<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From _____________ To ____________
---------------------------
PROVINCE HEALTHCARE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-23639 62-1710772
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
105 WESTWOOD PLACE
SUITE 400
BRENTWOOD, TENNESSEE 37027
(Address of principal executive offices) (zip code)
(615) 370-1377
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
------- -------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 17, 1998
COMMON STOCK, $.01 PAR VALUE 13,009,768
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,675 $ 4,186
Accounts receivable, less allowance for doubtful
accounts of $5,562 at March 31, 1998 and
$4,749 at December 31, 1997 35,705 30,902
Inventories 3,848 3,655
Prepaid expenses and other 6,028 8,334
--------- ---------
Total current assets 52,256 47,077
Property, plant and equipment, net 66,804 65,974
Other assets:
Unallocated purchase price 760 760
Cost in excess of net assets acquired, net 53,146 53,624
Other assets 8,256 9,026
--------- ---------
Total assets $ 181,222 $ 176,461
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,029 $ 6,524
Accrued salaries and benefits 6,968 8,720
Accrued expenses 2,311 4,422
Current maturities of long-term obligations 2,255 6,053
--------- ---------
Total current liabilities 16,563 25,719
Long-term obligations, less current maturities 52,166 83,043
Third-party settlements 7,255 4,680
Other liabilities 8,506 13,088
Minority interest 888 825
Mandatory redeemable preferred stock -- 50,162
Common stockholders' equity (deficit):
Common stock--no par value at December 31, 1997; $0.01 par value at March 31,
1998; authorized 20,000,000 shares; issued and outstanding 13,009,768
shares and 6,330,614 shares at
March 31, 1998 and December 31, 1997, respectively 130 2,116
Additional paid-in-capital 97,338 --
Retained deficit (1,624) (3,172)
--------- ---------
Total common stockholders' equity (deficit) 95,844 (1,056)
--------- ---------
Total liabilities, redeemable preferred stock
and common stockholders' equity $ 181,222 $ 176,461
========= =========
</TABLE>
See accompanying notes.
1
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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
Actual Pro Forma
-------------------------- (Note 9)
1998 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Revenue:
Net patient service revenue $ 42,750 $ 34,504 $42,750
Management and professional services 2,930 3,253 2,930
Reimbursable expenses 1,562 1,707 1,562
Other 609 995 609
-------- -------- -------
Net operating revenue 47,851 40,459 47,851
Expenses:
Salaries, wages and benefits 18,606 15,400 18,606
Reimbursable expenses 1,562 1,707 1,562
Purchased services 6,035 5,045 6,035
Supplies 4,627 3,817 4,627
Provision for doubtful accounts 3,082 2,410 3,082
Other operating expenses 4,257 4,353 4,257
Rentals and leases 1,474 1,323 1,474
Depreciation and amortization 2,205 1,770 2,205
Interest expense 1,855 1,761 1,381
Minority interest 68 68 68
Loss on sale of assets 33 87 33
-------- -------- -------
Total expenses 43,804 37,741 43,330
Income before provision for income taxes 4,047 2,718 4,521
Provision for income taxes 1,772 1,211 1,961
-------- -------- -------
Net income 2,275 1,507 2,560
Preferred stock dividends and accretion (696) (1,115) --
-------- -------- -------
Net income to common shareholders $ 1,579 $ 392 $ 2,560
======== ======== =======
Basic earnings per common share:
Net income $ 0.24 $ 0.28 $ 0.20
Preferred stock dividends and accretion (0.07) (0.21) --
-------- -------- -------
Net income per common share $ 0.17 $ 0.07 $ 0.20
======== ======== =======
Diluted earnings per common share:
Net income $ 0.23 $ 0.24 $ 0.19
Preferred stock dividends and accretion (0.07) (0.18) --
-------- -------- -------
Net income per common share $ 0.16 $ 0.06 $ 0.19
======== ======== =======
</TABLE>
See accompanying notes.
2
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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: $ 233 ($ 1,264)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,524) (2,420)
Net capital contributions and withdrawals-investments (15) (61)
-------- --------
Net cash used in investing activities (2,539) (2,481)
FINANCING ACTIVITIES
Proceeds from long-term debt 61,000 --
Repayments of debt (95,649) (431)
Net proceeds from issuance of common stock 77,067 --
Exchange of Junior Preferred Stock (14,884) --
Redemption of Senior Preferred Stock (22,739) --
-------- --------
Net cash provided by (used in) financing activities 4,795 (431)
-------- --------
Net increase (decrease) in cash and cash equivalents 2,489 (4,176)
Cash and cash equivalents at beginning of period 4,186 11,256
-------- --------
Cash and cash equivalents at end of period $ 6,675 $ 7,080
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid during the period $ 1,966 $ 1,433
======== ========
Income taxes paid during the period $ 166 $ 41
======== ========
NONCASH TRANSACTIONS
Dividends and accretion on preferred stock $ 696 $ 1,115
Conversion and redemption of preferred stock 33,138 --
Property and equipment acquired through capital leases -- 706
</TABLE>
See accompanying notes.
3
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PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Interim results are not necessarily
indicative of results that may be expected for the full year.
In the opinion of management, the accompanying interim financial
statements contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations and cash flows of Province Healthcare Company (the
"Company").
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
2. LONG-TERM DEBT
On March 30, 1998, the Company amended and restated its Credit
Agreement and increased its credit facilities to $260 million, including a
five-year $35 million End-Loaded Lease Facility ("ELLF"). At March 31, 1998, the
Company had $48 million outstanding under its revolving line of credit and no
amounts outstanding under the ELLF.
The Amended and Restated Credit Agreement contains limitations on the
Company's ability to incur additional indebtedness (including contingent
obligations), sell material assets, retire, redeem or otherwise reacquire its
capital stock, acquire the capital stock or assets of another business, and pay
dividends. The Amended and Restated Credit Agreement also requires the Company
to maintain a specified net worth and meet or exceed certain coverage, leverage,
and indebtedness ratios. Indebtedness under the Amended and Restated Credit
Agreement is secured by substantially all assets of the Company.
4
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3. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share date):
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
Actual Pro Forma
-------------------------- (Note 9)
1998 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Numerator:
Net income $ 2,275 $ 1,507 $ 2,560
Preferred stock dividends and accretion (696) (1,115) --
------- -------- -------
Net income to common shareholders $ 1,579 $ 392 $ 2,560
======= ======== =======
Denominator:
Denominator for basic earnings per share to
common shareholders - weighted-average shares 9,343 5,371 13,010
Effect of dilutive securities -
Incentive stock options 272 311 272
July stock issuance -- 672 --
------- -------- -------
Denominator for diluted earnings per share 9,615 6,354 13,282
Basic earnings per common share:
Net income $ 0.24 $ 0.28 $ 0.20
Preferred stock dividends and accretion (0.07) (0.21) --
------- -------- -------
Net income per common share $ 0.17 $ 0.07 $ 0.20
======= ======== =======
Diluted earnings per common share:
Net income $ 0.23 $ 0.24 $ 0.19
Preferred stock dividends and accretion (0.07) (0.18) --
------- -------- -------
Net income per common share $ 0.16 $ 0.06 $ 0.19
======= ======== =======
</TABLE>
4. INCOME TAXES
The income tax provision recorded for the three months ended March 31, 1998
and 1997 differs from the expected income tax provision due to permanent
differences and the provision for state income taxes.
5. ACQUISITIONS
In August 1997, the Company acquired Colorado River Medical Center ("CRMC")
(formerly Needles Desert Communities Hospital) in Needles, California by paying
cash of $3,191,000 and assuming liabilities totaling $518,000. The operating
results of CRMC are included in the Company's results of operations from the
date of purchase; therefore, the results of operations for the first quarter
of 1998 include CRMC.
6. CONTINGENCIES
Management continually evaluates contingencies based on the best available
evidence and believes that adequate provision for losses has been provided to
the extent necessary. In the opinion of management, the ultimate resolution of
the following contingencies will not have a material effect on the Company's
results of operations or financial position.
5
<PAGE> 7
GENERAL AND PROFESSIONAL LIABILITY RISKS
The reserve for the self-insured portion of general and professional
liability risks is included in "Other liabilities" and is based on actuarially
determined estimates.
LITIGATION
The Company currently, and from time to time, is expected to be subject to
claims and suits arising in the ordinary course of business.
NET PATIENT SERVICE REVENUE
Final determination of amounts earned under the Medicare and Medicaid
programs often occurs in subsequent periods because of audits by the programs,
rights of appeal and the application of numerous technical provisions.
FINANCIAL INSTRUMENTS
Interest rate swap agreements are used on a limited basis to manage the
Company's interest rate exposure. The agreements are contracts to periodically
exchange fixed and floating interest rate payments over the life of the
agreements. On March 10, 1997, as required by the Credit Agreement, the Company
entered into an interest rate swap agreement, which effectively converted for a
five-year period $35 million of floating-rate borrowings to fixed-rate
borrowings. The floating-rate payments are based on LIBOR, and fixed-rate
payments are dependent upon market levels at the time the swap agreement was
consummated. For the three months ended March 31, 1998 and 1997, the Company
received a weighted average rate of 5.88% and 5.72% and paid a weighted average
rate of 6.27% and 6.27%, respectively.
7. STOCKHOLDERS' EQUITY
REINCORPORATION
On February 4, 1998, the Company merged with a wholly-owned subsidiary in
order to change its jurisdiction of incorporation to Delaware and change its
name to Province Healthcare Company. In the Merger, the Company exchanged 1.83
shares of its no par common stock for each share of the subsidiary's $0.01 par
value common stock. All common share and per share data included in the
condensed consolidated financial statements and footnotes thereto have been
restated to reflect this reincorporation. As a result of the reincorporation,
$2,053,000 was reclassified from common stock to additional paid-in-capital upon
conversion from no par to $0.01 par value Common Stock.
PUBLIC OFFERING OF COMMON STOCK
On February 17, 1998, the Company closed its initial public offering of
common stock. In connection with the offering, the Series B redeemable junior
preferred stock was converted into common stock at the public offering price of
the common stock. The net proceeds from the offering were used to redeem the
outstanding balance of the Series A redeemable senior preferred stock plus
accrued dividends, reduce the balance of the outstanding term and revolving
credit loans, and repurchase a portion of the common stock which was issued upon
conversion of the Series B redeemable junior preferred stock.
6
<PAGE> 8
The following table sets forth the changes in the stockholders' equity
accounts as a result of the reincorporation and the initial public offering of
common stock (in thousands):
<TABLE>
<CAPTION>
No Par Value
Common Stock
-------------------------- Additional Retained
Shares Amount Paid-in-Capital Deficit Total
---------- ------ --------------- --------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 6,330,614 $2,116 $ -- ($3,172) $ (1,056)
Reincorporation -- (2,053) 2,053 -- --
Conversion of the junior preferred stock
and initial public offering of
common stock 6,679,154 67 95,285 (31) 95,321
Preferred stock dividends and accretion -- -- -- (696) (696)
Net income -- -- -- 2,275 2,275
---------- ------ ------- ------- --------
Balance at March 31, 1998 13,009,768 $ 130 $97,338 ($1,624) $ 95,844
========== ====== ======= ======= ========
</TABLE>
8. SUBSEQUENT EVENT
On May 1, 1998, the Company acquired the assets and business of Havasu
Samaritan Regional Hospital ("Havasu") in Lake Havasu City, Arizona for
approximately $105.5 million. To finance the acquisition, the Company borrowed
$106 million under its revolving credit facility. The acquisition will be
accounted for as a purchase business combination, and the results of operations
of Havasu will be included in the results of operations of the Company from the
purchase date forward.
9. PRO FORMA FINANCIAL INFORMATION
The condensed consolidated pro forma statement of income for the three
months ended March 31, 1998, gives effect to (i) the conversion of junior
preferred stock into common stock and (ii) the sale of common stock in the
offering and the application of net proceeds thereof to the repurchase of
certain shares of common stock, the redemption of senior preferred stock and the
repayment of debt, as if all such transactions had been completed as of January
1, 1998, at the initial public offering price of $16.00 per share, as follows:
- The elimination of interest expense associated with the $39.5 million of
long-term obligations repaid with the net proceeds of the offering, and the
elimination of the related income tax benefit based on the combined federal
and state statutory rate of 39%.
- The elimination of the dividends and the accretion of issuance costs on
the senior preferred stock redeemed with a portion of the net proceeds of
the offering, and the junior preferred stock converted into common stock in
connection with the offering.
The pro forma condensed consolidated financial information does not purport
to represent what the Company's results of operations would have been had such
transactions in fact occurred as of January 1, 1998, or to project the Company's
results of operations in any future period.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
IMPACT OF ACQUISITIONS
An integral part of the Company's strategy is to acquire non-urban
acute-care hospitals. In August 1997, the Company acquired Colorado River
Medical Center ("CRMC") (formerly Needles Desert Communities Hospital) in
Needles, California (the "CRMC acquisition"). The operating results of CRMC are
included in the Company's results of operations from the date of purchase;
therefore, the results of operations for the first quarter 1998 include CRMC.
On May 1, 1998, the Company acquired the assets and business of Havasu
Samaritan Regional Hospital ("Havasu"), a 119-bed general acute-care hospital in
Lake Havasu City, Arizona, for approximately $105.5 million. To finance the
acquisition, the Company borrowed $106 million under its revolving credit
facility. The acquisition has been accounted for as a purchase business
combination, and the results of operations of Havasu will be included in the
results of operations of the Company from the purchase date forward.
Due to the relatively small number of owned and leased hospitals, each
hospital acquisition can materially affect the overall operating margin of the
Company. Upon the acquisition of a hospital, the Company typically takes a
number of steps to lower operating costs. The impact of such actions may be
offset by other cost increases to expand services, strengthen medical staff and
improve market position. The benefits of these investments and of other
activities to improve operating margins generally do not occur immediately.
Consequently, the financial performance of a newly acquired hospital may
adversely affect overall operating margins in the short term. As the Company
makes additional hospital acquisitions, the Company expects that this effect
will be mitigated by the expanded financial base of existing hospitals and the
allocation of corporate overhead among a larger number of hospitals.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, information
expressed as a percentage of net operating revenue. Such information has been
derived from the Condensed Consolidated Statements of Income of the Company
included elsewhere in this report. The results of operations for the periods
presented include hospitals from their acquisition dates, as discussed above.
<TABLE>
<CAPTION>
THREE MONTHS PERCENTAGE
ENDED INCREASE (DECREASE)
MARCH 31, AMOUNTS
------------------- -------------------
1998 1997
<S> <C> <C> <C>
Net operating revenue 100.0% 100.0% 18.3%
Operating expenses (1) 82.8 84.2 16.4
----- ----
EBITDA (2) 17.2 15.8 28.2
Depreciation and amortization 4.6 4.4 24.6
Interest 3.9 4.4 5.3
Minority interest 0.1 0.1 --
Loss on sale of assets 0.1 0.2 62.1
----- ----
Income before income taxes 8.5 6.7 48.9
Provision for income taxes 3.7 3.0 46.3
----- ----
Net income 4.8% 3.7% 51.0%
===== ====
</TABLE>
(1) Operating expenses represent expenses before interest, minority interest,
loss on sale of assets, income taxes, depreciation and amortization expense.
(2) EBITDA represents the sum of income before income tax expense, interest,
minority interest, depreciation and amortization, and loss on sale of assets.
Management
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<PAGE> 10
understands that industry analysts generally consider EBITDA to be one measure
of the financial performance of a company that is presented to assist investors
in analyzing the operating performance of the Company and its ability to service
debt. Management believes that an increase in EBITDA level is an indicator of
the Company's improved ability to service existing debt, to sustain potential
future increases in debt and to satisfy capital requirements. However, EBITDA is
not a measure of financial performance under generally accepted accounting
principles and should not be considered an alternative (i) to net income as a
measure of operating performance or (ii) to cash flows from operating,
investing, or financing activities as a measure of liquidity. Given that EBITDA
is not a measurement determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA, as
presented, may not be comparable to other similarly titled measures of other
companies.
SELECTED OPERATING STATISTICS - OWNED HOSPITALS
The following table sets forth certain operating statistics for the
Company's owned hospitals for each of the periods presented. The results of the
owned hospitals for the three months ended March 31, 1998 and 1997 include three
months of operations for eight hospitals and seven hospitals, respectively.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CONSOLIDATED HOSPITALS:
Number of hospitals end of period 8 7
Licensed beds end of period 570 517
Beds in service end of period 463 405
Inpatient admissions 4,575 3,910
Patient days 25,570 20,904
Adjusted patient days 42,295 36,437
Average length of stay (days) 5.6 5.3
Occupancy rates (licensed beds) 49.8% 44.9%
Occupancy rates (beds in service) 61.4% 57.4%
Gross inpatient revenue $45,052,328 $35,187,373
Gross outpatient revenue $30,010,142 $25,860,236
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Net operating revenue was $47.9 million for the three months ended March 31,
1998, compared to $40.5 million for the comparable period of 1997, an increase
of $7.4 million or 18.3%. Revenue generated by hospitals owned during both
periods ("same store hospitals") increased $3.3 million, or 9.4%, resulting from
inpatient and outpatient volume increases, as well as price increases. The
remaining increase of $4.1 million was primarily attributable to the CRMC
acquisition, offset by decreases in revenue in the management company of $0.5
million, resulting primarily from a decrease in the number of management
contracts, and a decrease in various other revenue.
Operating expenses were $39.6 million, or 82.8% of net operating revenue, for
the three months ended March 31, 1998, compared to $34.1 million, or 84.2% of
net operating revenue, for the comparable period of 1997. Operating expenses of
same store hospitals increased $2.4 million, primarily as a result of volume
increases, change in case mix and an increase in bad debt expense. The remaining
$3.1 million increase was primarily attributable to the CRMC acquisition.
EBITDA was $8.2 million or 17.2% of net operating revenue for the three months
ended March 31, 1998, compared to $6.4 million, or 15.8% of net operating
revenue, for the comparable period of 1997. EBITDA for the Company's hospitals
owned during both
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<PAGE> 11
periods increased 11.7%, and as a percent of net operating revenue was 22.2%
for the three months ended March 31, 1998, compared to 21.8% for the comparable
period of 1997.
Depreciation and amortization expense was $2.2 million, or 4.6% of net operating
revenue, for the three months ended March 31, 1998, compared to $1.8 million, or
4.4% of net operating revenue for the comparable period of 1997. The increase in
depreciation and amortization resulted from increased capital expenditures.
Interest expense as a percent of net operating revenue decreased to 3.9% for the
three months ended March 31, 1998, compared to 4.4% for the comparable period of
1997.
Net income was $2.3 million, or 4.8% of net operating revenue, for the three
months ended March 31, 1998, compared to $1.5 million, or 3.7% of net operating
revenue for the comparable period of 1997.
The unaudited pro forma condensed consolidated statement of income for the three
months ended March 31, 1998, gives effect to (i) the conversion of junior
preferred stock into common stock and (ii) the sale of common stock in the
offering and the application of net proceeds thereof to the repurchase of
certain shares of common stock, the redemption of senior preferred stock and the
repayment of debt, as if all such transactions had been completed as of January
1, 1998, at the initial public offering price of $16.00 per share, as follows:
- - The elimination of interest expense associated with the $39.5 million of
long-term obligations repaid with the net proceeds of the offering, and
the elimination of the related income tax benefit based on the combined
federal and state statutory rate of 39%.
- - The elimination of the dividends and the accretion of issuance costs on
the senior preferred stock redeemed with a portion of the net proceeds of
the offering and the junior preferred stock converted into common stock in
connection with the offering.
The pro forma condensed consolidated income statement does not purport to
represent what the Company's results of operations would have been had such
transactions in fact occurred as of January 1, 1998, or to project the Company's
results of operations in any future period.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had working capital of $35.7 million,
including cash and cash equivalents of $6.7 million. The ratio of current assets
to current liabilities was 3.2 to 1.0 and 1.8 to 1.0 at March 31, 1998 and 1997,
respectively.
In February 1998, the Company completed its initial public offering
("IPO") of common stock. In connection with the offering, the Series B
redeemable junior preferred stock was converted into common stock at the public
offering price of the common stock. The net proceeds from the offering were used
to reduce the balance of the outstanding term and revolving credit loans ($39.5
million), redeem the outstanding balance of the Series A redeemable senior
preferred stock plus accrued dividends ($22.7 million) and repurchase a portion
of the common stock which was issued upon conversion of the Series B junior
preferred stock ($14.9 million).
In the first quarter of 1998, total long-term obligations declined to
$52.2 million from $83.0 million at year end. In March 1998, the Company amended
and restated its Credit Agreement and increased its credit facilities to $260
million, including a five-year $35 million End-Loaded Lease Facility ("ELLF").
Cash provided by operations was $0.2 million for the three months ended
March 31, 1998.
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<PAGE> 12
Cash used in operations was $1.3 million for the three months ended March 31,
1997. Cash used in investing activities was $2.5 million for the three months
ended March 31, 1998 and 1997, primarily related to capital expenditures. Net
cash provided by financing activities was $4.8 million for the three months
ended March 31, 1998, primarily as a result of the IPO. Cash used in financing
activities was $0.4 million in 1997, as a result of the repayment of debt.
The Company intends to acquire additional acute care facilities, and is
actively seeking out such acquisitions. There can be no assurance that the
Company will not require additional debt or equity financing for any particular
acquisition. Also, the Company continually reviews its capital needs and
financing opportunities and may seek additional equity or debt financing for its
acquisition program or other needs. At March 31, 1998, the Company had $48
million outstanding under its revolving line of credit and no amounts
outstanding under the ELLF.
Capital expenditures, excluding acquisitions for the three months ended
March 31, 1998 and 1997 were $2.5 million and $2.4 million, respectively.
Capital expenditures for the owned hospitals may vary from year to year
depending on facility improvements and service enhancements undertaken by the
hospitals. The management services business does not require significant capital
expenditures. The Company expects to make capital expenditures in 1998 of
approximately $10 million, exclusive of any acquisitions of businesses. Planned
capital expenditures for 1998 consist principally of capital improvements to
owned and leased hospitals. The Company expects to fund these expenditures
through cash provided by operating activities and borrowings under its revolving
credit agreement.
GENERAL
The federal Medicare program and state Medicaid programs accounted for
approximately 71.4% and 73.4% of patient days for the three months ended March
31, 1998 and 1997, respectively. The payment rates under the Medicare program
for inpatients are prospective, based upon the diagnosis of a patient. The
payment rate increases have historically been less than actual inflation.
Both federal and state legislators are continuing to scrutinize the health
care industry for the purpose of reducing health care costs. While the Company
is unable to predict what, if any, future health reform legislation may be
enacted at the federal or state level, the Company expects continuing pressure
to limit expenditures by governmental health care programs. Under the Balanced
Budget Act of 1997 (the "1997 Act"), there are no increases in the rates paid to
acute care hospitals for inpatient care through September 30, 1998. Payments for
Medicare outpatient services provided at acute care hospitals and home health
services historically have been paid based on costs, subject to certain limits.
The 1997 Act requires that the payment for those services be converted to a
prospective payment system, which will be phased in over time. The 1997 Act also
includes a managed care option which could direct Medicare patients to only
managed care providers exclusively. Further changes in the Medicare or Medicaid
programs and other proposals to limit health care spending could have a material
adverse impact upon the health care industry and the Company.
The Company's acute care hospitals, like most acute care hospitals in the
United States, have significant unused capacity. The result is substantial
competition for patients and physicians. Inpatient utilization continues to be
negatively affected by payor-required pre-admission authorization and by payor
pressure to maximize outpatient and alternative health care delivery services
for less acutely ill patients. The Company expects increased competition and
admission constraints to continue in the future. The ability to respond
successfully to these trends, as well as spending reductions in governmental
health care programs, will play a significant role in determining hospitals'
ability to maintain their current rate of net revenue growth and operating
margins.
The Company expects the industry trend from inpatient to outpatient
services to continue due to the increased focus on managed care and advances in
technology. Outpatient revenue of the Company's owned hospitals was
approximately 40.0% and 42.4%
11
<PAGE> 13
of gross patient service revenue for the three months ended March 31, 1998 and
1997, respectively.
The complexity of the Medicare and Medicaid regulations, increases in
managed care, hospital personnel turnover, the dependence of hospitals on
physician documentation of medical records and the subjective judgment involved
complicates the billing and collections of accounts receivable by hospitals.
There can be no assurance that this complexity will not negatively impact the
Company's future cash flow or results of operations.
The Company's historical financial trend has been favorably impacted by
the Company's ability to successfully acquire acute care hospitals. While the
Company believes that trends in the health care industry described above may
create possible future acquisition opportunities, there can be no assurances
that it can continue to maintain its current growth rate through hospital
acquisitions and successfully integrate the hospitals into its system.
The Company's owned hospitals accounted for 90.6% of the Company's net
operating revenue for the six months ended March 31, 1998 compared to 87.7% for
the three months ended March 31, 1997.
The federal government and a number of states are rapidly increasing the
resources devoted to investigating allegations of fraud and abuse in the
Medicare and Medicaid programs. At the same time, regulatory and law enforcement
authorities are taking an increasingly strict view of the requirements imposed
on providers by the Social Security Act and Medicare and Medicaid regulations.
Although the Company believes that it is in material compliance with such laws,
a determination that the Company has violated such laws, or even the public
announcement that the Company was being investigated concerning possible
violations, could have a material adverse effect on the Company.
INFLATION
The health care industry is labor intensive. Wages and other expenses
increase, especially during periods of inflation and labor shortages. In
addition, suppliers pass along rising costs to the Company in the form of higher
prices. The Company has generally been able to offset increases in operating
costs by increasing charges for services and expanding services. The Company has
also implemented cost control measures to curb increases in operating costs and
expenses. In light of cost containment measures imposed by government agencies
and private insurance companies, the Company is unable to predict its ability to
offset or control future cost increases, or its ability to pass on the increased
costs associates with providing health care services to patients with government
or managed care payors, unless such payors correspondingly increase
reimbursement rates.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this discussion, including without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects," and words of similar import, constitute forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or industry results to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, both nationally and in
regions where the Company operates; demographic changes; the effect of existing
or future governmental regulation and federal and state legislative and
enforcement initiatives on the Company's business, including the
recently-enacted Balanced Budget Act of 1997; changes in Medicare and Medicaid
reimbursement levels; the Company's ability to implement successfully its
acquisition and development strategy and changes in such strategy; the
availability and terms of financing to fund the expansion of the Company's
business, including the acquisition of additional hospitals; the Company's
ability to attract and retain qualified management personnel and to recruit and
retain physicians and other health care personnel to the non-urban markets it
serves; the effect of managed care initiatives on the non-urban markets served
by the Company's
12
<PAGE> 14
hospitals and the Company's ability to enter into managed care provider
arrangements on acceptable terms; the effect of liability and other claims
asserted against the Company; the effect of competition in the markets served by
the Company's hospitals; and other factors referenced in this report. Certain of
these factors are discussed in more detail elsewhere in this report. Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements contained herein to reflect future events
or developments.
13
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On January 14, 1998, in anticipation of its initial public offering, the
shareholders of Province Healthcare Company took action by unanimous written
consent without a meeting and approved the proposed merger with Principal
Hospital Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ------ -----------------------
<S> <C>
2.1 Amended and Restated Agreement and Plan of Merger, dated
as of January 15, 1998, between Principal Hospital
Company and Province Healthcare Company ("Province")*
3.1 Amended and Restated Certificate of Incorporation of Province*
3.2 Amended and Restated By-laws of Province*
4.5 Amended and Restated Credit Agreement, dated as of March
30, 1998, among Province, First Union National Bank, as
Agent and Issuing Bank, and various lenders thereto
4.6 Participation Agreement, dated as of March 30, 1998,
among Province, as Construction Agent and Lessee, various
parties as Guarantors, First Security Bank, National
Association, as Owner Trustee, various banks party
thereto, as Holders, various banks party thereto, as
Lenders, and First Union National Bank, as Agent.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C>
10.1 Lease Agreement, dated as of March 30, 1998, between
First Security Bank, National Association, as Owner
Trustee, and Province, as Lessee
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
- ------------------------
(*) Incorporated by reference to the exhibits filed with the registrant's
Registration Statement on Form S-1, Registration No. 333-34421.
(b) Reports on Form 8-K.
The Company has filed no reports on Form 8-K for the quarterly period
ending March 31, 1998.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on behalf by the undersigned
thereunto duly authorized.
PROVINCE HEALTHCARE COMPANY
By: /s/ BRENDA B. RECTOR
---------------------------------------
Brenda B. Rector
Vice President and Controller
Date: May 15, 1998
<PAGE> 1
EXHIBIT 4.5
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 30th day of
March, 1998 (the "Credit Agreement" or "Agreement"), is made among PROVINCE
HEALTHCARE COMPANY, a Delaware corporation (formerly known as Principal Hospital
Company) with its principal offices in Brentwood, Tennessee (the "Borrower");
the banks and other financial institutions from time to time parties hereto
(each, a "Lender," and collectively, the "Lenders"); and FIRST UNION NATIONAL
BANK (formerly known as First Union National Bank of North Carolina), as Agent
(the "Agent") and as Issuing Bank.
RECITALS
A. The Borrower, certain banks and other financial institutions, and
the Agent are parties to a Credit Agreement, dated as of December 17, 1996 (as
amended prior to the date hereof, the "Original Credit Agreement"), providing
for the availability to the Borrower of a revolving credit facility in the
aggregate principal amount of $65,000,000 and a term loan facility in the
aggregate principal amount of $35,000,000, on the terms and subject to the
conditions set forth therein.
B. The Borrower has requested certain amendments to the Original Credit
Agreement, including that the Lenders make available to the Borrower, in lieu of
the revolving credit facility and the term loan facility made available under
the Original Credit Agreement, a revolving credit facility in the aggregate
principal amount of up to $225,000,000. The Lenders have agreed to such
amendments and to make a $225,000,000 revolving credit facility available to the
Borrower by amending and restating the Original Credit Agreement in its entirety
on the terms and subject to the conditions hereinafter set forth.
AGREEMENT
NOW THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree that, as of the
Amendment Effective Date, the Original Credit Agreement shall be amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Credit Agreement, in addition
to the terms defined elsewhere in this Credit Agreement, the following terms
shall have the meanings set forth below:
"ABR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Alternate Base Rate.
"Account Designation Letter" shall mean a letter from the Borrower to
the Agent, duly completed and signed by an Authorized Officer of the Borrower,
listing any one or more accounts to which the Borrower may from time to time
request the Agent to forward the proceeds of any Loans made hereunder.
<PAGE> 2
"Accounts" shall mean all "accounts," within the meaning of the Uniform
Commercial Code, of the Borrower and each of its Subsidiaries, including,
without limitation, (to the extent permitted by law) any existing and future
Medicare, Medicaid, MediCal and other similar accounts receivable.
"Acquisition" shall mean any acquisition consummated on or after the
date hereof, whether in a single transaction or series of related transactions,
by the Borrower or any one or more of its Subsidiaries, or any combination
thereof, of (i) all or a substantial part of the assets, equity or a going
business or division, of any Person, whether through purchase of assets or
securities, by merger or otherwise (including, without limitation, the
acquisition of a Facility or an operating lease for a Facility), (ii) control of
at least a majority of the outstanding securities of an existing corporation
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of directors or (iii) control of a greater
than 50% ownership interest in any existing partnership, joint venture or other
Person.
"Acquisition Amount" shall mean, with respect to any Permitted
Acquisition, the sum (without duplication) of (i) the amount of cash paid by the
Borrower and its Subsidiaries in connection with such Permitted Acquisition,
(ii) the Fair Market Value of all capital stock or other ownership interests of
the Borrower or any of its Subsidiaries issued or given in connection with such
Permitted Acquisition, (iii) the amount (determined by using the face amount or
the amount payable at maturity, whichever is greater) of all Debt incurred,
assumed or acquired in connection with such Permitted Acquisition, (iv) all
additional purchase price amounts in the form of earnouts and other contingent
obligations, (v) all amounts paid in respect of covenants not to compete,
consulting agreements and other affiliated contracts in connection with such
Permitted Acquisition other than bona fide employment and similar agreements not
a part of the allocation of the purchase price, and (vi) the aggregate Fair
Market Value of all other consideration given by the Borrower and its
Subsidiaries in connection with such Permitted Acquisition. All Capital
Expenditures made or projected to be incurred by the Borrower or its
Subsidiaries within ninety (90) days and in connection with any Permitted
Acquisition shall be included in the Acquisition Amount attributable to such
Permitted Acquisition and shall not be included in the calculation of Capital
Expenditures for purposes of SECTION 6.14.
"Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate plus the Applicable Margin for
LIBOR Loans, each as in effect at such time.
"Affiliate" shall mean, as to any Person, each of the Persons that
directly, or indirectly through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean First Union, in its capacity as agent as appointed
in ARTICLE IX hereof, and its permitted successors and assigns.
"Agreement" or "this Agreement" or "Credit Agreement" shall mean this
Amended and Restated Credit Agreement and any further amendments, modifications
and supplements hereto, any replacements, renewals, extensions and restatements
hereof, and any substitutes herefor, in whole or in part, and all schedules and
exhibits hereto, and shall refer to this Agreement as the same may be in effect
at the time such reference becomes operative.
"Alternate Base Rate" shall mean, at any time with respect to any ABR
Loan, a rate per
<PAGE> 3
annum equal to the Base Rate plus the Applicable Margin for ABR Loans, each as
in effect at such time.
"Amendment Effective Date" shall mean the date on which all conditions
precedent set forth in SECTION 3.2 have been satisfied or waived in accordance
with the terms of this Agreement.
"Annualized Cash Taxes" shall mean, as of the last day of any fiscal
quarter, Cash Taxes for the four (4) consecutive fiscal quarters ending on such
date.
"Annualized Consolidated EBITDAR" shall mean, as of the last day of any
fiscal quarter, Consolidated EBITDAR for the two (2) consecutive fiscal quarters
ending on such date, multiplied by two (2); provided, that for purposes of this
calculation, losses of an extraordinary nature included in Consolidated Net
Income shall not be multiplied by two.
"Annualized Facility Rent Expense" shall mean, as of the last day of
any fiscal quarter, Facility Rent Expense for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2).
"Annualized Interest Expense" shall mean, as of the last day of any
fiscal quarter, Interest Expense for the two (2) consecutive fiscal quarters
ending on such date, multiplied by two (2).
"Annualized Joint Venture EBITDAR" shall mean, as of the last day of
any fiscal quarter, Joint Venture EBITDAR for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2); provided, that for purposes
of this calculation, losses of an extraordinary nature included in Consolidated
Net Income shall not be multiplied by two.
"Annualized Non-Landlord Consent EBITDAR" shall mean, as of the last
day of any fiscal quarter, Non-Landlord Consent EBITDAR for the two (2)
consecutive fiscal quarters ending on such date, multiplied by two (2);
provided, that for purposes of this calculation, losses of an extraordinary
nature included in Consolidated Net Income shall not be multiplied by two.
"Applicable Margin" shall mean, at any time with respect to any Loan,
the applicable percentage points as determined under the following matrix with
reference to the ratio of Consolidated Adjusted Debt to Annualized Consolidated
EBITDAR calculated as provided below:
<TABLE>
<CAPTION>
Ratio of Consolidated Adjusted
Debt to Annualized Applicable Margin Applicable Margin
Consolidated EBITDAR (ABR Rate) (LIBOR Rate)
- -------------------- ------------------ ------------------
<S> <C> <C>
Greater than or equal to
4.0 to 1.0 0.75% 2.00%
Less than 4.0 to 1.0
but greater than or equal to
3.5 to 1.0 0.50% 1.75%
Less than 3.5 to 1.0
but greater than or equal to
3.0 to 1.0 0.25% 1.50%
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Less than 3.0 to 1.0
but greater than or equal to
2.5 to 1.0 0.00% 1.25%
Less than 2.5 to 1.0
but greater than or equal to
2.0 to 1.0 0.00% 1.00%
Less than 2.0 to 1.0 0.00% 0.75%
</TABLE>
From the Amendment Effective Date until the fifth (5th) Business Day after
receipt by the Agent of the financial statements for the fiscal quarter ended
March 31, 1998 pursuant to SECTION 5.1(B) below, the Applicable Margin shall be
1.25% for LIBOR Loans and 0% for ABR Loans. The Applicable Margins shall be
reset from time to time in accordance with the above matrix on the fifth (5th)
Business Day after receipt by the Agent in accordance with SECTIONS 5.1(A) or
(B) of financial statements together with a Compliance Certificate attaching an
Interest Rate Calculation Worksheet (reflecting the computation of the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR as of the last day
of the preceding fiscal quarter or fiscal year, as appropriate) that provides
for different Applicable Margins than those then in effect.
"Assigned Rights" shall have the meaning assigned to such term in
SECTION 2.17.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement entered into between a Lender and an Eligible Assignee, and accepted
by the Agent, in substantially the form of EXHIBIT D.
"Assignment Restrictions" shall mean (i) with respect to any contracts
or agreements assigned to the Agent, on behalf of the Lenders, as Collateral by
the Borrower or any of its Subsidiaries, any restriction or prohibition on
assignment that has not been waived or consented to by the Person for whose
benefit such restriction or prohibition exists; provided that such restriction
or prohibition will not be permitted if the Agent has required such waiver or
consent, such requirement of waiver or consent not to unreasonably interfere
with the ordinary course of business of the Borrower and its Subsidiaries and
may only be required with respect to a material contract, and (ii) with respect
to Medicare, Medicaid and MediCal accounts receivable, assignment restrictions
as provided in the Medicare Regulations, the Medicaid Regulations and the
MediCal Regulations.
"Authorized Officer" shall mean any of (i) the Chief Executive Officer,
Chief Financial Officer, Vice President-Finance or Vice President-Controller,
and (ii) any other officer of the Borrower authorized by resolution of the board
of directors of the Borrower to take the action specified herein with respect to
such officer and whose signature and incumbency shall have been certified to the
Agent by the secretary or an assistant secretary of the Borrower.
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as amended, and
any successor statute or statute having substantially the same function.
"Base Rate" shall mean the higher of (i) the Prime Rate, or (ii)
one-half percentage point (0.5%) in excess of the Federal Funds Rate, as
adjusted to conform to changes as of the opening of business on the date of any
such change in the Federal Funds Rate.
"Bloodborne Pathogens Standard" shall mean the Final Standard for
Occupational Exposure to Bloodborne Pathogens promulgated by OSHA at 56 Federal
Register 64004 et
<PAGE> 5
seq. (December 6, 1991) and codified at 29 C.F.R. ss. 1910.1030, or any similar
regulation promulgated by any Governmental Authority.
"Borrower" shall mean Province Healthcare Company, a Delaware
corporation (formerly known as Principal Hospital Company), and its successors
and assigns.
"Borrowing" shall mean the incurrence by the Borrower on a given date
(including as a result of conversions of outstanding Loans pursuant to SECTION
2.9) of one Type of Loan (or a Swingline Loan made by the Swingline Lender)
having in the case of LIBOR Loans the same Interest Period, provided that ABR
Loans incurred pursuant to SECTION 2.11(C) shall be considered part of the
related Borrowing of LIBOR Loans.
"Borrowing Date" shall have the meaning assigned to such term in
SECTION 2.2(B).
"Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan or any Swap Agreement, any such day that is also a day
on which tradings are conducted in the London interbank Eurodollar market.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Expenditures" shall mean the aggregate amount of all
expenditures and liabilities (including, without limitation, Capital Lease
Obligations) made and incurred in respect of the acquisition by the Borrower or
any of its Subsidiaries of Capital Assets, but excluding Capital Assets acquired
in the form of a Permitted Acquisition and excluding expenditures and
liabilities not to exceed $25,000,000 in the aggregate made and incurred by the
Borrower or any of its Subsidiaries prior to May 31, 2001 in respect of the
acquisition of Capital Assets at Havasu Samaritan Regional Hospital.
"Capital Lease" shall mean any lease of any property that would, in
accordance with Generally Accepted Accounting Principles, be required to be
classified and accounted for as a capital lease on the balance sheet of the
lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with Generally Accepted Accounting Principles, appear on a balance
sheet as a liability of such lessee in respect of such Capital Lease.
"Cash Collateral Account" shall have the meaning assigned to such term
in SECTION 2.18(I).
"Cash Investments" shall mean (i) marketable direct obligations (x)
issued or unconditionally guaranteed by the United States of America or (y)
issued by any agency thereof having a rating of A or higher by Standard & Poor's
or A-2 or higher by Moody's Investors Service, Inc., in each case maturing
within one year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Services or Moody's Investors Service, Inc.; (iii) marketable commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 or the equivalent
<PAGE> 6
thereof by Standard & Poor's Rating Services or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc.; (iv) demand deposits, time deposits
and certificates of deposit maturing within one (1) year from the date of
issuance thereof and issued by a Lender or a bank or trust company organized
under the laws of the United States of America or any state thereof and having a
long term debt rating by Standard & Poor's Rating Services of A or higher; (v)
repurchase agreements with a term not exceeding seven days with respect to
underlying securities of the types described in clause (I) above entered into
with a bank or trust company meeting the qualifications specified in clause (IV)
above; and (vi) mutual funds that invest solely in any of the items described
above.
"Cash Management Line of Credit" shall mean a cash management line of
credit between the Borrower and First Union in an aggregate principal amount not
in excess of $5,000,000.
"Cash Taxes" shall mean, for any fiscal quarter, the aggregate amount
of cash payments made by or on behalf of the Borrower or any Subsidiaries to
Governmental Authorities for taxes, levies, charges or withholdings during such
fiscal quarter.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Section 13(d)(3) under the Exchange Act), shall, directly or
indirectly, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become, after the Amendment
Effective Date, the "beneficial owner" (within the meanings of Rules 13d-3 and
13d-5 under the Exchange Act) of securities of the Borrower representing 30% or
more of the combined voting power of the then outstanding securities of the
Borrower ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, assuming the conversion,
exchange or exercise into or for voting stock of all outstanding shares so
convertible (other than GTCR Fund IV, Bruce V. Rauner or Joseph P. Nolan, which
are currently the beneficial owners of 36.6% of the voting securities of the
Borrower and may increase such holdings without causing a Change of Control), or
(ii) the members of the Board of Directors of the Borrower shall cease to
consist of a majority of the individuals (y) who constituted the Board of
Directors as of the date hereof or (z) who shall have become members thereof
subsequent to the date hereof after having been nominated, or otherwise approved
in writing, by at least a majority of individuals who constituted the Board of
Directors of the Borrower as of the date hereof. For purposes of this
definition, "voting power" shall be determined with reference to the then
outstanding securities of the Borrower ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors, assuming the conversion, exchange or exercise into or for voting
stock of all outstanding securities of the Borrower other than voting stock.
"Collateral" shall mean all assets, property and interests in property
of the Borrower and its Subsidiaries, whether now owned or hereafter acquired,
that shall, from time to time, directly or indirectly secure the Credit
Obligations or the Guaranty Obligations, including, without limitation, the
assets, property or interests in property described in the Security and Pledge
Agreement; provided, that with respect to Subsidiaries acquired or created after
the Amendment Effective Date in accordance with SECTION 5.11, "Collateral" shall
mean all Stock, Interests and promissory notes owned by such Subsidiaries or by
the Borrower with respect to such Subsidiaries; and provided, further that
"Collateral" shall not include Realty acquired after the Amendment Effective
Date by the Borrower or any of its Subsidiaries.
"Commitment" shall mean, for any Lender, such Lender's Revolving Credit
Commitment including its Swingline Commitment.
"Commitment Letter" shall mean the commitment letter to the Borrower
from First Union
<PAGE> 7
National Bank dated March 11, 1998, confirming its commitment to provide a
portion of the Revolving Credit Facility pursuant to this Agreement.
"Compliance Certificate" shall mean a fully completed certificate in
the form of EXHIBIT C.
"Consolidated Adjusted Debt" shall mean the sum of (a) Consolidated
Debt, and (b) the product of (i) Annualized Facility Rent Expense, multiplied by
(ii) eight (8).
"Consolidated Adjusted Senior Debt" shall mean, at any time,
Consolidated Adjusted Debt less Subordinated Debt.
"Consolidated Debt" shall mean, at any date, the aggregate (without
duplication) of all Debt of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis.
"Consolidated EBITDAR" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis as of the last day of any period, EBITDAR
for the period ending on such date determined in accordance with Generally
Accepted Accounting Principles. Consolidated EBITDAR shall be deemed to include,
without duplication, historical Consolidated EBITDAR, of any business acquired
and operated by the Borrower or any Subsidiary after the commencement of the
relevant measurement period, as if such business had been acquired by the
Borrower or such Subsidiary as of the first day of such measurement period,
subject to pro forma expense adjustments as set forth below; provided that such
Consolidated EBITDAR is supported by financial statements, tax returns or other
financial data acceptable to the Agent in its sole discretion. Calculations of
Consolidated EBITDAR shall exclude the results of operations of any entity
disposed of by the Borrower or any Subsidiary at any time after the first day of
the relevant measurement period. Consolidated EBITDAR shall be adjusted for pro
forma expense adjustments in connection with newly acquired entities, if and
only to the extent approved in writing by the Required Lenders.
"Consolidated Net Income" shall mean, for any fiscal quarter, the net
income (or loss) of the Borrower and its Subsidiaries, on a consolidated basis
and excluding intercompany items, for such quarter, determined in accordance
with Generally Accepted Accounting Principles, but excluding the effect of: (a)
gains on the sale, conversion or other disposition of Capital Assets, (b) gains
on the acquisition, retirement, sale or other disposition of stock of the
Borrower or any of its Subsidiaries, (c) gains on the collection of life
insurance proceeds, (d) any write-up of any asset, (e) any other gain or credit
of an extraordinary nature, and (f) noncash losses approved in writing by the
Agent.
"Consolidated Net Revenues" shall mean, for any fiscal quarter, the net
revenues of the Borrower and its Subsidiaries, on a consolidated basis and
excluding intercompany items, for such quarter, determined in accordance with
Generally Accepted Accounting Principles.
"Consolidated Net Worth" shall mean, as of the last day of any fiscal
year, the net worth of the Borrower and its Subsidiaries as of such date,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Debt, lease,
dividend, guaranty, letter of credit (other than a standby letter of credit with
no reasonable likelihood of draw, in the reasonable opinion of the Agent) or
other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such
<PAGE> 8
primary obligations, (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation, or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability of the primary
obligor to perform in respect thereof. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by such Person in good faith.
"Covenant Compliance Worksheet" shall mean a fully completed
certificate in the form of Attachment A to EXHIBIT C.
"Credit Obligations" shall mean and include (i) the Loans, any
Reimbursement Obligations and all other loans, advances, indebtedness,
liabilities and obligations owing, arising, due or payable from the Borrower to
the Agent, the Issuing Bank or any Lender of any kind or nature, present or
future, howsoever evidenced, created, incurred, acquired or owing, that arise
under this Agreement, the Notes or the other Loan Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, and (ii) all interest (including, to the extent permitted
by law, all post-petition interest), charges, expenses, fees, attorneys' fees
and any other sums payable by the Borrower to the Agent, the Issuing Bank or any
Lender under this Agreement, or any of the other Loan Documents (other than any
interest payments or lease payments made in connection with the End Loaded Lease
Facility).
"Debt" shall mean, with respect to any Person or group of Persons,
without duplication, (i) all indebtedness of such Person for money borrowed,
(ii) all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not
matured), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iv) all obligations of such Person to pay
the deferred purchase price of property or services (including earnouts and
other similar contingent obligations, calculated in accordance with Generally
Accepted Accounting Principles), other than trade payables, (v) 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), (vi) all Capital Lease
Obligations of such Person, (vii) all monetary obligations and amounts owing of
such Person under the End Loaded Lease Facility or any other synthetic or end
loaded lease facility of such Person, (viii) the net termination obligations of
such Person under any Swap Agreement or other interest rate protection or
hedging arrangement, calculated as of any date as if such agreement or
arrangement were terminated as of such date, (ix) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any capital stock or other equity securities that, by their stated terms (or by
the terms of any equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, mature or are
mandatorily redeemable, or are redeemable at the option of the holder thereof,
in whole or in part, (x) all indebtedness referred to in clauses (I) through
(IX) above secured by any lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by such Person or is nonrecourse to the credit of such Person, and (xi)
any Contingent Obligation of such Person to the extent that such Contingent
Obligation in accordance with Generally Accepted Accounting Principles would be
<PAGE> 9
set forth in a specific Dollar amount on the liability side of a balance sheet,
and excluding any guaranty of Debt related to an operating lease, provided that
such guaranty will be included as a Contingent Obligation if the guaranty is
called and there is not a corresponding forgiveness of lease payments in like
amounts commencing in the order due, and provided, further, that Contingent
Obligations of such Person under the End Loaded Lease Facility shall constitute
"Debt" of such Person.
"Default" shall mean any event that, with the passage of time or giving
of notice, or both, would constitute an Event of Default.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDAR" shall mean, for any Person for any fiscal quarter, (i)
Consolidated Net Income, plus (ii) the sum of Interest Expense, taxes,
depreciation, amortization, and Facility Rent Expense.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the OECD or a political subdivision of any
such country and having total assets in excess of $1,000,000,000, provided that
such bank is acting through a branch or agency located in the United States, in
the country under the laws of which it is organized or in another country that
is also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual fund, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $250,000,000, (v) any Affiliate of an existing Lender
or (vi) any other Person (other than an Affiliate of any Borrower) approved by
the Agent and the Borrower, which approval shall not be unreasonably withheld.
"Employee Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA maintained by the Borrower or any of its
Subsidiaries.
"End Loaded Lease Commitments" shall mean, with respect to any Lender
at any time, the amount set forth under such Lender's name on Schedule 1.1 to
the End Loaded Lease Credit Agreement or, if such Lender has entered into one or
more Assignment and Acceptances, the amount set forth for such Lender at such
time in the Register maintained by the Agent pursuant to Section 9.9(a) of the
End Loaded Lease Credit Agreement as such Lender's aggregate "End Loaded Lease
Commitment", as such amount may be reduced at or prior to such time pursuant to
the terms of the End Loaded Lease Credit Agreement.
"End Loaded Lease Credit Agreement" shall mean the credit agreement,
dated the Amendment Effective Date, among the Owner Trustee, the lenders party
thereto and First Union, as agent, together with any amendments, modifications,
and supplements thereto, any replacements, renewals, extensions, restatements
and confirmations thereof, and any substitutes therefor, in whole or in part.
"End Loaded Lease Facility" shall mean a $35,000,000 end loaded lease
financing facility arranged by First Union Capital Markets for the Company, as
embodied in the Participation Agreement and the other Operative Agreements (as
defined in the Participation Agreement).
"End Loaded Lease Loans" shall mean loans made by the lenders party
thereto pursuant to the End Loaded Lease Credit Agreement.
<PAGE> 10
"End Loaded Lease Notes" shall mean the promissory notes of the
Borrower executed and delivered to the lenders party thereto with End Loaded
Lease Commitments pursuant to the End Loaded Lease Credit Agreement.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than internal
reports prepared by the Borrower or any of its Subsidiaries solely in the
ordinary course of its business and not in response to any third party action or
request of any kind) or proceedings relating in any way to any Environmental Law
or any permit issued, or any approval given, under any such Environmental Law
(hereinafter, "Claims"), including, without limitation, (i) any and all Claims
by Governmental Authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law and (ii) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Substances or arising from alleged injury or threat of
injury to human safety, health or the environment, (iii) any violation or
alleged violation of any Environmental Law or other legal requirement by
Borrower or its Subsidiaries with respect to any property owned, leased or
operated by Borrower or its Subsidiaries (in the past, currently or in the
future) and/or (iv) any Claim arising out of any presence, suspected presence,
generation, treatment, storage, disposal, transport, movement, release,
suspected release or threatened release of any Hazardous Material in, on, to or
from any property (or any part thereof including without limitation the soil and
groundwater thereon and thereunder) owned, leased or operated by Borrower or its
Subsidiaries (in the past, currently or in the future).
"Environmental Laws" shall mean any and all applicable laws, as in
effect from time to time at the effective time of any applicable representation,
warranty, covenant or indemnity, including, without limitation, federal, state
and local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, and orders of courts or Governmental Authorities, relating to the
protection of human health or the environment, including, but not limited to,
requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Substances. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.) ("RCRA"), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Safe Drinking Water Act (42 U.S.C. ss. 300f, et seq.), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. ss. 651 et seq.), to the extent that it regulates exposure to
Hazardous Substances, ("OSHA"), as such laws have been amended or supplemented,
and any analogous federal, state or local statutes, as in effect from time to
time at the effective time of any applicable representation, warranty, covenant
or indemnity, and the rules and regulations promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan (as defined in SECTION 4.16); (b) a withdrawal by the Borrower or any of
its Subsidiaries from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial
<PAGE> 11
employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete or partial
withdrawal by the Borrower or any of its Subsidiaries from a Multiemployer Plan;
(d) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Qualified Plan or Multiemployer
Plan; (g) the imposition of any liability under Title IV of ERISA, other than
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any of its Subsidiaries; (h) an
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Internal Revenue Code with respect to any
Qualified Plan; (i) the Borrower or any of its Subsidiaries engages in or
otherwise becomes liable for a nonexempt Prohibited Transaction; or (j) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Internal Revenue Code by any
fiduciary with respect to any Qualified Plan for which the Borrower or any of
its Subsidiaries may be directly or indirectly liable.
"Event of Default" shall have the meaning specified in ARTICLE VII
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"Existing Loans" shall have the meaning assigned to such term in
SECTION 2.1(A).
"Facility" shall mean a hospital or other health care facility,
together with other ancillary businesses, all buildings and improvements
associated therewith, that are owned or leased in whole or in part, by the
Borrower or any of its Subsidiaries.
"Facility Rent Expense" shall mean, for any fiscal quarter, all amounts
paid, payable or accrued during such fiscal quarter by the Borrower and its
Subsidiaries on a consolidated basis with respect to all operating leases of
hospitals and the operating lease of any other Facility with a Lease Expense in
excess of $200,000 annually; provided that Facility Rent Expense shall exclude
any amounts that constitute Debt pursuant to clause (vii) of the Debt
definition.
"Fair Market Value" shall mean, with respect to any capital stock or
other ownership interests issued or given by the Borrower or any of its
Subsidiaries in connection with a Permitted Acquisition, (i) in the case of
common stock of the Borrower that is then designated as a national market system
security by the National Association of Securities Dealers, Inc. ("NASDAQ") or
is listed on a national securities exchange, the average of the last reported
bid and ask quotations or prices reported thereon for such common stock or (ii)
in all other cases, the determination of the fair market value thereof in good
faith by a majority of members of the board of directors of the Borrower or such
Subsidiary with no direct or indirect (other than by virtue of being a director)
economic interest in such Permitted Acquisition, in each case effective as of
the close of business on the Business Day immediately preceding the closing date
of such Permitted Acquisition.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to 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 for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of Richmond, or
if such rate is not so published on the relevant Business Day, the
<PAGE> 12
average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
"Fee Letter" shall mean the letter, dated March 11, 1998, as amended,
from First Union and First Union Capital Markets to the Borrower, relating to
the fees payable to First Union Capital Markets as of the Amendment Effective
Date for its own account and the administrative fee payable to the Agent from
time to time for its own account, the obligations under which have been assumed
by the Borrower.
"Financial Condition Certificate" shall mean a fully completed
certificate, with the attachments required thereby, in the form of EXHIBIT E.
"Financials" or "Financial Statements" shall mean the audited
consolidated balance sheet of the Borrower and its Subsidiaries as of December
31, 1996, 1995 and 1994, and related statements of operations, stockholders'
equity and cash flows for the fiscal years then ended, together with the opinion
of Ernst & Young LLP thereon; and (ii) the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries as of December 31, 1997 and the related
statements of operations, stockholders' equity and cash flows for the six-month
period then ended.
"Financing Statements" shall mean financing statements approved for
filing in accordance with the applicable adopted version of the Uniform
Commercial Code and all other titles, documents and certificates that the Agent
has required or may reasonably require from the Borrower or any Guarantor to
describe and perfect the security interests created hereunder or under the other
Loan Documents, and all assignments thereof and amendments thereto, in form and
substance satisfactory to the Agent.
"First Union" shall mean First Union National Bank, a national banking
association, and its successors and assigns.
"First Union Capital Markets" shall mean First Union Capital Markets, a
division of Wheat First Securities, Inc.
"Fixed Charges" shall mean, as of the last day of any fiscal quarter,
(a) Scheduled Principal Payments, plus (b) the sum of the following as of the
fiscal quarter then ending: (i) Annualized Interest Expense payable in cash,
(ii) Annualized Facility Rent Expense, (iii) actual Capital Expenditures
(excluding, for measurement dates ending on or prior to September 30, 1998,
aggregate acquisition expenditures and current building programs incurred on or
prior to December 31, 1997 at Parkview Regional Hospital, Mexia, Texas and
Colorado Plains Medical Center, Fort Morgan, Colorado, not to exceed $3,200,000)
for the four fiscal quarters then ending and (iv) Annualized Cash Taxes.
"Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles, as recognized by the American Institute of
Certified Public Accountants, consistently applied and maintained on a
consistent basis for the Borrower and its Subsidiaries on a consolidated basis
throughout the period indicated and consistent with the financial practice of
the Borrower and its Subsidiaries after the date hereof.
"GTCR Fund IV" shall mean the Golder, Thoma, Cressy, Rauner Fund IV,
L.P.
"Governmental Authority" means the federal government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or
<PAGE> 13
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guarantors" shall mean any Subsidiary of the Borrower that jointly and
severally guarantees the Credit Obligations of the Borrower. As of the Amendment
Effective Date, the Guarantors shall include, without limitation,
Blythe-Province, Inc., Brim Equipment Services, Inc., Brim Fifth Avenue, Inc.,
Brim Healthcare, Inc., Brim Hospitals, Inc., Brim Outpatient Services, Inc.,
Brim Pavilion, Inc., Brim Services Group, Inc., Care Health Company, Inc.,
Integrated Health Management, LLC, Mexia Principal Healthcare Limited
Partnership, Mexia-Principal, Inc., Palestine Limited Partnership,
Palestine-Principal G.P., Inc., Palestine-Principal, Inc., Principal Hospital
Company of Nevada, Inc., Principal Knox Company, PHC-Eunice, Inc., PHC-Lake
Havasu, Inc., PHC of Delaware, Inc. and Principal-Needles, Inc.
"Guaranty Agreement" shall mean the Amended and Restated Guaranty
Agreement dated as of the date hereof, executed by each Guarantor in favor of
the Agent, whereby each Guarantor guarantees to the Lenders the payment and
performance of the Credit Obligations, together with any amendments, accessions,
modifications and supplements thereto, any replacements, renewals, extensions,
restatements and confirmations thereof, and any substitutes therefor, in whole
or in part.
"Guaranty Documents" shall mean the Guaranty Agreement and the security
agreements, pledge agreements, collateral assignments of agreements and any
other documents or agreements between the Agent and any of the Guarantors,
whereby the Guarantors have pledged Collateral to the Agent as security for the
obligations of the Guarantors under the Guaranty Agreement, including, without
limitation, the Security and Pledge Agreement and the Mortgages, together with
any amendments, modifications, accessions and supplements thereto, any
replacements, renewals, extensions, restatements and confirmations thereof, and
any substitutes therefor, in whole or in part.
"Guaranty Obligations" shall mean the obligations of the Guarantors
pursuant to the Guaranty Agreement and the Guaranty Documents.
"HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.
"Hazardous Substances" means any substances or materials (i) that are,
at any time of determination, defined as hazardous wastes, hazardous substances,
pollutants, contaminants or toxic substances under any Environmental Law; (ii)
that are toxic, explosive, corrosive, flammable, infectious, radioactive,
mutagenic or otherwise hazardous and are, at any time of determination,
regulated by any Governmental Authority; (iii) the presence of which requires
investigation or remediation under any Environmental Law or common law; or (iv)
that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"IRS" shall mean the Internal Revenue Service and any successor
thereto.
"Indemnified Costs" shall have the meaning assigned to such term in
SECTION 10.7.
"Indemnified Person" shall have the meaning assigned to such term in
SECTION 10.7.
"Intercompany Management Agreements" shall mean and include any and all
management agreement now or hereafter existing between the Borrower and any of
its
<PAGE> 14
Subsidiaries or between such Subsidiaries under which the Borrower or a
Subsidiary receives management, consulting or other similar fees for services
rendered thereunder, and includes without limitation those management agreements
described on SCHEDULE 6.20 attached hereto, together with all amendments,
supplements and restatements thereof.
"Interest Expense" shall mean, for any fiscal quarter, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
fiscal quarter (including, without limitation, interest expense attributable to
Capital Lease Obligations), determined in accordance with Generally Accepted
Accounting Principles, and all lease payments made by the Borrower and its
Subsidiaries in connection with the End Loaded Lease Facility.
"Interest Period" shall have the meaning assigned to such term in
SECTION 2.8.
"Interest Rate Calculation Worksheet" shall mean a fully completed
worksheet in the form of Attachment B to EXHIBIT C.
"Interests" shall mean all ownership or profit-sharing interests
(howsoever designated) in any general or limited partnership, limited liability
company or joint venture, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Internal Revenue Code" or "IRC" shall mean the Internal Revenue Code
of 1986, as amended from time to time, applicable United States Treasury
Department regulations promulgated under the IRC, published administrative
positions of the Internal Revenue Service and any judicial decisions related
thereto.
"Issuing Bank" shall mean First Union, in its capacity as issuer of the
Letters of Credit, and its successors and assigns in such capacity.
"Joint Venture EBITDAR" shall mean, for any fiscal quarter,
Consolidated EBITDAR attributable to any Non-Wholly Owned Consolidated
Subsidiary of the Borrower or any other of its Subsidiaries for such fiscal
quarter, but excluding EBITDAR attributable to the Palestine Limited
Partnership.
"L/C Participant" shall have the meaning assigned to such term in
SECTION 2.18(C).
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the Adjusted LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next higher 1/100 of one percentage
point) obtained by dividing (a) the rate of interest determined by Agent to be
the rate for deposits in U.S. Dollars for the applicable Interest Period which
appears on the Telerate Page 3750 or successor page or successor service at
approximately 11:00 a.m. London time, two (2) Business Days prior to the first
date of the applicable Interest Period, or if such rate is not available, the
rate per annum at which, in the reasonable opinion of Agent, U.S. Dollars
substantially in the amount of the corresponding Borrowing are being offered to
leading reference banks in the London interbank market for settlement at
approximately 11:00 a.m. London time, two (2) Business Days prior to the first
date of the applicable Interest Period, by (b) the percentage equal to one
hundred percent (expressed as a decimal fraction) minus the Reserve Requirement
for such Interest Period. Each calculation by the Agent of the applicable LIBOR
Rate shall be conclusive and binding for all purposes, absent bad faith or
manifest error.
<PAGE> 15
"Landlord Consents" shall mean (i) a waiver and consent from each
landlord with respect to all Facility Leased Properties of the Borrower and its
Subsidiaries and (ii) all other landlord consents that the Agent or the Required
Lenders may reasonably require of the Borrower or any of its Subsidiaries from
time to time in respect of amendments, modifications or renewals of the leases
referred to in clause (i) above or in respect of any other leases to which the
Borrower or any of its Subsidiaries is now or hereafter a party, in each case in
form and substance reasonably satisfactory to the Agent, together with any
amendments, modifications and supplements thereto and restatements thereof, in
whole or in part.
"Lease Expense" shall mean, for any fiscal quarter, all amounts paid,
payable or accrued during such fiscal quarter by the Borrower and its
Subsidiaries on a consolidated basis with respect to all leases and rental
agreements, including, without limitation, all amounts paid as Facility Rent
Expense, of the Borrower and its Subsidiaries, other than Capital Leases,
determined in accordance with Generally Accepted Accounting Principles; provided
that Lease Expense shall exclude any amounts that constitute Debt pursuant to
clause (vii) of the Debt definition.
"Leased Properties" shall mean the real properties leased and occupied
by the Borrower and its Subsidiaries, as of the date hereof and at any time
hereafter and consisting, as of the date hereof, of the properties set forth in
SCHEDULE 4.8 hereof.
"Lender" shall mean each financial institution signatory hereto and
each other financial institution that becomes a "Lender" hereto pursuant to
SECTION 10.5, and their permitted successors and assigns.
"Lending Office" shall mean, with respect to any Lender, the branch or
branches (or Affiliates) from which any of such Lender's Loans are made or
maintained.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit at such time
and (ii) the aggregate amount of all Reimbursement Obligations at such time.
"Letter of Credit Request" shall have the meaning assigned to such term
in SECTION 2.18(B).
"Letters of Credit" shall have the meaning assigned to such term in
SECTION 2.18(A).
"Line of Business" shall mean the business of owning or operating
nonurban hospitals and managing hospitals and engaging in businesses ancillary
to the aforesaid line of business that enhance or support it and that are not
materially different from the foregoing.
"Loan Documents" shall mean and collectively refer to this Agreement,
the Notes, the Security and Pledge Agreement, the Guaranty Documents, the
Financing Statements, the Mortgages, the Landlord Consents, the Letters of
Credit, the Fee Letter, Swap Agreements (if any) between the Borrower and any
Lender, and any and all other material agreements and instruments, including,
without limitation, notes, guaranties, mortgages, deeds to secure debt, deeds of
trust, chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, security agreements, trust account agreements heretofore, now or
hereafter executed by or on behalf of the Borrower or any of its Subsidiaries
and heretofore, now or hereafter delivered to the Agent or any Lender with
respect to this Agreement, and in each case, together with any amendments,
modifications and supplements thereto, any replacements, renewals, extensions
and restatements thereof, and any substitutes therefor, in whole or in part.
<PAGE> 16
"Loans" shall mean and collectively refer to the Revolving Credit Loans
and the Swingline Loans.
"Material Adverse Effect" or "Material Adverse Change" shall mean,
subject to any applicable cure or grace periods, a material adverse effect upon,
or a material adverse change in, any of (a) the financial condition, operations,
business, properties or prospects of the Borrower and its Subsidiaries, taken as
a whole; (b) the ability of the Borrower or any of its Subsidiaries to perform
its material obligations under any Material Loan Document; (c) the legality,
validity or enforceability of any Material Loan Document; (d) the perfection or
priority of the liens of the Agent granted under the Material Loan Documents or
the rights and remedies of the Agent or the Lenders under the Material Loan
Documents; or (e) the condition or value of any portion of the Collateral, which
compared to the total Collateral, is material (other than market fluctuations in
the values of such Collateral); provided, that a material adverse effect or a
material adverse change caused solely by the Agent's or the Lenders' failure to
file continuation statements shall not be a Material Adverse Effect or a
Material Adverse Change for purposes of this Agreement.
"Material Loan Documents" shall mean and collectively refer to this
Agreement, the Notes, the Security and Pledge Agreement, the Guaranty Documents,
the Financing Statements, the Mortgages, the Landlord Consents, the Letters of
Credit, the Fee Letter, Swap Agreements (if any) between the Borrower and any
Lender, and in each case, together with any amendments, modifications and
supplements thereto, any replacements, renewals, extensions and restatements
thereof, and any substitute therefor, in whole or in part.
"Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC
ss.ss. 1396 et seq., or elsewhere) affecting the medical assistance program
established by Title XIX of the Social Security Act, and any statutes succeeding
thereto; (ii) all applicable provisions of all federal rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (i) above; (iii) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (iii) above,
in each case as may be amended, supplemented or otherwise modified from time to
time.
"MediCal Regulations" shall mean collectively, all California state
statutes (whether set forth in Cal. Welf. & Inst. Code ss.ss. 14000 et seq., or
elsewhere) affecting the health insurance program for the aged and disabled
established in connection with Title XIX of the Social Security Act, and any
statutes succeeding thereto; together with all applicable provisions of all
rules, regulations, manuals and orders and administrative, reimbursement and
other guidelines having the force of law of all Governmental Authorities
(including without limitation, the California Department of Health Services)
promulgated pursuant to or in connection with any of the foregoing having the
force of law, in each case as may be amended, supplemented or otherwise modified
from time to time.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC ss.ss. 1396
et seq., or elsewhere) affecting the health
<PAGE> 17
insurance program for the aged and disabled established by Title XVIII of the
Social Security Act and any statutes succeeding thereto; together with all
applicable provisions of all rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law of
all Governmental Authorities (including without limitation, Health and Human
Services ("HHS"), HCFA, the Office of the Inspector General for HHS, or any
Person succeeding to the functions of any of the foregoing) promulgated pursuant
to or in connection with any of the foregoing having the force of law, in each
case as may be amended, supplemented or otherwise modified from time to time.
"Mortgages" shall mean all fee and leasehold mortgages, deeds of trust
and similar instruments pursuant to which the Borrower or any Guarantor grants
to the Agent, for the benefit of the Lenders, a mortgage lien, or an assignment
of any mortgage lien obtain by such Person from another Person, to secure any or
all of the Credit Obligations or the Guaranty Obligations, and shall include,
without limitation, the deeds of trust and security agreements dated as of
December 17, 1996, July 31, 1997 or August 11, 1997, executed by the Borrower
and/or certain of its Subsidiaries with respect to the parcels of Realty located
at (i) General Hospital, Eureka, Humboldt County, California; (ii) Palo Verde
Community Hospital, Blythe, Riverside County, California; (iii) Parkview
Regional Hospital, Mexia, Limestone County, Texas; (iv) Colorado Plains Medical
Center, Fort Morgan, Morgan County, Colorado; (v) Memorial Hospital, Palestine,
Anderson, Leon and Houston Counties, Texas; (vi) Starke Memorial Hospital, Knox,
Starke County, Indiana, (vii) Brim headquarters building, Portland, Multnomah
County, Oregon, (viii) Colorado River Medical Center, Needles, San Bernardino
County, California (formerly known as Needles Desert Community Hospital) and
(ix) Ojai Valley Community Hospital, Ojai, Ventura County, California, in all
cases together with any amendments, modifications and supplements thereto, any
replacements, renewals, extensions and restatements thereof, and any substitutes
therefor, in whole or in part.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Borrower or any of its
Subsidiaries is required to make contributions.
"Non-Landlord Consent EBITDAR" shall mean, for any fiscal quarter,
Consolidated EBITDAR attributable to all Facility Leased Properties of the
Borrower for which a Landlord Consent has not been delivered to the Agent
pursuant to Section 5.13.
"Non-Wholly Owned Subsidiary" shall mean any Subsidiary of which less
than one- hundred percent (100%) of the outstanding equity is, directly or
indirectly, owned by the Borrower.
"Notes" shall mean the Revolving Credit Notes and the Swingline Note.
"Notice of Borrowing" shall have the meaning assigned to such term in
SECTION 2.2(B).
"Notice of Conversion/Continuation" shall have the meaning assigned to
such term in SECTION 2.9(B).
"Notice of Swingline Borrowing" shall have the meaning given to such
term in SECTION 2.2(F).
"Original Credit Agreement" shall have the meaning given to such term
in the recitals hereof.
"Original Credit Agreement Date" shall mean December 17, 1996.
<PAGE> 18
"Original Lenders" shall mean the banks and other financial
institutions that are "Lenders" (within the meaning of the Original Credit
Agreement) under the Original Credit Agreement as of the Amendment Effective
Date.
"OSHA" shall mean the Occupational Safety and Health Act, as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
"Owner Trustee" shall mean First Security Bank, National Association,
in its capacity as owner trustee under the End Loaded Lease Facility.
"Palestine Limited Partnership" shall mean Palestine Principal
Healthcare Limited Partnership, a Texas limited partnership and a Subsidiary of
the Borrower.
"Palestine Limited Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of the Palestine Principal Healthcare
Limited Partnership dated as of June 30, 1997 between PHC of Delaware, Inc., as
original general partner, Palestine-Principal G.P., Inc., as successor general
partner, and Palestine-Principal, Inc., a Tennessee corporation and a Subsidiary
of the Borrower, and Mother Frances Hospital Regional Health Care Center, as
limited partners.
"Palestine Limited Partnership Note" shall mean the promissory note of
the Palestine Limited Partnership dated July 26, 1996, in the principal amount
of $13,700,000, payable to the Borrower, together with any supplements,
amendments, restatements or modifications thereof to the extent approved in
writing by the Required Lenders.
"Participant" shall mean any Person, now or at any time hereafter,
participating with any Lender in the Loans pursuant to this Agreement, and its
permitted successors and assigns.
"Participation Agreement" shall mean the Participation Agreement, dated
the Amendment Effective Date, among the Borrower, as construction agent and
lessee, the various parties from time to time party thereto as guarantors, the
Owner Trustee, the various banks and other lending institutions from time to
time party thereto as lenders, the various banks and other lending institutions
party thereto as holders, and First Union, as agent.
"Pension Plan" shall mean any "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA maintained by the Borrower or any of its
Subsidiaries (other than any Multiemployer Plan that is subject to the
provisions of Title IV of ERISA).
"Permitted Acquisition" shall mean (a) the acquisition of Havasu
Samaritan Regional Hospital on or before May 31, 1998 for an Acquisition Amount
not to exceed $110,000,000 or (b) an Acquisition approved in writing by the
Required Lenders pursuant to SECTIONS 5.12 and 6.7; provided however, that the
approval of the Required Lenders shall not be required for (i) any Acquisition
of a Facility for which the Acquisition Amount is $25,000,000 or less, or (ii)
any lease of a Facility with a present value (calculated using a reasonable
discount rate determined in good faith by the Borrower and consistent with the
projections provided pursuant to SECTION 5.12(C)(III)) of aggregate lease
payments and related asset acquisition costs of $15,000,000 or less, in each
case subject to an aggregate Acquisition Amount of $40,000,000 for all
Acquisitions consummated during any four consecutive fiscal quarters.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, an Acquisition shall be a Permitted Acquisition only if all
requirements of SECTIONS 5.11 (if any new Subsidiaries are acquired or created
in connection with such Acquisition), 5.12, 6.2 (if any Debt is assumed in
connection with such Acquisition) and 6.3 (if any Liens are incurred in
connection with such
<PAGE> 19
Acquisition) are met with respect thereto.
"Permitted Liens" shall mean any of the following liens, restrictions
or encumbrances securing any liability or indebtedness of the Borrower or any of
its Subsidiaries on, or otherwise affecting, any of the Borrower's or such
Subsidiary's property, real or personal, whether now owned or hereafter
acquired:
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) Liens granted for the benefit of the lenders to the End Loaded
Lease Facility pursuant to such facility;
(c) Liens for taxes, assessments or other governmental charges
that are not delinquent or remain payable without any penalty or that are being
contested in good faith and with due diligence by appropriate proceedings,
provided that if reasonably requested by the Agent, the Borrower or such
Subsidiary has established reserves with respect thereto in accordance with
Generally Accepted Accounting Principles;
(d) Liens upon property leased under a Capital Lease (including
sale/leaseback transactions permitted by SECTION 6.17) and placed upon such
property at the time of, or within sixty (60) days after, the commencement of
the lease thereof to secure the lease payments under such Capital Lease,
provided that any such lien (i) shall not encumber any other property of the
Borrower or any of its Subsidiaries, and (ii) shall not exceed the total of such
lease payments;
(e) Liens set forth on SCHEDULE 1.1(A) attached hereto (as
modified from time to time in accordance with SECTION 5.17 in connection with
Acquisitions or otherwise), provided that the Debt related to such liens is not
increased above the amount then outstanding;
(f) Purchase money liens incurred or assumed in the purchase of
equipment permitted under SECTION 6.14 hereof, provided that any such lien (i)
attaches to such asset concurrently with or within ten (10) days after the
acquisition thereof, (ii) shall not encumber any other property of the Borrower
or any of its Subsidiaries and (iii) shall not exceed the purchase price of such
asset;
(g) Assignment Restrictions;
(h) Easements, rights of way, restrictive covenants, conditions,
zoning restrictions and other similar title, survey or other encumbrances on
real estate that do not materially impair the current use and value of the
property to which they relate;
(i) Carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like non-consensual liens arising in the
ordinary course of business that are not overdue for a period of more than
thirty (30) days, or, if overdue for more than thirty (30) days, (i) which are
being contested in good faith and by appropriate proceedings; and (ii) for which
adequate reserves in accordance with Generally Accepted Accounting Principles
have been established on the books of the Borrower or appropriate Subsidiary;
provided however, that any such landlord liens shall be subject to the Landlord
Consents to the extent applicable;
(j) Pledges or deposits in connection with workers' compensation
insurance, unemployment insurance and like matters;
(k) Deposits to secure the performance of bids, trade contracts
(other than for
<PAGE> 20
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(l) Liens in respect of any writ of execution, attachment,
garnishment, judgment or award in an amount less than $500,000, the time for
appeal or petition for rehearing of which shall not have expired, or in respect
of which an appeal or appropriate proceeding for review is being prosecuted in
good faith and a stay of execution pending such appeal or proceeding for review
has been secured;
(m) Liens of a lessor with respect to an operating lease of
equipment or machinery; and
(n) Any other liens or encumbrances as the Required Lenders may
approve in writing from time to time.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, limited liability company, an organization, a business, an
individual, a trust or a government or political subdivision thereof or any
government agency or any other legal entity.
"Prime Rate" shall mean the per annum interest rate publicly announced
from time to time by First Union from its principal office in Charlotte, North
Carolina, to be its Prime Rate, which may not necessarily be its best lending
rate, as adjusted to conform to changes as of the opening of business on the
date of any such change in the Prime Rate. In the event First Union shall
abolish or abandon the practice of announcing its Prime Rate or should the same
be unascertainable, the Agent shall designate a comparable reference rate that,
upon the Borrower's consent (which shall not be unreasonably withheld), shall be
deemed to be the Prime Rate under this Credit Agreement and the other Loan
Documents.
"Pro Rata Share" of any amount shall mean, with respect to any Lender
at any time, the product of (i) such amount, multiplied by (ii) such Lender's
Revolving Credit Percentage.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or
(ii) Section 4975(c) of the Internal Revenue Code that is not exempt by reason
of Section 4975(c) or 4975(d).
"Projections" shall mean the financial projections delivered to the
Agent by the Borrower pursuant to SECTION 4.5(B) hereof.
"Purchasing Lender" shall have the meaning assigned to such term in
SECTION 2.17.
"Realty" shall mean all of the right, title and interest of the
Borrower or any of its Subsidiaries in and to land, improvements and fixtures,
including any leasehold interests (whether as lessor or lessee).
"Refunded Swingline Loans" shall have the meaning given to such term in
SECTION 2.2(G).
"Register" shall have the meaning given to such term in
SECTION 10.5(C).
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 207, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation G and having
substantially the same function.
<PAGE> 21
"Regulation T" shall mean Regulation T promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 220, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation T and having substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Reimbursement Obligation" shall have the meaning assigned to such term
in SECTION 2.18(D).
"Replaced Lender" shall have the meaning assigned to such term in
SECTION 2.19.
"Replacement Effective Date" shall have the meaning assigned to such
term in SECTION 2.19.
"Replacement Lender" shall have the meaning assigned to such term in
SECTION 2.19.
"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA (other than an event for which notice is waived under the ERISA
regulations).
"Required Lenders" shall mean, at any time, the Lenders owning or
holding 51% or more of the sum of the then aggregate principal amount of the
Revolving Credit Commitments then outstanding (or after the termination of the
Commitments, the aggregate at such time of all outstanding Loans and Letter of
Credit Outstandings). For purposes of this definition, the Letter of Credit
Outstandings shall be considered to be owed to the Lenders according to their
Revolving Credit Percentages.
"Requirement of Law" means, as to any Person, the charter, articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any statute, law, treaty, rule, regulation, order,
decree, writ, injunction or determination of any 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.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) applicable two (2) Business Days
before the first day of such Interest Period determined by the Agent to be in
effect on such day, as provided by the Board of Governors of the Federal Reserve
System (or any successor governmental body), applied for determining the maximum
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to the Lenders under Regulation D
with respect to "Eurocurrency liabilities" within the meaning of Regulation D,
or under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding.
"Revolving Credit Commitment" shall mean, with respect to any Lender at
any time, the amount set forth under such Lender's name on its signature page
hereto under the caption
<PAGE> 22
"Revolving Credit Commitment" or, if the Borrower has converted End Loaded Lease
Commitments into Revolving Credit Commitments pursuant to SECTION 2.9(D) or, if
such Lender has entered into one or more Assignment and Acceptances, the amount
set forth for such Lender at such time in the Register maintained by the Agent
pursuant to SECTION 10.5(C) as such Lender's "Revolving Credit Commitment," as
such amount may be reduced at or prior to such time pursuant to the terms
hereof.
"Revolving Credit Facility" shall mean the revolving line of credit
established by the Lenders under SECTION 2.1(B).
"Revolving Credit Facility Maturity Date" shall mean March 31, 2003.
"Revolving Credit Facility Termination Date" shall mean such earlier
date of March 31, 2003, or termination of the Total Revolving Credit Commitment
in accordance with SECTION 2.4(D) or SECTION 8.1.
"Revolving Credit Loans" shall have the meaning assigned to such term
in SECTION 2.1(B).
"Revolving Credit Notes" shall mean the promissory notes of the
Borrower in substantially the form of EXHIBIT A-1, executed and delivered to the
Lenders with Revolving Credit Commitments pursuant to SECTION 2.3(B) or, in
connection with conversions of End Loaded Lease Commitments into Revolving
Credit Commitments, pursuant to SECTION 2.9(D) or, in connection with an
Assignment and Acceptance, pursuant to SECTION 10.5(D), together with any
amendments, modifications and supplements thereto and restatements thereof, in
whole or in part.
"Revolving Credit Percentage" shall mean, with respect to any Lender at
any time, a fraction (expressed as a percentage) the numerator of which is the
Revolving Credit Commitment of such Lender at such time and the denominator of
which is the Total Revolving Credit Commitment at such time; provided that if
the Revolving Credit Percentage of any Lender is to be determined after the
Revolving Credit Commitments have been terminated, then such Revolving Credit
Percentage shall be determined immediately prior (and without giving effect) to
such termination.
"Scheduled Principal Payments" shall mean all scheduled principal
payments on long-term Debt due and payable in the subsequent four consecutive
fiscal quarters, including, without limitation, the aggregate principal amount
of the Loans due during such period under SECTION 2.5(C) (as such amounts may
have been previously adjusted in accordance with the terms of this Agreement as
a result of prior prepayments on the Loans, including adjustments made pursuant
to SECTION 2.5(A)).
"Security and Pledge Agreement" shall mean the Amended and Restated
Security and Pledge Agreement, dated as of the date hereof, between the
Borrower, the Guarantors and the Agent, whereby the Borrower and the Guarantors
have granted to the Agent a security interest in certain Collateral described
therein as security for the Credit Obligations of the Borrower and the Guaranty
Obligations of the Guarantors, together with any amendments, accessions,
modifications and supplements thereto, any replacements, renewals, extensions,
restatements and confirmations thereof, and any substitutes therefor, in whole
or in part.
"Selling Lender" shall have the meaning assigned to such term in
SECTION 2.17.
"Senior Officer" shall mean any officer or director of the Borrower
(including, without
<PAGE> 23
limitation, the Chief Executive Officer, Chief Financial Officer, Vice
President-Controller, Vice President-Finance and in-house General Counsel) or
any Subsidiary, or the Chief Executive Officer, Chief Financial Officer or the
Chief Nursing Officer of any Facility.
"Solvent" shall mean, as to any Person on any particular date, that
such Person (i) has capital reasonably sufficient to carry on its business as
presently conducted and all business in which it is about to engage, (ii) is
able to pay its debts as they mature, (iii) owns property having a fair saleable
value on a going concern basis that is greater than the amount required to pay
its probable liability on existing debts as they mature (including known
reasonable contingencies and contingencies that should be included in notes of
the financial statements of such Person pursuant to Generally Accepted
Accounting Principles considering all financing alternatives and potential asset
sales reasonably available to such Person), and (iv) does not intend to, and
does not believe that it will, incur debts or probable liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or nonvoting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Subordinated Debt" shall mean unsecured Debt of the Borrower or any of
its Subsidiaries that is expressly subordinated and made junior to the payment
and performance of the Credit Obligations and the Guaranty Obligations on terms
(including, without limitation, covenants, terms of subordination and payment
terms) approved in writing by the Required Lenders, including without limitation
the Intercompany Management Agreements.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, or other entity of which more than 50% of
the Interests or voting power, is at the time, directly or indirectly, owned by
any Person or one or more of its Subsidiaries (irrespective of whether, at the
time, the ownership interests or Stock of any other class or classes of such
entity or corporation shall have or might have voting power by reason of the
happening of any contingency). When used without reference to a parent, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower.
"Swap Agreement" shall mean any and all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance or other hedging arrangements and all other similar agreements or
arrangements between the Borrower and any Lender designed to protect against
fluctuations in interest rates.
"Swingline Commitment" shall mean $5,000,000 or, if less, the aggregate
Revolving Credit Commitments at the time of determination, as such amount may be
reduced at or prior to such time pursuant to the terms hereof.
"Swingline Lender" shall mean First Union in its capacity as maker of
Swingline Loans, and its successors in such capacity.
"Swingline Loans" shall have the meaning given to such term in SECTION
2.1(C).
<PAGE> 24
"Swingline Maturity Date" shall mean the date that is five (5) Business
Days prior to the Revolving Credit Facility Maturity Date.
"Swingline Note" shall mean the promissory note of the Borrower in
substantially the form of EXHIBIT A-2, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.
"Target" shall have the meaning assigned to such term in SECTION
5.12(C)(I).
"Taxes" shall have the meaning assigned to such term in
SECTION 2.12(A).
"Total Commitment" shall mean, at any time, the sum of all Commitments
at such time.
"Total Revolving Credit Commitment" shall mean, at any time, the sum of
the Revolving Credit Commitments of all Lenders at such time.
"Total Unutilized Revolving Credit Commitment" shall mean, at any time,
the sum of the Unutilized Revolving Credit Commitments of all Lenders at such
time.
"Trust" shall mean PHC Real Estate Trust 1998-1, a single purpose
grantor trust organized under the laws of the State of Utah to consummate the
transactions contemplated by the End Loaded Lease Facility, including, without
limitation, transactions to purchase, own and improve realty pursuant to the End
Loaded Lease Facility.
"Type" shall have the meaning assigned to such term in SECTION 2.2(A).
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
Code as the same may, from time to time, be in effect in the State of North
Carolina; provided, however, in the event that, by reason of the mandatory
provisions of law, any or all of the attachment, perfection or priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than North Carolina, the term "Uniform
Commercial Code" or "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"Unutilized End Loaded Lease Commitment" shall mean, with respect to
any Lender at any time, the End Loaded Lease Commitment of such Lender less the
aggregate principal amount of all End Loaded Lease Loans made by such Lender
under the End Loaded Lease Credit Agreement that are outstanding at such time.
"Unutilized Revolving Credit Commitment" shall mean, with respect to
any Lender at any time, such Lender's Revolving Credit Commitment at such time
less the sum of (i) the aggregate principal amount of all Revolving Credit Loans
made by such Lender that are outstanding at such time and (ii) such Lender's Pro
Rata Share (calculated based on its Revolving Credit Percentage) of all Letter
of Credit Outstandings at such time. The Unutilized Revolving Credit Commitment
of the Swingline Lender shall not be reduced by the amount of any Swingline
Loans outstanding at any time.
"Unutilized Swingline Commitment" shall mean, with respect to the
Swingline Lender at any time, the Swingline Commitment at such time less the
aggregate principal amount of all Swingline Loans that are outstanding at such
time.
<PAGE> 25
1.2. Accounting Terms. Any accounting terms used in this Agreement that
are not specifically defined shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles; provided, however,
that, in the event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the
Borrower's certified public accountants, to the extent that such changes would
modify or could modify such accounting terms or the interpretation or
computation thereof, such changes shall be followed in defining such accounting
terms only from and after the date this Agreement shall have been amended to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement. In the event of any such changes,
the Borrower, the Agent and the Required Lenders shall endeavor in good faith to
promptly agree to appropriate amendments hereto.
1.3. Singular/Plural. Unless the context otherwise requires, words in
the singular include the plural and words in the plural include the singular.
1.4. Other Terms. All other terms contained in this Agreement shall,
when the context so indicates, have the meanings provided for by the Uniform
Commercial Code of the State of North Carolina to the extent the same are used
or defined therein.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans.
(a) The aggregate principal amount of all Loans (as defined in the
Original Credit Agreement) made pursuant to the Original Credit Agreement and
outstanding on the Amendment Effective Date (collectively, the "Existing Loans")
is $45,000,000. On the Amendment Effective Date, and after giving effect to the
concurrent assignment and purchase of a portion of the Existing Loans among the
Lenders in accordance with SECTION 2.17, the aggregate outstanding principal
amount of all Existing Loans shall automatically be converted to an equivalent
principal amount of Revolving Credit Loans hereunder, made by the Lenders
ratably in accordance with their respective Commitments, and for all purposes of
this Agreement shall be deemed to be Loans hereunder and entitled to the
benefits of (and subject to the terms of) this Agreement and the other Loan
Documents. All such Loans hereunder shall be of the same Type, and shall have
the same Interest Period, as the corresponding Existing Loans.
(b) Each Lender having a Revolving Credit Commitment severally
agrees, subject to and on the terms and conditions of this Agreement, to make
loans (each, a "Revolving Credit Loan" and collectively, the "Revolving Credit
Loans") to the Borrower, from time to time on any Business Day during the period
from the date hereof to the Revolving Credit Facility Termination Date, provided
that (i) the aggregate principal amount of Revolving Credit Loans at any time
outstanding for any Lender shall not exceed the difference between (1) such
Lender's Revolving Credit Commitment at such time less (2) such Lender's Pro
Rata Share (calculated based on its Revolving Credit Percentage) of the
aggregate Letter of Credit Outstandings at such time (exclusive of
<PAGE> 26
Reimbursement Obligations that are repaid with the proceeds of, and
simultaneously with the incurrence of, Revolving Credit Loans) and (ii) no
Borrowing of Revolving Credit Loans shall be made if, immediately after giving
effect thereto, the aggregate principal amount of Revolving Credit Loans, Letter
of Credit Outstandings (exclusive of Reimbursement Obligations that are repaid
with the proceeds of, and simultaneously with, the incurrence of Revolving
Credit Loans) and Swingline Loans (excluding the aggregate amount of any
Swingline Loans to be repaid with proceeds of Revolving Credit Loans made
pursuant to such Borrowing) outstanding at such time would exceed the Total
Revolving Credit Commitment, and (iii) no advance of any Borrowing of Revolving
Credit Loans shall be required if, immediately after giving effect thereto, a
Default or Event of Default exists. Subject to and on the terms and conditions
of this Agreement, the Borrower may borrow, repay and reborrow Revolving Credit
Loans until the Revolving Credit Facility Termination Date.
(c) The Swingline Lender agrees, subject to and on the terms and
conditions of this Agreement, to make loans (each, a "Swingline Loan," and
collectively, the "Swingline Loans") to the Borrower, from time to time on any
Business Day during the period from the Amendment Effective Date to but not
including the Swingline Maturity Date (or, if earlier, the Revolving Credit
Facility Termination Date), in an aggregate principal amount not exceeding the
Swingline Commitment, notwithstanding that the aggregate principal amount of
Swingline Loans outstanding at any time, when added to the aggregate principal
amount of the Revolving Credit Loans made by the Swingline Lender in its
capacity as a Lender outstanding at such time and its Letter of Credit
Outstandings at such time, may exceed its Revolving Credit Commitment at such
time; provided, however, that no Borrowing of Swingline Loans shall be made if,
immediately after giving effect thereto, the sum of the aggregate principal
amount of Revolving Credit Loans, Letter of Credit Outstandings (exclusive of
Reimbursement Obligations that are repaid with the proceeds of, and
simultaneously with, the incurrence of Revolving Credit Loans), and Swingline
Loans (excluding the aggregate amount of any Swingline Loans to be repaid with
proceeds of Revolving Credit Loans made pursuant to such Borrowing) outstanding
at such time would exceed the Total Revolving Credit Commitment. Subject to and
on the terms and conditions of this Agreement, the Borrower may borrow, repay
(including by means of a Borrowing of Revolving Credit Loans pursuant to SECTION
2.2(B)) and reborrow Swingline Loans.
2.2. Borrowings.
(a) The Loans (other than the Swingline Loans) shall, at the
option of the Borrower and subject to the terms and conditions of this
Agreement, be either ABR Loans or LIBOR Loans (each such type of Loan, a
"Type"), provided that (i) all Loans comprising the same Borrowing shall, unless
otherwise specifically provided herein, be of the same Type and (ii) the
Swingline Loans shall be made and maintained as ABR Loans at all times.
(b) In order to make a Borrowing (other than continuations of
outstanding Loans which shall be made pursuant to SECTION 2.9, mandatory
Borrowings of Revolving Credit Loans pursuant to SECTION 2.18(E), Borrowings of
Swingline Loans pursuant to SECTION 2.2(F), and Borrowings for the purpose of
repaying Refunded Swingline Loans, which shall be made pursuant to SECTION
2.2(G)), the Borrower will give the Agent written notice (by telecopier or
otherwise), not later than 12:00 noon, Charlotte, North Carolina local time, at
least three (3) Business Days prior to each Borrowing to be comprised of LIBOR
Loans and at least one (1) Business Day prior to each Borrowing to be comprised
of ABR Loans; provided, however, that requests for the Borrowing of any
Revolving Credit Loans to be made on the Amendment Effective Date may, at the
discretion of the Agent, be given later than the times specified hereinabove.
Each such notice (each, a "Notice of Borrowing") shall be irrevocable, shall be
given in the form of EXHIBIT B-1 and shall be appropriately completed to specify
(i) the aggregate principal amount and Type of the Loans to be made pursuant to
such Borrowing (and, in the case of a Borrowing of LIBOR Loans, the initial
Interest Period to be applicable thereto), (ii) the purpose and proposed use of
the proceeds of the Borrowing, and (iii) the requested date of the Borrowing
(the "Borrowing Date"), which shall be a Business Day.
<PAGE> 27
Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
hereunder (x) in the case of Borrowings of Revolving Credit Loans
comprised of ABR Loans (excluding Borrowings for the purpose of
repaying Refunded Swingline Loans, and mandatory Borrowings of
Revolving Credit Loans pursuant to SECTION 2.18(E)), shall not be less
than $1,000,000 and, if greater, shall be in an integral multiple of
$500,000 in excess thereof, (y) in the case of Borrowings of Swingline
Loans, shall not be less than $250,000 and, if greater, shall be in an
integral multiple of $100,000 in excess thereof, and (z) in the case of
Borrowings comprised of LIBOR Loans, shall not be less than $3,000,000
and, if greater, shall be in an integral multiple of $1,000,000 in
excess thereof (or, in all cases of a Borrowing of Revolving Credit
Loans, if less, in the amount of the Total Unutilized Revolving Credit
Commitment);
(ii) if the Borrower shall have failed to designate
the Type of Loans comprising a Borrowing, the Borrower shall be deemed
to have requested a Borrowing comprised of ABR Loans;
(iii) if the Borrower shall have failed to select the
duration of the Interest Period to be applicable to any Borrowing of
LIBOR Loans, then the Borrower shall be deemed to have selected an
Interest Period with a duration of one month; and
(iv) LIBOR Loans under the Revolving Credit Facility
may not be outstanding under more than five (5) separate Interest
Periods at any one time.
(c) Upon its receipt of a Notice of Borrowing, the Agent will
promptly notify each Lender of the proposed Borrowing. Not later than 2:00 p.m.,
Charlotte time, on the requested Borrowing Date, each such Lender will make
available to the Agent at its office referred to in SECTION 10.4 (or at such
other location as the Agent may designate) an amount, in Dollars and in
immediately available funds, equal to the amount of the Loan to be made by such
Lender. To the extent the relevant Lenders have made such amounts available to
the Agent as provided hereinabove, the Agent will make the aggregate of such
amounts available to the Borrower in accordance with subsection (D) below and in
like funds as received by the Agent. Each Lender may, at its option, make and
maintain any LIBOR Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make or maintain such LIBOR Loan, provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement; provided, further, that the
Borrower shall not be responsible for costs arising under SECTIONS 2.11, 2.12,
2.13 or otherwise payable hereunder resulting from any such transfer of its
Loans to the extent such costs would not otherwise be applicable to such Lender
in the absence of such transfer.
(d) The Borrower hereby authorizes the Agent to disburse the
proceeds of each Borrowing in accordance with the terms of any written
instructions from any of the Authorized Officers, provided that the Agent shall
not be obligated under any circumstances to forward amounts to any account not
listed in an Account Designation Letter. The Borrower may at any time deliver to
the Agent an Account Designation Letter listing any additional accounts or
deleting any accounts listed in a previous Account Designation Letter.
(e) Unless the Agent has received, prior to 12:00 noon, Charlotte
time, on the relevant Borrowing Date, written notice from a Lender that such
Lender will not make available to the Agent such Lender's ratable portion, if
any, of the relevant Borrowing, the Agent may assume that such Lender has made
such portion available to the Agent in immediately
<PAGE> 28
available funds on such Borrowing Date in accordance with subsection (C) above,
and the Agent may, in reliance upon such assumption, make a corresponding amount
available to the Borrower on such Borrowing Date. If and to the extent that such
Lender shall not have made such portion available to the Agent, and the Agent
shall have made such corresponding amount available to the Borrower, such
Lender, on the one hand, and the Borrower, on the other, severally (but without
duplication of payments made by the applicable Lender) agree to pay to the Agent
forthwith on demand such corresponding amount, together with interest thereon
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, (i) in the case of such Lender, at
the Federal Funds Rate, and (ii) in the case of the Borrower, at the rate of
interest applicable at such time to Loans comprising such Borrowing, as
determined under the provisions of SECTION 2.6. If such Lender shall repay to
the Agent such corresponding amount, such amount shall constitute such Lender's
Loan as part of such Borrowing for purposes of this Agreement and the Borrower
shall have no further obligation to make any repayment of such Borrowing
pursuant to this SECTION 2.2(E). The failure of any Lender to make any Loan
required to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Loan as part of such
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender as part of any
Borrowing.
(f) In order to make a Borrowing of a Swingline Loan, the Borrower
will give the Agent and the Swingline Lender written notice not later than 12:00
noon, Charlotte time, on the Business Day of such Borrowing. Each such notice
(each, a "Notice of Swingline Borrowing") shall be irrevocable, shall be given
in the form of EXHIBIT B-4 and shall specify (i) the principal amount of the
Swingline Loan to be made pursuant to such Borrowing (which shall not be less
than $250,000 and, if greater, shall be in an integral multiple of $100,000 in
excess thereof (or, if less, in the amount of the Unutilized Swingline
Commitment)) and (ii) the requested Borrowing Date, which shall be a Business
Day. Not later than 2:00 p.m., Charlotte time, on the requested Borrowing Date,
the Swingline Lender will make available to the Agent at its office referred to
in SECTION 10.4 (or at such other location as the Agent may designate) an
amount, in Dollars and in immediately available funds, equal to the amount of
the requested Swingline Loan. The Agent will make such amount available to the
Borrower in accordance with SECTION 2.2(C). Subject to the terms and conditions
of this Agreement, the Swingline Lender may at any time (whether or not an Event
of Default has occurred and is continuing) in its sole and absolute discretion,
and is hereby authorized and empowered by the Borrower to, cause a Borrowing of
Swingline Loans not in excess of the Swingline Commitment to be made for the
purpose of repaying any outstanding principal and interest amounts under the
Cash Management Line of Credit by delivering to the Borrower, not later than
12:00 noon, Charlotte time, on the Business Day of such Borrowing, a notice
(which shall be deemed to be a Notice of Swingline Borrowing given by the
Borrower but not a new representation) requesting that the Swingline Lender make
Swingline Loans on such Borrowing Date in an aggregate amount not to exceed the
outstanding principal and interest amounts under the Cash Management Line of
Credit; provided, that it shall be a condition precedent to any borrowing under
the Cash Management Line that no Default or Event of Default shall have occurred
and be continuing under this Agreement (which condition shall be deemed waived
upon and subject to the conditions of a waiver of such Default or Event of
Default pursuant to the terms of this Agreement).
(g) With respect to any outstanding Swingline Loans, the Swingline
Lender may at any time (whether or not an Event of Default has occurred and is
continuing) in its sole and absolute discretion, and is hereby authorized and
empowered by the Borrower to, cause a Borrowing of Revolving Credit Loans to be
made for the purpose of repaying such Swingline Loans by delivering to each
other Lender (on behalf of, and with a copy to, the Borrower), not later than
12:00 noon, Charlotte time, one (1) Business Day prior to the proposed Borrowing
Date therefor, a notice (which shall be deemed to be a Notice of Borrowing given
by the
<PAGE> 29
Borrower but not a new representation) requesting the Lenders to make Revolving
Credit Loans (which shall be made initially as ABR Loans) on such Borrowing Date
in an aggregate amount equal to the amount of such Swingline Loans (the
"Refunded Swingline Loans") outstanding on the date such notice is given that
the Swingline Lender requests to be repaid. Not later than 2:00 p.m., Charlotte
time, on the requested Borrowing Date, each Lender (other than the Swingline
Lender) will make available to the Agent at its office referred to in SECTION
10.4 (or at such other location as the Agent may designate) an amount, in
Dollars and in immediately available funds, equal to the amount of the Revolving
Loan to be made by such Lender. To the extent the Lenders have made such amounts
available to the Agent as provided hereinabove, the Agent will make the
aggregate of such amounts available to the Swingline Lender in like funds as
received by the Agent, which shall apply such amounts in repayment of the
Refunded Swingline Loans. Notwithstanding any provision of this Agreement to the
contrary, on the relevant Borrowing Date, the Refunded Swingline Loans
(including the Swingline Lender's ratable share thereof, in its capacity as a
Lender) shall be deemed to be repaid with the proceeds of the Revolving Credit
Loans made as provided above (including a Revolving Loan deemed to have been
made by the Swingline Lender), and such Refunded Swingline Loans deemed to be so
repaid shall no longer be outstanding as Swingline Loans but shall be
outstanding as Revolving Credit Loans. If any portion of any such amount repaid
(or deemed to be repaid) to the Swingline Lender shall be recovered by or on
behalf of the Borrower from the Swingline Lender in any bankruptcy, insolvency
or similar proceeding or otherwise, the loss of the amount so recovered shall be
shared ratably among all the Lenders in the manner contemplated by SECTION
2.2(H).
(h) If, as a result of any bankruptcy, insolvency or similar
proceeding with respect to the Borrower, Revolving Credit Loans are not made
pursuant to subsection (G) above in an amount sufficient to repay any amounts
owed to the Swingline Lender in respect of any outstanding Swingline Loans, or
if the Swingline Lender is otherwise precluded for any reason from giving a
notice on behalf of the Borrower as provided for hereinabove, the Swingline
Lender shall be deemed to have sold without recourse, representation or
warranty, and each Lender shall be deemed to have purchased and hereby agrees to
purchase, a participation in such outstanding Swingline Loans in an amount equal
to its ratable share (based on the proportion that its Revolving Credit
Commitment bears to the Total Revolving Credit Commitments at such time) of the
unpaid amount thereof together with accrued interest thereon. Upon one (1)
Business Day's prior notice from the Swingline Lender, each Lender (other than
the Swingline Lender) will make available to the Agent at its office referred to
in SECTION 10.4 (or at such other location as the Agent may designate) an
amount, in Dollars and in immediately available funds, equal to its
participation. To the extent the Lenders have made such amounts available to the
Agent as provided hereinabove, the Agent will make the aggregate of such amounts
available to the Swingline Lender in like funds as received by the Agent. In the
event any such Lender fails to make available to the Agent the amount of such
Lender's participation as provided in this subsection (H), the Swingline Lender
shall be entitled to recover such amount on demand from such Lender, together
with interest thereon for each day from the date such amount is required to be
made available for the account of the Swingline Lender until the date such
amount is made available to the Swingline Lender at the Federal Funds Rate.
Promptly following its receipt of any payment by or on behalf of the Borrower in
respect of a Swingline Loan, the Swingline Lender will pay to each Lender that
has acquired a participation therein such Lender's ratable share of such
payment.
(i) Notwithstanding any provision of this Agreement to the
contrary, the obligation of each Lender (other than the Swingline Lender) to
make Revolving Credit Loans for the purpose of repaying any Refunded Swingline
Loans pursuant to subsection (G) above and each such Lender's obligation to
purchase a participation in any unpaid Swingline Loans pursuant to subsection
(H) above shall be absolute and unconditional and shall not be affected
<PAGE> 30
by any circumstance or event whatsoever, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right that such Lender may
have against the Swingline Lender, the Agent, the Borrower or any other Person
for any reason whatsoever, (ii) the occurrence or continuance of any Default or
Event of Default, (iii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Borrower or any of its Subsidiaries, or (iv) any breach of this Agreement by any
party hereto.
2.3. Notes.
(a) The Loans made by each Lender shall be evidenced (i) if
Revolving Credit Loans, by a Revolving Credit Note appropriately completed in
substantially the form of EXHIBIT A-1, and (ii) if Swingline Loans, by a
Swingline Note appropriately completed in substantially the form of EXHIBIT A-2.
(b) The Revolving Credit Note issued to each Lender with a
Revolving Credit Commitment shall (i) be executed by the Borrower, (ii) be
payable to the order of such Lender, (iii) be dated as of the Amendment
Effective Date (or, in the case of Revolving Credit Notes issued pursuant to an
Assignment and Acceptance, as of the date thereof), (iv) be in a stated
principal amount equal to such Lender's Revolving Credit Commitment, (v) bear
interest in accordance with the provisions of SECTION 2.6, as the same may be
applicable to the Revolving Credit Loans made by such Lender from time to time,
and (vi) be entitled to all of the benefits of this Agreement and the other Loan
Documents and subject to the provisions hereof and thereof.
(c) The Swingline Note issued to the Swingline Lender shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline Lender,
(iii) be dated as of the Amendment Effective Date, (iv) be in a stated principal
amount equal to the Swingline Commitment, (v) bear interest in accordance with
the provisions of SECTION 2.6, as the same may be applicable to the Swingline
Loans made by the Swingline Lender from time to time, and (vi) be entitled to
all of the benefits of this Agreement and the other Loan Documents and subject
to the provisions hereof and thereof.
(d) Each Lender will record on its internal records the amount of
each Loan made by it and each payment received by it in respect thereof and
will, in the event of any transfer of any of its Notes, either endorse on the
reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount of the Loans evidenced thereby as of
the date of transfer or provide such information on Annex I to the Assignment
and Acceptance relating to such transfer; provided, however, that the failure of
any Lender to make any such recordation or provide any such information, or any
error in such recordation or information, shall not affect the Borrower's
obligations in respect of such Loans. The register maintained by the Agent shall
be deemed correct absent manifest error.
(e) The Notes shall be issued in renewal, amendment, rearrangement
and restatement of, and not in novation, discharge or satisfaction of, the Notes
(as defined in the Original Credit Agreement) evidencing the Existing Loans.
2.4. Termination and Reduction of Commitments and Swingline
Commitment.
(a) The Revolving Credit Commitment of each Lender shall be
automatically and permanently terminated on the Revolving Credit Facility
Termination Date unless sooner terminated pursuant to subsection 2.4(d) below or
SECTION 10.5.
<PAGE> 31
(b) The Swingline Commitment shall be automatically and
permanently terminated on the Swingline Maturity Date unless sooner terminated
pursuant to subsection 2.4(d) below or SECTION 10.5.
(c) On each date set forth below, the Total Revolving Credit
Commitments shall automatically be permanently reduced by the amount set forth
below opposite such date (such amounts being subject to reduction as set forth
in subsection (e) below):
<TABLE>
<CAPTION>
Amount of Reduction in
Date Aggregate Commitments
---- ----------------------
<S> <C>
March 31, 2001 $25,000,000
June 30, 2001 $25,000,000
September 30, 2001 $25,000,000
December 31, 2001 $25,000,000
March 31, 2002 $25,000,000
June 30, 2002 $25,000,000
September 30, 2002 $25,000,000
December 31, 2002 $25,000,000
March 31, 2003 All Remaining Total
Revolving Credit Commitments
</TABLE>
(d) At any time and from time to time, upon at least five (5)
Business Days' prior written notice to the Agent (and, in the case of a
termination or reduction of the Unutilized Swingline Commitment, the Swingline
Lender), the Borrower may, without premium or penalty, terminate in whole or
reduce in part the Total Unutilized Revolving Credit Commitment or the
Unutilized Swingline Commitment, provided that any such partial reduction shall
be in an aggregate amount of not less than $5,000,000 ($1,000,000 in the case of
the Unutilized Swingline Commitment) or, if greater, in multiples of $1,000,000
in excess thereof. The amount of any termination or reduction made under this
subsection (D) may not thereafter be reinstated.
(e) Each reduction of the Total Revolving Credit Commitment under
this SECTION 2.4 shall be applied ratably among the Lenders according to their
respective Revolving Credit Commitments and shall be applied to reduce the
scheduled reduction amounts set forth in the table in subsection (c) above
ratably in accordance with their respective Dollar amounts. After any such
reduction, the fee provided in SECTIONS 2.7(B) shall be calculated with respect
to the reduced Commitments. Notwithstanding any provision of this Agreement to
the contrary, any reduction of the Total Revolving Credit Commitments pursuant
to this SECTION 2.4 that has the effect of reducing the Total Revolving Credit
Commitments to an amount less than the amount of the Swingline Commitment at
such time shall result in an automatic corresponding reduction of the Swingline
Commitment to the amount of the Total Revolving Credit Commitments (as so
reduced), without any further action on the part of the Borrower or the
Swingline Lender.
2.5. Payments; Voluntary, Mandatory.
(a) At any time and from time to time, the Borrower shall have the
right to voluntarily prepay the Loans, in whole or in part, without premium or
penalty (except as provided in clause (III) below), upon written notice to the
Agent given not later than 12:00 noon, Charlotte time, (x) at least three (3)
Business Days prior to each intended prepayment of any Loans that are LIBOR
Loans and (y) at least one (1) Business Day prior to each intended prepayment of
any Loans that are ABR Loans; provided that Swingline Loans may be prepaid on a
same day basis; provided further that (i) each partial voluntary
prepayment of Revolving Credit Loans shall be in an aggregate principal amount
of not less than $1,000,000 or, if
<PAGE> 32
greater, an integral multiple of $1,000,000 in excess thereof, and each partial
voluntary prepayment of Swingline Loans shall be in an aggregate principal
amount of not less than $100,000, or if greater, an integral multiple thereof,
(ii) no partial voluntary prepayment of LIBOR Loans made pursuant to any single
Borrowing shall reduce the aggregate outstanding principal amount of the
remaining LIBOR Loans under such Borrowing to less than $3,000,000 or to any
greater amount not an integral multiple of $1,000,000 in excess thereof, and
(iii) unless made together with all amounts required under SECTION 2.13 to be
paid as a consequence of such prepayment, a prepayment of a LIBOR Loan may be
made only on the last day of the Interest Period applicable thereto. Each such
notice shall specify the proposed date of such prepayment and the aggregate
principal amount and the Types of the Loans to be prepaid (and, in the case of
LIBOR Loans, the Interest Period of the Borrowing pursuant to which made), and
shall be irrevocable and shall bind the Borrower to make such prepayment on the
terms specified therein. During the continuance of any Event of Default, all
prepayments pursuant to this subsection (A) shall be applied, first, to the
Swingline Loans, and second, after payment in full of the Swingline Loans, to
the Revolving Credit Loans as determined by the Agent. Each prepayment of the
Revolving Credit Loans made pursuant to this subsection (A) shall be applied to
reduce the aggregate outstanding principal amount of the Revolving Credit Loans
ratably among the Lenders holding Revolving Credit Loans in proportion to the
principal amount held by each. In the absence of an Event of Default, voluntary
prepayments pursuant to this subsection (A) shall be applied as specified by the
Borrower in the applicable prepayment notice. Loans prepaid pursuant to this
subsection (A) may be reborrowed, subject to the terms and conditions of this
Agreement.
(b) Except to the extent due or made sooner pursuant to the
provisions of this Agreement, the Borrower will repay the aggregate outstanding
principal amount of the Revolving Credit Loans in full on the Revolving Credit
Facility Maturity Date. Except to the extent due or made sooner pursuant to the
provisions of this Agreement, the Borrower will repay the aggregate outstanding
principal amount of the Swingline Loans in full on the Swingline Maturity Date.
(c) In the event that, at any time (including on any date set
forth in the table in SECTION 2.4(C)), the sum of (i) the aggregate principal
amount of the Revolving Credit Loans outstanding on any date (after giving
effect to all repayments thereof on such date), (ii) the aggregate Letter of
Credit Outstandings at such time (after giving effect to all repayments thereof
on such date), and (iii) the aggregate Swingline Loans outstanding at such time
(excluding the aggregate amount of any Swingline Loans to be repaid with
proceeds of Revolving Credit Loans made on the date of determination after
giving effect to all repayments on such date) at such time exceeds the lesser of
the Total Revolving Credit Commitment at such time (after giving effect to any
termination or reduction thereof as of such date), the Borrower will immediately
repay the principal amount of the Swingline Loans in the amount of such excess
and, to the extent of any excess remaining after prepayment in full of
outstanding Swingline Loans, the Borrower will immediately prepay the
outstanding principal amount of the Revolving Credit Loans in the amount of such
excess; provided, however, such payment shall be accompanied by all amounts
required under SECTION 2.13 if applied to a LIBOR Loan and such payment is not
made on the last day of the Interest Period applicable thereto, and (B) to the
extent such excess amount required to be repaid is greater than the aggregate
principal amount of the Swingline Loans and Revolving Credit Loans outstanding
immediately prior to the application of such repayment, the amount so repaid
shall be retained by the Agent and held in the Cash Collateral Account as
security for the Borrower's Credit Obligations, as more particularly described
in SECTION 2.18(I), and thereupon such cash shall be deemed to reduce the
aggregate Reimbursement Obligations by an equivalent amount.
<PAGE> 33
(d) On the date of receipt by the Borrower or any of its
Subsidiaries of any net cash proceeds from any issuance of equity securities
(other than an immaterial amount of equity securities issued pursuant to
employee benefit and deferred compensation plans of the Borrower or any of its
Subsidiaries) or debt securities (other than Debt expressly permitted by SECTION
6.2 hereof or for which consent of the Required Lenders was obtained), the
Borrower shall make a mandatory repayment of principal of the Revolving Credit
Loans (as set forth in subsection (G) below) in an amount equal to seventy-five
percent (75%) of net proceeds from the issuance of equity securities and one
hundred percent (100%) of net cash proceeds from the issuance of debt securities
(in each case, net of any underwriting discounts and commissions and other
reasonable costs associated with such issuance).
(e) On the date of receipt by the Borrower or any of its
Subsidiaries of any net cash proceeds from any sale or disposition of assets in
any transaction or series of related transactions causing receipt of net cash
proceeds in excess of $250,000 per sale or disposition or $2,000,000 in the
aggregate, other than sales or dispositions permitted under clauses (i), (ii),
(iv) (subject to the above-mentioned $250,000 per sale limitation) and (v) of
Section 6.5 or the sale of permitted temporary overnight investments or any
other investment products sold to the Borrower by any Lender or any Affiliate
thereof, the Borrower shall make a mandatory repayment of principal of the
Revolving Credit Loans (as set forth in subsection (G) below) in an amount equal
to one-hundred percent (100%) of such net cash proceeds.
(f) On the date of receipt by the Borrower or any of its
Subsidiaries of any cash prepayment received in reduction of the principal
balance of the Palestine Limited Partnership Note, the Borrower shall make a
mandatory repayment of principal of the Revolving Credit Loans (as set forth in
subsection (g) below) in an amount equal to one hundred percent (100%) of such
payment.
(g) Each prepayment of the Loans made pursuant to subsections (D),
(E) and (F) above shall be applied to reduce the aggregate outstanding principal
amount of the Revolving Credit Loans, ratably among the Lenders holding
Revolving Credit Loans in proportion to the principal amount held by each. Each
payment or prepayment of a LIBOR Loan made pursuant to the provisions of this
SECTION 2.5 on a day other than the last day of the Interest Period applicable
thereto shall be made together with all amounts required under SECTION 2.13 to
be paid as a consequence thereof.
2.6. Interest.
(a) The Borrower will pay interest in respect of the unpaid
principal amount of each Loan, from the date of Borrowing thereof until such
principal amount shall be paid in full, (i) at the Alternate Base Rate, as in
effect from time to time, during such periods as such Loan is an ABR Loan, or
(ii) at the Adjusted LIBOR Rate, as in effect from time to time, during such
periods as such Loan is a LIBOR Loan.
(b) Any principal amounts of the Loans not paid when due and, to
the greatest extent permitted by law, all interest accrued on the Loans and all
other fees and amounts hereunder not paid when due (whether at maturity,
pursuant to acceleration or otherwise), shall bear interest at a rate per annum
equal to the rate otherwise applicable to such Loan plus two percentage points
(2.0%), and such default interest shall be payable on demand; provided, however,
that if the Required Lenders waive such Default, the Loans will continue to bear
interest at a rate per annum equal to the rate applicable to such Loan. Further,
but without duplication of the foregoing, during the existence of any Event of
Default in response to which the Lenders do not grant a waiver but do not elect
to declare the outstanding principal amounts of the Loans immediately due and
payable, if required by the Required Lenders, the Borrower will pay interest on
the dates provided pursuant to subsection (c), below, in respect of the
<PAGE> 34
unpaid principal amount of each Loan, from the date the Event of Default first
exists until it is cured or waived, at a rate per annum equal to the rate
otherwise applicable to such Loan plus two percentage points (2.0%) and such
interest shall be payable on demand. To the greatest extent permitted by law,
interest shall continue to accrue after the filing by or against the Borrower of
any petition seeking any relief in bankruptcy or under any act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign.
(c) Accrued (and theretofore unpaid) interest shall be payable as
follows:
(i) in respect of each ABR Loan (including any
ABR Loan or portion thereof paid or prepaid pursuant to the provisions
of SECTION 2.5, except as provided hereinbelow), in arrears on the
first Business Day of each successive January, April, July and October,
beginning with the first such day to occur after the Amendment
Effective Date; provided, that in the event the Loans are repaid or
prepaid in full and the Total Commitment has been terminated, then
accrued interest in respect of all ABR Loans shall be payable together
with such repayment or prepayment on the date thereof;
(ii) in respect of each LIBOR Loan (including any
LIBOR Loan or portion thereof paid or prepaid pursuant to the
provisions of SECTION 2.5, except as provided hereinbelow), in arrears,
on the last Business Day of the Interest Period applicable thereto
(subject to the provisions of clause (IV) in SECTION 2.8); provided,
that in the event all LIBOR Loans made pursuant to a single Borrowing
are repaid or prepaid in full, then accrued interest in respect of such
LIBOR Loans shall be payable together with such repayment or prepayment
on the date thereof; and
(iii) in respect of any Loan, at maturity (whether
pursuant to acceleration or otherwise) and, after maturity, on demand.
(d) Nothing contained in this Agreement or in any other Loan
Document shall be deemed to establish or require the payment of interest to any
Lender in an amount in excess of the maximum amount permitted by applicable law.
If the amount of interest or other charges payable for the account of any Lender
on any payment date would exceed the maximum amounts permitted by applicable law
to be charged by such Lender, the amount of interest payable for its account on
such payment date shall be automatically reduced to such maximum permissible
amounts. In the event of any such reduction affecting any Lender, if from time
to time thereafter the amount of interest payable for the account of such Lender
on any interest payment date would be less than the maximum amounts permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent payment date shall be automatically increased
to such maximum permissible amount, provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the previous sentence. The
parties hereto understand and believe that if Tennessee or Delaware law were to
apply, this lending transaction complies with the usury laws of the State of
Tennessee or Delaware. If at any time, any amount of interest or other charges
actually paid by the Borrower on or with respect to any Loan is determined to be
in excess of the maximum amount permitted by applicable law, such excess amount
shall be credited as a prepayment of the outstanding principal balance of the
applicable Loan as of the date paid or, if such Loan has been paid in full,
refunded to the Borrower.
(e) The Agent shall promptly notify the Borrower and the Lenders
upon determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant
<PAGE> 35
Notice of Borrowing or Notice of Conversion/Continuation; provided, however,
that the failure of the Agent to provide the Borrower or the Lenders with any
such notice shall neither affect any obligations of the Borrower or the Lenders
hereunder nor result in any liability on the part of the Agent to the Borrower
or any Lender. Each such determination (including each determination of the
Reserve Requirement in connection with a Borrowing of LIBOR Loans) shall, absent
manifest error, be final, conclusive and binding on all parties hereto.
2.7. Fees. The Borrower agrees to pay:
(a) To First Union Capital Markets, for its own account, on the
date of this Agreement, the fees described in the Fee Letter, in the amounts set
forth therein as due and payable on the date of this Agreement and to the extent
not theretofore paid to First Union Capital Markets;
(b) To the Agent, for the account of each Lender with a Revolving
Credit Commitment, a commitment fee per annum for the period from the date of
this Agreement to the Revolving Credit Facility Termination Date at the rate per
annum as determined under the following matrix with reference to the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR, applied to the
average daily Unutilized Revolving Credit Commitment of such Lender, payable in
arrears (i) on the first Business Day of each successive January, April, July
and October, beginning with July 1, 1998, and (ii) on the Revolving Credit
Facility Termination Date:
<TABLE>
<CAPTION>
Ratio of Consolidated Adjusted
Debt to Annualized Consolidated EBITDAR Fee Percentage
- --------------------------------------- --------------
<S> <C>
Greater than or equal to
4.0 to 1.0 0.500%
Less than 4.0 to 1.0
but greater than or equal to
3.5 to 1.0 0.375%
Less than 3.5 to 1.0
but greater than or
equal to 2.5 to 1.0 0.3125%
Less than 2.5 to 1.0 0.250%
</TABLE>
From the Amendment Effective Date until the fifth (5) Business Day
after receipt by the Agent of the financial statement for the fiscal quarter
ended March 31, 1998 pursuant to SECTION 5.1(A) below (together with a
Compliance Certificate), the fee percentage shall be 0.250%. The fee percentage
shall be reset from time to time as the calculation of Applicable Margin changes
as set forth herein.
(c) To the Agent, for the account of each L/C Participant, a
letter of credit fee in respect of each Letter of Credit for the period from the
date of its issuance to the date of its termination, at a rate per annum equal
to the Applicable Margin for LIBOR Loans in effect from time to time during such
period, on the daily average Stated Amount thereof, payable in arrears (i) on
the first Business Day of each successive January, April, July and October,
beginning with the first such day to occur after the Amendment Effective Date,
and (ii) on the later of the Revolving Credit Facility Termination Date or the
date of termination of the last outstanding Letter of Credit;
<PAGE> 36
(d) To the Issuing Bank, for its own account, a facing fee in
respect of each Letter of Credit for the period from the date of its issuance to
the date of its termination, at a rate per annum equal to 0.125%, on the face
amount thereof, payable in arrears (i) on the first Business Day of each
successive January, April, July and October, beginning with the first such day
to occur after the Amendment Effective Date, and (ii) on the later of the
Revolving Credit Facility Termination Date or the date of termination of the
last outstanding Letter of Credit;
(e) To the Issuing Bank, for its own account, such commissions,
issuance fees, transfer fees and other fees and charges incurred in connection
with the issuance and administration of each Letter of Credit as are customarily
charged from time to time by the Issuing Bank for the performance of such
services in connection with similar letters of credit, or as may be otherwise
agreed to by the Borrower; and
(f) To the Agent, for its own account, the annual administrative
fees provided in the Fee Letter, on the terms, in the amounts and at the times
set forth therein.
2.8. Interest Periods. Concurrently with the giving of any Notice
of Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, or three month period (subject to SECTION 2.11);
provided, however, that:
(i) all LIBOR Loans comprising a single
Borrowing shall at all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR
Loan shall commence on the date of the Borrowing of such Loan
(including the date of any continuation of, or conversion into, such
LIBOR Loan), and each successive Interest Period applicable to such
LIBOR Loan shall commence on the day on which the next preceding
Interest Period applicable thereto expires;
(iii) the Borrower may not select any Interest
Period that expires after the Revolving Credit Facility Maturity Date;
(iv) if any Interest Period otherwise would
expire on a day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day unless such next succeeding
Business Day falls in another calendar month, in which case such
Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period with respect to Revolving
Credit Loans that are to be maintained as LIBOR Loans may be selected
that would end after a scheduled date for repayment of principal of the
Revolving Credit Loans (including any date of a scheduled mandatory
reduction of the aggregate Commitments) occurring on or after the first
day of such Interest Period unless, immediately after giving effect to
such selection, the sum of (y) the aggregate principal amount of
Revolving Credit Loans that are ABR Loans or that have Interest Periods
expiring on or before such principal repayment date, plus (z) the Total
Unutilized Revolving Credit Commitment as of such date, equals or
exceeds the principal amount required to be paid on such principal
repayment date;
<PAGE> 37
(vi) if any Interest Period begins on a day for
which there is no numerically corresponding day in the calendar month
during which such Interest Period would otherwise expire, such Interest
Period shall expire on the last Business Day of such calendar month;
and
(vii) if, upon the expiration of any Interest
Period applicable to a Borrowing of LIBOR Loans, the Borrower shall
have failed to elect a new Interest Period to be applicable to such
LIBOR Loans, then the Borrower shall be deemed to have elected to
convert such LIBOR Loans into ABR Loans as of the expiration of the
then current Interest Period applicable thereto.
2.9. Conversions and Continuations.
(a) The Borrower shall have the right, on any Business Day to
elect (i) to convert all or a portion of the outstanding principal amount of any
ABR Loans into LIBOR Loans, or to convert any LIBOR Loans the Interest Periods
for which end on the same day into ABR Loans, or (ii) to continue all or a
portion of the outstanding principal amount of any LIBOR Loans the Interest
Periods for which end on the same day for an additional Interest Period,
provided that (i) any such conversion of LIBOR Loans into ABR Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; (ii) any such
conversion of ABR Loans into, or continuation of, LIBOR Loans shall involve an
aggregate principal amount of not less than $3,000,000 or, if greater, an
integral multiple of $1,000,000 in excess thereof; (iii) no partial conversion
of LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding
principal amount of such LIBOR Loans to less than $3,000,000 or to any greater
amount not an integral multiple of $1,000,000 in excess thereof, (iv) no such
conversion or continuation shall be permitted with regard to any ABR Loans that
are Swingline Loans, and (v) no conversion of ABR Loans into LIBOR Loans or
continuation of LIBOR Loans into a new Interest Period shall be permitted during
the continuance of a Default or Event of Default. If a LIBOR Loan is converted
into a ABR Loan on any day other than the last day of the Interest Period
applicable thereto, the Borrower will pay, upon such conversion, all amounts
required under SECTION 2.13 to be paid as a consequence thereof.
(b) The Borrower shall make each such election by giving the Agent
written notice not later than 12:00 noon, Charlotte time, three (3) Business
Days prior to the effective date of any conversion of ABR Loans into, or
continuation of, LIBOR Loans and one (1) Business Day prior to the effective
date of any conversion of LIBOR Loans into ABR Loans. Each such notice (each, a
"Notice of Conversion/Continuation") shall be irrevocable, shall be given in the
form of EXHIBIT B-2 and shall specify (x) the date of such conversion or
continuation (which shall be a Business Day), (y) in the case of a conversion
into, or a continuation of, LIBOR Loans, the Interest Period to be applicable
thereto, and (z) the aggregate amount and Type of the Loans being converted or
continued. Upon the receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Lender of the proposed conversion or continuation. In
the event that the Borrower shall fail to deliver a Notice of Conversion/
Continuation as provided herein with respect to any outstanding LIBOR Loans,
such LIBOR Loans shall automatically be converted to ABR Loans upon the
expiration of the then current Interest Period applicable thereto (unless repaid
pursuant to the terms hereof).
(c) The Borrower shall have a one-time option, exercisable on any
Business Day, to convert Unutilized End Loaded Lease Commitments under the End
Loaded Lease Credit Agreement to Revolving Credit Commitments under this
Agreement on a pro rata basis among the Lenders; provided, that (i) any such
conversion shall involve aggregate Unutilized End Loaded Lease Commitments of
not less than $5,000,000 or, if greater, an integral multiple of $5,000,000 in
excess thereof and (ii) no such conversion shall be permitted during the
<PAGE> 38
continuance of a Default or an Event of Default. The Borrower shall exercise
such option by giving the Agent written notice not later than 12:00 noon,
Charlotte time, fifteen (15) Business Days prior to the effective date of any
conversion of Unutilized End Loaded Lease Commitments to Revolving Credit
Commitments. Such notice (the "Notice of Commitment Conversion") shall be
irrevocable, shall be given in the form of EXHIBIT B-3 and shall specify (x) the
date of such conversion (which will be a Business Day) and (y) the amount of
Unutilized End Loaded Lease Commitments being converted.
(d) The Notice of Commitment Conversion shall be accompanied by
new Revolving Credit Notes and End Loaded Lease Notes executed by the Borrower
at its own expense, dated the date of conversion and reflecting the changes in
the End Loaded Lease Commitments and Revolving Credit Commitments of the
Lenders. Upon receipt of the Notice of Commitment Conversion and the new
Revolving Credit Notes and End Loaded Lease Notes from the Borrower, the Agent
will (i) accept such Notice of Commitment Conversion, (ii) record the
information contained therein in the Register and in the register maintained by
the Agent pursuant to Section 9.9(a) of the End Loaded Lease Credit Agreement,
and (iii) promptly notify each Lender of the proposed conversion and request
that the Revolving Credit Notes and the End Loaded Lease Notes then held by the
Lenders be returned to the Agent. Upon receipt by the Agent of the Revolving
Credit Notes and the End Loaded Lease Notes provided by any Lender pursuant to
clause (iii) above, the Agent shall deliver the new Revolving Credit Notes and
End Loaded Lease Notes to such Lender in exchange for the surrendered notes and
shall forward the surrendered notes to the Borrower for cancellation.
2.10. Method of Payments; Computations.
(a) All payments by the Borrower hereunder shall be made without
setoff, counterclaim or other defense, in Dollars and in immediately available
funds to the Agent, for the account of the Lenders or the Swingline Lender, as
the case may be (except as otherwise expressly provided herein as to payments
required to be made directly to the Issuing Bank and the Lenders) at its office
referred to in SECTION 10.4, prior to 12:00 noon, Charlotte time, on the date
payment is due. Any payment made as required hereinabove, but after 12:00 noon,
Charlotte time, shall be deemed to have been made on the next succeeding
Business Day. If any payment falls due on a day that is not a Business Day, then
such due date shall be extended to the next succeeding Business Day (except that
in the case of LIBOR Loans to which the provisions of clause (IV) in SECTION 2.8
are applicable, such due date shall be the next preceding Business Day), and
such extension of time shall then be included in the computation of payment of
interest, fees or other applicable amounts at the applicable rate in effect
immediately prior to such extension.
(b) The Agent will distribute to the Lenders like amounts relating
to payments made to the Agent for the account of the Lenders as follows: (i) if
the payment is received by 12:00 noon, Charlotte time, in immediately available
funds, the Agent will make available to each relevant Lender on the same date,
by wire transfer of immediately available funds, such Lender's ratable share of
such payment (based on the percentage that the amount of the relevant payment
owing to such Lender bears to the total amount of such payment owing to all of
the relevant Lenders), and (ii) if such payment is received after 12:00 noon,
Charlotte time, or in other than immediately available funds, the Agent will
make available to each such Lender its ratable share of such payment by wire
transfer of immediately available funds on the next succeeding Business Day (or
in the case of uncollected funds, as soon as practicable after collected). If
the Agent shall not have made a required distribution to the appropriate Lenders
as required hereinabove after receiving a payment for the account of such
Lenders, the Agent will pay to each such Lender, on demand, its ratable share of
such payment with interest thereon at the Federal Funds Rate for each day from
the date such amount was required to be
<PAGE> 39
disbursed by the Agent until the date repaid to such Lender. The Agent will
distribute to the Issuing Bank like amounts relating to payments made to the
Agent for the account of the Issuing Bank in the same manner, and subject to the
same terms and conditions, as set forth hereinabove with respect to
distributions of amounts to the Lenders.
(c) Unless the Agent shall have received written notice from the
Borrower prior to the date on which any payment of principal, interest or fees
under SECTION 2.7 is due to any Lender hereunder that such payment will not be
made in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date, and the Agent may, in reliance on such
assumption, but shall not be obligated to, cause to be distributed to such
Lender on such due date an amount equal to the amount then due to such Lender.
If and to the extent the Borrower shall not have so made such payment in full to
the Agent, and without limiting the obligation of the Borrower to make such
payment in accordance with the terms hereof, such Lender shall repay to the
Agent forthwith on demand such amount so distributed to such Lender, together
with interest thereon for each day from the date such amount is so distributed
to such Lender until the date repaid to the Agent, at the Federal Funds Rate.
(d) With respect to each payment hereunder, except as specifically
provided otherwise herein or in any of the other Loan Documents, the Borrower
may designate by written notice to the Agent prior to or concurrently with such
payment the Types of Loans that are to be paid, repaid or prepaid, provided that
(i) unless made together with all amounts required under SECTION 2.13 to be paid
as a consequence thereof, a prepayment of a LIBOR Loan may be made only on the
last day of the Interest Period applicable thereto, and (ii) each payment on
account of any Credit Obligations to or for the account of any one or more
Lenders shall be apportioned ratably among such Lenders in proportion to the
amounts of such Credit Obligations owed to them. In the absence of any such
designation by the Borrower, or if an Event of Default has occurred and is
continuing, the Agent shall make such designation as the Required Lenders may
direct, subject to the foregoing and to the other provisions of this Agreement.
(e) All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed; provided, however, that interest calculated
with respect to the Base Rate shall be computed on the basis of a 365/366-day
year and the actual days elapsed.
2.11. Increased Costs, Change in Circumstances, Etc.
(a) If, at any time after the Amendment Effective Date and from
time to time, the adoption or modification of any applicable law, rule or
regulation, or any interpretation or administration thereof by any Governmental
Authority or central bank (whether or not having the force of law) charged with
the interpretation, administration or compliance of the Lenders with any of such
requirements, shall, subject to the provisions of SECTION 2.12 which shall be
controlling as to the matters covered thereby:
(i) subject any Lender to, or increase the net
amount of, any tax, impost, duty, charge or withholding with respect to
any amount received or to be received hereunder in connection with
LIBOR Loans (other than taxes imposed on net income or profits of, or
any branch or franchise tax applicable to, such Lender or a Lending
Office of such Lender);
<PAGE> 40
(ii) change the basis of taxation of payments to
any Lender in connection with LIBOR Loans (other than changes in taxes
on the net income or profits of, or any branch or franchise tax
applicable to, such Lender or a Lending Office of such Lender);
(iii) impose, increase or render applicable any
reserve (other than the Reserve Requirement), capital adequacy, special
deposit or similar requirement against assets of, deposits with or for
the account of, or loans, credit or commitments extended by, any Lender
or a Lending Office of such Lender; or
(iv) impose on any Lender or in the London
interbank Eurodollar market any other condition or requirement (other
than taxes imposed on net income or profits of, or any branch or
franchise tax applicable to, such Lender or a Lending Office of such
Lender, and other than the Reserve Requirement to the extent otherwise
taken into account in the determination of LIBOR Rates) affecting this
Agreement or LIBOR Loans;
and the result of any of the foregoing is to increase the costs to any Lender of
agreeing to make, making, funding or maintaining any LIBOR Loans or to reduce
the yield or rate of return of such Lender on any LIBOR Loans to a level below
that which such Lender could have achieved but for the adoption or modification
of any such requirements, the Borrower will, within fifteen (15) days after
delivery to the Borrower by such Lender of written demand therefor (with a copy
thereof to the Agent), pay to such Lender such additional amounts relating or
directly corresponding to the Loans as shall compensate such Lender for such
increase in costs or reduction in return.
(b) If, at any time after the Amendment Effective Date and from
time to time, the adoption or modification of any applicable federal, state or
local law, rule or regulation regarding any Lender's required level of capital
(including any allocation of capital requirements or conditions, but excluding
federal, state or local income tax liability), or the implementation of any such
requirements previously adopted but not implemented prior to the Amendment
Effective Date, or any interpretation or administration thereof by any
Governmental Authority (whether or not having the force of law) charged with the
interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of reducing the rate of return on
such Lender's capital as a consequence of its Commitments, Loans or
participations in Letters of Credit hereunder to a level below that which such
Lender could have achieved but for such adoption, modification, implementation
or interpretation (taking into account such Lender's policies with respect to
capital adequacy), the Borrower will, within fifteen (15) days after delivery to
the Borrower by such Lender of written demand therefor (with a copy thereof to
the Agent), pay to such Lender such additional amounts as will compensate such
Lender for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, by
reason of changes arising after the date of this Agreement generally affecting
the London interbank Eurodollar market, (i) the Agent shall have determined that
Dollar deposits in the amount of any Lender's required LIBOR Loan pursuant to
such Borrowing are not generally available in the London interbank Eurodollar
market or that the rate at which such Dollar deposits are being offered will not
adequately and fairly reflect the cost to such Lender of making or maintaining
its LIBOR Loan during such Interest Period or (ii) the Agent shall have
determined that adequate and reasonable means do not exist for ascertaining the
applicable LIBOR Rate for such Interest Period, the Agent will forthwith so
notify the Borrower and the Lenders, whereupon the obligation of (y) in the case
of clause (I) above, each such affected Lender, and (z) in the case of clause
(II) above, all Lenders, in each case to make, to convert ABR Loans into, or to
continue, LIBOR Loans shall be suspended (including pursuant to the Borrowing to
which such Interest Period applies), and any Notice of Borrowing or Notice of
Conversion/Continuation
<PAGE> 41
given at any time thereafter with respect to LIBOR Loans shall be deemed to be a
request for ABR Loans (but in the case of clause (I) above, only to the extent
of such affected Lender's Pro Rata Share thereof) until the Agent or the
affected Lender, as the case may be, shall have determined that the
circumstances giving rise to such suspension no longer exist (and the affected
Lender, if making such determination, shall have so notified the Agent), and the
Agent shall have so notified the Borrower and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at
any time after the Amendment Effective Date and from time to time, the adoption
or modification of any applicable law, rule or regulation, or any interpretation
or administration thereof by any Governmental Authority or central bank (whether
or not having the force of law) charged with the interpretation, administration
or compliance of any Lender with any of such requirements, has or would have the
effect of making it unlawful for such Lender to honor its obligation to make
LIBOR Loans or to continue to make or maintain LIBOR Loans, such Lender will
forthwith so notify the Agent and the Borrower, whereupon (i) each of such
Lender's outstanding LIBOR Loans shall automatically, on the expiration date of
the Interest Period applicable thereto or, to the extent any such LIBOR Loan may
not lawfully be maintained as a LIBOR Loan until such expiration date (subject
to payment as may be required by SECTION 2.13), upon such notice, be converted
into a ABR Loan and (ii) the obligation of such Lender to make, to convert ABR
Loans into, or to continue, LIBOR Loans shall be suspended, and any Notice of
Borrowing or Notice of Conversion/Continuation given at any time thereafter with
respect to LIBOR Loans shall, as to such Lender, be deemed to be a request for
ABR Loans, until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrower.
(e) Determinations by the Agent or any Lender for purposes of this
Section of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. Each Lender agrees
that, upon the occurrence of any event giving rise to the operation of this
Section with respect to such Lender, it will, if requested by the Borrower and
to the extent permitted by law, endeavor in good faith to designate another
Lending Office for its LIBOR Loans, but only if such designation would make it
lawful for such Lender to continue to make or maintain LIBOR Loans hereunder;
provided that such designation is made on such terms that such Lender, in its
good faith determination, suffers no increased cost or economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of this Section.
(f) Each demand for payment under this Section shall be preceded
by a notice to the Borrower of such anticipated demand, which notice shall
specify in reasonable detail the basis for such demand, but the failure to
provide such advance notice shall not relieve the Borrower of any of its
obligations hereunder. Nothing in this Section shall be construed or so operate
as to require the Borrower to pay any interest, fees, costs or charges in excess
of that permitted by applicable law. Notwithstanding the foregoing, all demands
for payment under this SECTION 2.11 must be made on the Borrower within one
hundred twenty (120) days after the relevant Lender obtains actual knowledge
that such Lender is entitled to such payment.
2.12. Taxes.
(a) So long as the applicable Lender shall have complied with the
provisions of SECTION 2.12(C) hereof, any and all payments by the Borrower
hereunder or under any Note shall be made, in accordance with the terms hereof
and thereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (other than taxes imposed on net income or
<PAGE> 42
profits of, or any branch or franchise taxes applicable to, the Agent, the
Issuing Bank or any Lender) (y) by the jurisdiction under the laws of which the
Agent, the Issuing Bank or such Lender, as the case may be, is organized or any
political subdivision thereof and (z) in the case of each Lender, by the
jurisdiction in which any Lending Office of such Lender is located or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to the Agent, the
Issuing Bank or any Lender, so long as the applicable Lender shall have complied
with the provisions of SECTION 2.12(C) hereof, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section),
the Agent, the Issuing Bank or such Lender, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower will make such deductions, and (iii) the Borrower will pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. If and to the extent that any Lender
subsequently shall be refunded or otherwise recover all or any part of such
deduction, it shall refund to the Borrower the amount so recovered.
(b) So long as the applicable Lender shall have complied with the
provisions of SECTION 2.12(C), the Borrower will indemnify the Agent, the
Issuing Bank and each Lender for the full amount of Taxes (including, without
limitation, any Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Agent, the Issuing Bank or such Lender, as the case may be,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date the Agent, the Issuing Bank or any Lender, as the case may be, makes
written demand therefor and delivers to the Borrower the original receipt of
Taxes paid by it or an invoice from the relevant taxing authority regarding such
Taxes. Within thirty (30) days after the date of any payment of Taxes pursuant
to this Section, the Borrower will furnish to the Agent, the Issuing Bank or the
relevant Lender, as the case may be, the original or a certified copy of a
receipt or other relevant documentation evidencing payment thereof; provided
that demand therefor must be made on the Borrower within one hundred twenty
(120) days after the Issuing Bank's or relevant Lender's actual knowledge that
such Lender is entitled to such payment. If and to the extent that any Lender
subsequently shall be refunded or otherwise recover all or any part of such
payment of taxes, it shall refund to the Borrower the amount so recovered.
(c) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code, and such Lender is entitled to
an exemption (or is exempt) from United States withholding tax under Section
1441 or 1442 of the Internal Revenue Code, such Lender will deliver to the Agent
and the Borrower:
(i) if such Lender is entitled to claim an
exemption from, or a reduction of, withholding tax under a United
States tax treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year, and before the
payment of any interest in each third succeeding calendar year, during
which interest may be paid to such Lender under this Agreement;
(ii) if such Lender is entitled to claim that
interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United
States trade or business of such Lender, two properly completed and
executed copies of IRS Form 4224 before the payment of any interest is
due in the first taxable year of such Lender, and in each succeeding
taxable year of such Lender, during which interest may be paid to such
Lender under this Agreement, and IRS Form W-9; and
<PAGE> 43
(iii) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United States as a
condition to exemption from, or reduction of, United States withholding
tax.
Each Lender as of the Amendment Effective Date, and each assignee under
any Assignment and Acceptance (as of the date thereof), that is a "foreign
corporation, partnership or trust" as described herein must be eligible to claim
a complete exemption and must provide applicable forms to the Borrower as
required by this SECTION 2.12. Each such Lender will promptly notify the Agent
and the Borrower of any changes in circumstances that would modify or render
invalid any claimed exemption or reduction.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required under subsection
(C) above are not executed, completed and/or delivered to the Agent, then the
Agent may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax. For purposes of this Section, a distribution hereunder by the Agent to or
for the account of any Lender shall be deemed a payment by the Borrower.
(e) If the IRS or any other Governmental Authority, domestic or
foreign, asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (whether because the
appropriate form was not delivered or was not properly executed, completed
and/or delivered, because such Lender failed to notify the Agent of a change in
circumstances that rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this subsection (E),
together with all costs, expenses and reasonable attorneys' fees incurred or
paid in connection therewith.
(f) If at any time the Borrower requests any Lender to deliver any
forms other than documentation pursuant to subsection (C) above, then the
Borrower shall, upon demand of such Lender, reimburse such Lender for any
reasonable costs or expenses incurred by such Lender in the preparation or
delivery of such forms or other documentation.
(g) Each Lender agrees that, if the Borrower is required to pay
additional amounts to or for the account of any Lender pursuant to subsection
(A) or (B) above, then such Lender will, to the extent permitted by law,
endeavor in good faith to designate another Lending Office for its LIBOR Loans,
but only if such designation would make it lawful for such Lender to continue to
make or maintain LIBOR Loans hereunder; provided that such designation is made
on such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section.
2.13. Compensation. The Borrower will compensate each Lender upon
demand for all losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund or
maintain LIBOR Loans, but excluding loss of anticipated profit with respect to
any Loans) that such Lender may sustain (i) if for any reason (other than a
default by Agent or such Lender) a Borrowing of, or conversion of or into, LIBOR
Loans does not occur on a date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation, (ii) if
<PAGE> 44
any repayment, prepayment or conversion of any LIBOR Loan occurs on a date other
than the last day of an Interest Period applicable thereto (including as a
consequence of conversion of LIBOR Loans pursuant to SECTION 2.11(D) or
acceleration of the maturity of such Loans pursuant to SECTION 8.1), (iii) if
any prepayment of any of its LIBOR Loans is not made on any date specified in a
notice of prepayment given by the Borrower, or (iv) as a consequence of any
other failure by the Borrower to make any payments with respect to LIBOR Loans
when due hereunder; provided, however, such Lender must make such demand for
payment on the Borrower within one hundred twenty (120) days after such Lender
obtains actual knowledge that such Lender is entitled to such payment.
Calculation of all amounts payable to a Lender under this Section shall be made
as though such Lender had actually funded its relevant LIBOR Loan through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate in an amount
equal to the amount of such LIBOR Loan, having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar deposit
from an offshore Lending Office of such Lender to a Lending Office of such
Lender in the United States; provided, however, that each Lender may fund each
of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall
be utilized only for the calculation of amounts payable under this Section.
Determinations by any Lender for purposes of this Section of any such losses,
expenses or liabilities shall, absent manifest error, be conclusive, provided
that such determinations are made in good faith.
2.14. Use of Proceeds. The proceeds of the Loans shall be used by
the Borrower (i) to consummate the amendment and restatement of this Agreement
as set forth herein, (ii) to finance Permitted Acquisitions of Facilities
pursuant to this Agreement, (iii) to pay reasonable fees and expenses in
connection herewith and with such Permitted Acquisitions; (iv) to provide
working capital for the Borrower and its Subsidiaries; and (v) for general
corporate purposes.
2.15. Recovery of Payments.
(a) The Borrower agrees that to the extent the Borrower makes a
payment or payments to or for the account of the Agent, the Lenders or the
Issuing Bank, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy,
insolvency or similar state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, the Credit Obligation intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been received.
(b) If any amounts distributed by the Agent to a Lender are
subsequently returned or repaid by the Agent to the Borrower or its
representative or successor in interest, whether by court order or by settlement
approved by the Lender in question, such Lender will, promptly upon receipt of
notice thereof from the Agent, pay the Agent such amount. If any such amounts
are recovered by the Agent from the Borrower or its representative or successor
in interest, the Agent shall redistribute such amounts to the Lenders on the
same basis as such amounts were originally distributed.
2.16. Pro Rata Treatment.
(a) Except for Swingline Loans, all funding of Borrowings,
continuations and conversions of Loans shall be made by the Lenders pro rata on
the basis of their relative Revolving Credit Commitments (in the case of initial
funding of Revolving Credit Loans) or Loans (in the case of continuations and
conversions of Revolving Credit Loans), as applicable from time to time.
<PAGE> 45
(b) Each Lender agrees that if it shall receive any amount
hereunder (whether by voluntary payment, realization upon security, exercise of
the right of setoff or banker's lien, counterclaim or cross action, or
otherwise, applicable to the payment of any of the Credit Obligations that
exceeds its ratable share (according to the proportion of (i) the amount of such
Credit Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of such Credit Obligations due and payable to all Lenders at
such time) of payments on account of such Credit Obligations then or therewith
obtained by all the Lenders to which such payments are required to have been
made, such Lender shall forthwith purchase from the other Lenders such
participations in such Credit Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each such other Lender shall be rescinded and each such other Lender shall repay
to the purchasing Lender the purchase price to the extent of such recovery,
together with an amount equal to such other Lender's ratable share (according to
the proportion of (i) the amount of such other Lender's required repayment to
(ii) the total amount so recovered from the purchasing Lender) of any interest
or other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to the provisions of this subsection
may, to the fullest extent permitted by law, exercise any and all rights of
payment (including, without limitation, setoff, banker's lien or counterclaim)
with respect to such participation as fully as if such participant were a direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or similar law, any Lender receives a secured
claim in lieu of a setoff to which this subsection applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled under this
subsection to share in the benefits of any recovery on such secured claim.
2.17. Sale and Assignment of Existing Loans.
(a) Each of the Original Lenders party hereto that is selling
Existing Loans pursuant to this SECTION 2.17 (each, a "Selling Lender," and
collectively, the "Selling Lenders") hereby represents and warrants to (i) each
of the Lenders party hereto that is not an Original Lender, and (ii) each other
Original Lender party hereto that is purchasing Existing Loans pursuant to this
SECTION 2.17 (the Lenders described under (i) and (ii), each, a "Purchasing
Lender," and collectively, the "Purchasing Lenders"), that it is the legal and
beneficial owner of the interest in the Existing Loans being assigned by it
hereunder and that such interest is free and clear of any adverse claim. In
order to give effect to the assignment to the Purchasing Lenders of their
respective Pro Rata Shares of the Existing Loans to be concurrently converted to
Revolving Credit Loans hereunder as of the Amendment Effective Date, all as
contemplated hereunder, each Selling Lender shall and does hereby sell and
assign to each Purchasing Lender, without recourse, representation or warranty
(except as set forth in the first sentence of this subsection (a)), and each
Purchasing Lender shall and does hereby purchase and assume from each Selling
Lender, a portion of all of the rights and obligations of each Selling Lender
with respect to such Existing Loans converted to Revolving Credit Loans
hereunder as of the Amendment Effective Date and to each of the Loan Documents,
in each case in the amounts set forth in Annex 1 hereto (the "Assigned Rights"),
such that after giving effect to such sale and assignment, the Lenders shall own
the Existing Loans converted to Revolving Credit Loans hereunder in proportion
to their respective Revolving Credit Commitments. Upon payment by the Purchasing
Lenders to the Selling Lenders of the amounts calculated by the Agent pursuant
to subsection (b) below, each Lender shall be entitled to its respective Pro
Rata Share of (y) all interest on and any fees in respect of the Revolving
Credit Loans and Revolving Credit Commitments which accrue on and after the
Amendment Effective Date and (z) all payments of principal made on the Revolving
Credit Loans attributable to such Lender that occur after the Amendment
Effective Date.
<PAGE> 46
(b) Pursuant to the sale and assignment of the Assigned Rights to
the Purchasing Lenders under this SECTION 2.17, each Selling Lender is entitled
to receive a payment from each Purchasing Lender in an amount equal to the
portion of such Selling Lender's Existing Loans representing the Assigned Rights
ratably purchased by each Purchasing Lender. In order to facilitate and give
effect to the sale and assignment of the Assigned Rights, each of the Selling
Lenders and Purchasing Lenders agrees that (i) the Agent shall calculate the
amount owing to the Selling Lenders and to be paid or funded by the Purchasing
Lenders, (ii) each of the Purchasing Lenders shall pay or fund, as the case may
be, to the Agent the amount specified by the Agent in writing to such Purchasing
Lender, and (iii) the Agent shall, to the extent such payments or fundings are
actually made, apply such amounts ratably to pay the amount owed to the Selling
Lenders.
2.18. Letters of Credit.
(a) Subject to and upon the terms and conditions herein set forth,
so long as no Default or Event of Default has occurred and is continuing, the
Issuing Bank will, at any time and from time to time on and after the Amendment
Effective Date and prior to the Revolving Credit Facility Termination Date, and
upon request by the Borrower in accordance with the provisions of SECTION
2.18(B), issue for the account of the Borrower one or more irrevocable standby
letters of credit denominated in Dollars and in a form customarily used or
otherwise approved by the Issuing Bank (together with all amendments,
modifications and supplements thereto, substitutions therefor and renewals and
restatements thereof, collectively, the "Letters of Credit"). Notwithstanding
the foregoing:
(i) No Letter of Credit shall be issued the
Stated Amount upon issuance of which (i) when added to all other Letter
of Credit Outstanding at such time, would exceed $5,000,000 or (ii)
when added to all other Letter of Credit Outstanding at such time
(exclusive of Reimbursement Obligations that are repaid with the
proceeds of, and simultaneously with the incurrence of, Revolving
Credit Loans) and the aggregate principal amount of all Revolving
Credit Loans and Swingline Loans then outstanding, would exceed the
Total Revolving Credit Commitment at such time;
(ii) No Letter of Credit shall be issued that by
its terms expires more than one (1) year after its date of issuance or
the Revolving Credit Facility Maturity Date, whichever is earliest;
provided, however, that a Letter of Credit may, if requested by the
Borrower and approved by the Issuing Bank, provide by its terms, and on
terms acceptable to the Issuing Bank, for renewal for successive
periods of one year or less, unless and until the Issuing Bank shall
have delivered a notice of nonrenewal to the beneficiary of such Letter
of Credit; and
(iii) The Issuing Bank shall be under no
obligation to issue any Letter of Credit if, at the time of such
proposed issuance, (A) any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing such Letter of Credit,
or any Requirement of Law applicable to the Issuing Bank or any request
or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated) not in effect on the
Amendment Effective Date, or any unreimbursed loss, cost or expense
that was not applicable, in effect or known to the Issuing Bank as of
the Amendment Effective Date
<PAGE> 47
and that the Issuing Bank in good faith deems material to it, or (B)
the Issuing Bank shall have actual knowledge, or shall have received
notice from any Lender, prior to the issuance of such Letter of Credit
that one or more of the conditions specified in SECTION 3.3 are not
then satisfied or that the issuance of such Letter of Credit would
violate the provisions of subsection (I) above unless the Required
Lenders otherwise authorize the Issuing Bank to issue such Letter of
Credit.
(b) Whenever the Borrower desires the issuance of a Letter of
Credit, the Borrower will notify the Issuing Bank (with copies to the Agent) in
writing, by 12:00 noon, Charlotte, North Carolina local time, at least three (3)
Business Days (or such shorter period as is acceptable to the Issuing Bank in
any given case) prior to the requested date of issuance thereof. Each such
request (each, a "Letter of Credit Request") may not be revoked at any time
after the Issuing Bank has completed processing and issued the Letter of Credit,
shall be given in the form of EXHIBIT B-5 and shall be appropriately completed
to specify (i) the proposed date of issuance (which shall be a Business Day),
(ii) the proposed Stated Amount and expiry date of the Letter of Credit, and
(iii) the name and address of the proposed beneficiary or beneficiaries of the
Letter of Credit. The Borrower will also complete any application procedures and
documents reasonably required by the Issuing Bank in connection with the
issuance of any Letter of Credit, it being understood that in the event of any
conflict between such documents and the Loan Documents, the Loan Documents shall
control. The Agent will, promptly upon its receipt thereof, notify each Lender
of the Letter of Credit Request. Upon its issuance of any Letter of Credit, the
Issuing Bank will promptly notify each Lender of such issuance and will notify
each Lender with a Revolving Credit Commitment of the amount of its
participation therein under SECTION 2.18(C).
(c) Immediately upon the issuance of any Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Lender with a
Revolving Credit Commitment, and each such Lender (each, in such capacity, an
"L/C Participant") shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation, pro rata to the extent of its Revolving
Credit Percentage at such time, in such Letter of Credit, each drawing made
thereunder, and the obligations of the Borrower under this Agreement with
respect thereto and any security therefor (including the Collateral) or guaranty
pertaining thereto; provided, however, that the fees and other charges relating
to Letters of Credit described in SECTIONS 2.7(D) and (E) shall be payable
directly to the Issuing Bank as provided therein, and the L/C Participants shall
have no right to receive any portion thereof. Upon any change in the Revolving
Credit Commitments of any of the Lenders pursuant to SECTION 10.5, with respect
to all outstanding Letters of Credit and Reimbursement Obligations there shall
be an automatic adjustment to the participations pursuant to this Section to
reflect the new Revolving Credit Percentages of the assigning Lender and the
Eligible Assignee.
(d) The Borrower hereby agrees to reimburse the Issuing Bank by
making payment to the Agent, for the account of the Issuing Bank, in immediately
available funds, for any payment made by the Issuing Bank under any Letter of
Credit (each such amount so paid until reimbursed, together with interest
thereon payable as provided hereinbelow, a "Reimbursement Obligation")
immediately after, and in any event on the date of, such payment, together with
interest on the amount so paid by the Issuing Bank, to the extent not reimbursed
prior to 2:00 p.m., Charlotte, North Carolina local time, on the date of such
payment or disbursement, (i) for the period from the date of the payment to the
date of receipt by the Borrower from the Issuing Bank of notice of such payment,
at the Alternate Base Rate as in effect from time to time during such period,
and (ii) for the period from the date of receipt by the Borrower from the
Issuing Bank of notice of such payment to the date the Reimbursement Obligation
created thereby is satisfied, at the Alternate Base Rate as in effect from time
to time
<PAGE> 48
during such period plus two percentage points (2.0%), such interest also to be
payable on demand. The Borrower hereby authorizes and directs the Agent to, and
the Agent shall, pay the Issuing Bank all Reimbursement Obligations payable
hereunder by applying any funds then held in the Cash Collateral Account
established pursuant to SECTION 2.18(I), and if such funds shall be insufficient
to satisfy such Reimbursement Obligation in full, by drawing such amounts under
the Revolving Credit Facility (to the extent of availability thereunder) as of
the due dates of such Reimbursement Obligations, but the failure of the Agent to
so pay the Issuing Bank by drawing under the Revolving Credit Facility will not
affect the Borrower's obligations to pay the Reimbursement Obligations.
Notwithstanding any such draw against the Revolving Credit Facility, the Agent
shall provide the notices to the Borrower required by this SECTION 2.18(D). The
Issuing Bank will provide the Agent and the Borrower with prompt notice of any
payment or disbursement made under any Letter of Credit, although the failure to
give, or any delay in giving, any such notice shall not release, diminish or
otherwise affect the Borrower's obligations under this Section or any other
provision of this Agreement.
(e) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have satisfied in a timely manner in
full its Reimbursement Obligation to the Issuing Bank pursuant to SECTION
2.18(D), and to the extent that any amounts then held in the Cash Collateral
Account established pursuant to SECTION 2.18(I) shall be insufficient to satisfy
such Reimbursement Obligation in full, the Issuing Bank will promptly notify the
Agent, and the Agent will promptly notify each L/C Participant, of such failure.
If the Agent gives such notice prior to 11:00 a.m., Charlotte, North Carolina
local time, on any Business Day to any L/C Participant, such L/C Participant
will make available to the Agent, for the account of the Issuing Bank, its Pro
Rata Share (calculated with respect to its Revolving Credit Percentage) of the
amount of such payment on such Business Day in immediately available funds. If
the Agent gives such notice after 11:00 a.m., Charlotte, North Carolina local
time, on any Business Day to any such L/C Participant, such L/C Participant
shall make its Pro Rata Share of such amount available to the Agent on the next
succeeding Business Day. If and to the extent such L/C Participant shall not
have so made its Pro Rata Share of the amount of such payment available to the
Agent, such L/C Participant agrees to pay to the Agent, for the account of the
Issuing Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Agent, at
the Federal Funds Rate. The failure of any L/C Participant to make available to
the Agent its Pro Rata Share of any payment under any Letter of Credit shall not
relieve any other L/C Participant of its obligation hereunder to make available
to the Agent its Pro Rata Share of any payment under any Letter of Credit on the
date required, as specified above, but no L/C Participant shall be responsible
for the failure of any other L/C Participant to make available to the Agent such
other L/C Participant's Pro Rata Share of any such payment. Each such payment by
an L/C Participant under this SECTION 2.18(E) of its Pro Rata Share of an amount
paid by the Issuing Bank shall constitute a Revolving Credit Loan by such Lender
(the Borrower being deemed to have given a timely Notice of Borrowing therefor)
and shall be treated as such for all purposes of this Agreement; provided that
for purposes of determining the available unused portion of the Total Revolving
Credit Commitment immediately prior to giving effect to the application of the
proceeds of such Revolving Credit Loans, the Reimbursement Obligation being
satisfied thereby shall be deemed not to be outstanding at such time.
(f) Whenever the Issuing Bank receives a payment in respect of a
Reimbursement Obligation as to which the Agent has received, for the account of
the Issuing Bank, any payments from the L/C Participants pursuant to SECTION
2.18(E), the Issuing Bank will promptly pay to the Agent, and the Agent will
promptly pay to each L/C Participant that has paid its Pro Rata Share thereof,
in immediately available funds, an amount equal to such L/C Participant's
ratable share (based on the proportionate amount funded by such L/C Participant
to the aggregate amount funded by all L/C Participants) of such Reimbursement
Obligation.
<PAGE> 49
(g) The Reimbursement Obligations of the Borrower, and the
obligations of the L/C Participants to make payments to the Agent, for the
account of the Issuing Bank, with respect to Letters of Credit, shall be
irrevocable, shall remain in effect until the Issuing Bank shall have no further
obligations to make any payments or disbursements under any circumstances with
respect to any Letter of Credit, and, except to the extent resulting from any
gross negligence or willful misconduct on the part of the Issuing Bank as
finally determined by a court of competent jurisdiction and not subject to any
appeal (or pursuant to arbitration as set forth in SECTION 10.3(B)), shall not
be subject to counterclaim, setoff or other defense or any other qualification
or exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of
this Agreement, any of the other Loan Documents or any documents or
instruments relating to any Letter of Credit;
(ii) Any change in the time, manner or place of
payment of, or in any other term of, all or any of the Credit
Obligations in respect of any Letter of Credit, whether or not the
Borrower has notice or knowledge thereof;
(iii) The existence of any claim, setoff, defense
or other right that the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting),
the Agent, the Issuing Bank, any Lender or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated hereby or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named
in any such Letter of Credit);
(iv) Any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect, any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, telecopier or otherwise, or any errors in translation or in
interpretation of technical terms, other than due to the Issuing Bank's
gross negligence or willful misconduct;
(v) Any defense based upon the failure of any
drawing under a Letter of Credit to conform to the terms of the Letter
of Credit (the Issuing Bank's sole obligation, in determining whether
to pay under any Letter of Credit, being to examine documents required
to be delivered under such Letter of Credit in good faith and without
gross negligence to ascertain that such documents appear on their face
to comply with the terms of such Letter of Credit), any non-application
or misapplication by the beneficiary or any transferee of the proceeds
of such drawing or any other act or omission of such beneficiary or
transferee in connection with such Letter of Credit;
(vi) The exchange, release, surrender or
impairment of any Collateral or other security for the Credit
Obligations;
(vii) The occurrence of any Default or Event of
Default; or
(viii) Subject to the Issuing Bank's obligation set
forth in the parenthetical in clause (V) above, any other circumstance
or event whatsoever, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or
a discharge of, the Borrower or a Guarantor.
<PAGE> 50
None of the foregoing shall impair, prevent or otherwise affect any of the
rights and powers granted to the Issuing Bank hereunder. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall be binding upon the Borrower and each L/C Participant and
shall not create or result in any liability of the Issuing Bank to the Borrower
or any L/C Participant. It is expressly understood and agreed that, for purposes
of determining whether a wrongful payment under a Letter of Credit resulted from
the Issuing Bank's gross negligence or willful misconduct, (i) the Issuing
Bank's acceptance of documents that appear on their face to comply with the
terms of such Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, (ii) the
Issuing Bank's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including the
amount of any draft presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect (so long as such document appears on its face
to comply with the terms of such Letter of Credit), and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (iii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be deemed not to constitute gross
negligence or willful misconduct of the Issuing Bank.
(h) If at any time after the Amendment Effective Date the Issuing
Bank or any L/C Participant determines that the introduction of or any change in
any applicable law, rule, regulation, order, guideline or request or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by the Issuing
Bank or any L/C Participant with any request or directive by any such authority
(whether or not having the force of law) shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
Letters of Credit issued by the Issuing Bank or participated in by any L/C
Participant or (ii) impose on the Issuing Bank or any L/C Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to the
Issuing Bank or L/C Participant of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Issuing Bank or such L/C Participant hereunder or reduce the rate of return
on its capital with respect to Letters of Credit, then the Borrower will, within
fifteen (15) days after delivery to the Borrower by the Issuing Bank or such L/C
Participant of written demand therefor (with a copy thereof to the Agent), pay
to the Issuing Bank or such L/C Participant such additional amounts as shall
compensate the Issuing Bank or such L/C Participant for such increase in costs
or reduction in return; provided that such demand must be made on the Borrower
within one hundred twenty (120) days after the Issuing Bank or relevant L/C
Participant obtains actual knowledge that such Issuing Bank or L/C Participant
is entitled to such payment. A certificate submitted to the Borrower by the
Issuing Bank or such L/C Participant, as the case may be (a copy of which
certificate shall be sent by the Issuing Bank or such L/C Participant to the
Agent), setting forth the basis for the determination of such additional amount
or amounts necessary to compensate the Issuing Bank or such L/C Participant as
aforesaid, shall be conclusive and binding on the Borrower absent manifest error
provided it is made in good faith.
(i) At any time and from time to time (i) during the continuance
of an Event of Default, the Agent, at the direction, or with the consent, of the
Required Lenders, may require the Borrower to deliver to the Agent such
additional amount of cash as is equal to the difference between the aggregate
Stated Amount of all Letters of Credit at any time outstanding (whether
<PAGE> 51
or not any beneficiary under any Letter of Credit shall have drawn or be
entitled at such time to draw thereunder) and the amount then on deposit in the
Cash Collateral Account (as hereinafter defined) and (ii) in the event of a
repayment under SECTION 2.5(C), the Agent will retain such amount as may then be
required to be retained under the proviso in SECTION 2.5(C), such amount in each
case under clauses (I) and (II) above to be held by the Agent in a cash
collateral account (the "Cash Collateral Account") as security for, and for
application to, the Borrower's Reimbursement Obligations. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Lender and the Lenders, a
lien upon and security interest in the Cash Collateral Account and all amounts
held therein from time to time as security for Letter of Credit Outstanding, and
for application to the Borrower's Reimbursement Obligations as and when the same
shall arise. The Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest on the
investment of such amounts in Cash Investments, which investments shall be made
at the direction of the Borrower (unless a Default or Event of Default shall
have occurred and be continuing, in which case the determination as to
investments shall be made at the option and in the discretion of the Agent),
amounts in the Cash Collateral Account shall not bear interest. Interest and
profits, if any, on such investments shall accumulate in such account. In the
event of a drawing, and subsequent payment by the Issuing Bank, under any Letter
of Credit at any time during which any amounts are held in the Cash Collateral
Account, the Agent will deliver to the Issuing Bank an amount equal to the
Reimbursement Obligation created as a result of such payment (or, if the amounts
so held are less than such Reimbursement Obligation, all of such amounts) to
reimburse the Issuing Bank therefor. Any amounts remaining in the Cash
Collateral Account after the expiration of all Letters of Credit and
reimbursement in full of the Issuing Bank for all of its obligations thereunder
shall be held by the Agent, for the benefit of the Borrower, with such amounts
to be applied against the Credit Obligations in such order and manner (x) as the
Borrower may direct in the absence of a Default or an Event of Default and (y)
otherwise, as the Agent may direct; provided, however, that the Cash Collateral
Account shall not be subject to setoff except with the consent of the Required
Lenders provided in SECTION 8.2. If the Borrower is required to provide cash
collateral pursuant to SECTION 2.5(C), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower on demand, provided that after
giving effect to such return (i) the sum of (x) the aggregate principal amount
of all Revolving Credit Loans, Letter of Credit Outstanding and Swingline Loans
outstanding at such time would not exceed the lesser of the Total Revolving
Credit Commitments at such time or the Revolving Credit Borrowing Availability
and (ii) no Default or Event of Default shall have occurred and be continuing at
such time. If the Borrower is required to provide cash collateral as a result of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower promptly after all Events of Default have been
waived. Notwithstanding anything to the contrary contained herein, Agent may,
without notice to the Borrower, sell or liquidate any of the foregoing
investments at any time if the proceeds thereof are required for any release of
funds permitted or required hereunder, and Agent shall not be liable or
responsible for any loss, cost or penalty resulting from any such sale or
liquidation. With respect to any funds received by Agent for deposit into the
Cash Collateral Account after 10:00 a.m., Charlotte, North Carolina, time, the
Agent shall not be required to invest such funds or to effect such investment
instruction until the following Business Day.
(j) Notwithstanding any termination of the Commitments or
repayment of the Loans, or both, the obligations of the Borrower under this
SECTION 2.18 shall remain in full force and effect until the Issuing Bank and
the L/C Participants shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
<PAGE> 52
2.19. Replacement of Lenders. The Borrower may, at any time and so long
as no Default or Event of Default has then occurred and is continuing, replace
any Lender (a) that has requested additional amounts from the Borrower under
SECTION 2.12, SECTION 2.11(A) or SECTION 2.11(B) or the obligation of which to
make or maintain LIBOR Loans has been suspended under SECTION 2.11(D) by written
notice to such Lender and the Agent given not more than thirty (30) days after
any such event. Within sixty (60) days of such notice, the Borrower shall give
written notice to such Lender and the Agent identifying one or more Persons each
of which qualifies as an Eligible Assignee and shall be reasonably acceptable to
the Agent (each, a "Replacement Lender," and collectively, the "Replacement
Lenders") to replace such Lender (the "Replaced Lender"), provided that (i) the
second notice from the Borrower to the Replaced Lender and the Agent provided
for hereinabove shall specify an effective date for such replacement (the
"Replacement Effective Date"), which shall be at least five (5) Business Days
after such notice is given, (ii) as of the relevant Replacement Effective Date,
each Replacement Lender shall enter into an Assignment and Acceptance with the
Replaced Lender pursuant to SECTION 10.5(A) (but shall not be required to pay
the processing fee otherwise payable to the Agent pursuant to SECTION 10.5(A)),
pursuant to which such Replacement Lenders collectively shall acquire, in such
proportion among them as they may agree with the Borrower and the Agent, all
(but not less than all) of the Commitments, End Loaded Lease Commitments,
outstanding Loans and End Loaded Lease Loans of the Replaced Lender, and, in
connection therewith, shall pay to the Replaced Lender, as the purchase price in
respect thereof, an amount equal to the sum as of the Replacement Effective Date
(without duplication) of (y) the unpaid principal amount of, and all accrued but
unpaid interest on, all outstanding Loans and End Loaded Lease Loans of the
Replaced Lender and (z) the Replaced Lender's ratable share of all accrued but
unpaid fees owing to the Replaced Lender hereunder and under the End Loaded
Lease Credit Agreement, and (iii) all other obligations of the Borrower owing to
the Replaced Lender (other than those specifically described in clause (ii)
above in respect of which the assignment purchase price has been, or is
concurrently being, paid), including, without limitation, amounts payable under
SECTION 2.13 as a result of the actions required to be taken under this Section,
shall be paid in full by the Borrower to the Replaced Lender on or prior to the
Replacement Effective Date.
ARTICLE III
CONDITIONS OF BORROWING
3.1. Conditions of Loans under Original Credit Agreement. The
obligation of each Lender to make Loans in connection with the initial Borrowing
(as such terms are defined in the Original Credit Agreement) under the Original
Credit Agreement was subject to the satisfaction of the conditions precedent set
forth in Sections 3.1 and 3.2 of the Original Credit Agreement, which conditions
have heretofore been satisfied.
3.2. Conditions to Effectiveness. The effectiveness of this
Agreement and the amendment and restatement of the Original Credit Agreement
effected hereby is subject to the satisfaction of the condition set forth in the
last sentence of SECTION 10.14 and the following conditions precedent:
3.2.1. Executed Loan Documents.
(a) Loan Documents. The Notes and all other Loan Documents to be
executed on or prior to the Amendment Effective Date shall have been duly
authorized, executed and delivered to the appropriate Lenders and the Swingline
Lender by the Borrower, in form and substance satisfactory to the Lenders, shall
be in full force and effect and no Default shall exist thereunder, each Lender
and the Swingline Lender shall have received its original Notes and a copy of
each other Note, and the Agent shall have received a copy of each Note.
<PAGE> 53
(b) Security and Pledge Agreement. The Security and Pledge
Agreement shall have been duly authorized, executed and delivered to the Agent
and each Lender by the Borrower and the Guarantors, together with, to the extent
not previously delivered, all certificates for the Stock being pledged
thereunder and duly executed undated stock powers for each such certificate, and
together with, to the extent not previously delivered, all promissory notes
(duly endorsed in blank), initial transaction statements and other documents
requested by the Agent and the Lenders to perfect the security interests granted
therein. The Security and Pledge Agreement shall be in full force and effect and
no Default shall exist thereunder, and the Agent and each Lender shall have
received a fully executed original thereof.
(c) Guaranty Documents. Each Subsidiary of the Borrower (other
than The Woodrum Group, Inc. and InProNet, Inc.) existing as of the Amendment
Effective Date shall have duly authorized, executed and delivered to the Agent
and each Lender a Guaranty Agreement and the other Guaranty Documents in form
and substance satisfactory to the Lenders, each such document shall be in full
force and effect and no Default shall exist thereunder, and the Agent and each
Lender shall have received a fully executed original thereof.
(d) Financing Statements. Financing Statements and all other
filings or recordations necessary to perfect the security interest of the Agent,
on behalf of the Lenders, in the Collateral shall have been filed, and the Agent
shall have received confirmation in a form acceptable to the Lenders that such
security interest constitutes a valid and perfected first priority security
interest therein to the extent such security interest can be perfected by filing
a financing statement, subject only to Permitted Liens.
(e) Mortgages; Title Insurance. Amended and Restated Mortgages
shall have been duly authorized, executed and delivered by the Borrower and the
Guarantors (as applicable), shall have been recorded, registered and filed in a
manner acceptable to the Agent, shall be in full force and effect and no default
shall exist thereunder, and the Agent shall have received fully executed copies
thereof, and each Lender shall have received a photocopy thereof. To the extent
not previously delivered, the Agent, for the benefit of the Lenders, shall have
received policies of title insurance or title insurance binders in form and
substance satisfactory to the Agent, from title insurance companies duly
licensed to do business in the states where the Realty is located, selected by
the Borrower and acceptable to the Agent, in amounts satisfactory to the Agent
but not to exceed the fair market value of the Realty, on standard ALTA (1992)
Loan Policy forms, with respect to each tract of Realty being encumbered by the
liens of the Mortgages, all premiums thereon shall have been paid, and the
policy shall insure that the Mortgages constitute valid, enforceable first
priority liens on the Realty, free and clear from all title defects and
encumbrances whatsoever except for and subject to Permitted Liens, and with such
exceptions as are acceptable to the Agent, and shall include revolving credit
endorsements, variable rate endorsements and such other endorsements as the
Agent may request, to the extent available in the applicable jurisdictions. Such
title insurance policies (or binders, as the case may be) with respect to the
Realty may not contain general survey exceptions except with the Agent's prior
written consent. To the extent title insurance policies (or binders, as the case
may be) have been previously delivered to the Agent, this CLAUSE (E) shall only
require (with respect to title insurance) (i) an endorsement to such title
insurance (or binders, as the case may be) insuring that the amended and
restated Mortgages constitute valid enforceable, first priority liens on the
Realty, free and clear from all title defects and encumbrances whatsoever except
from and subject to Permitted Liens and with such exceptions as are acceptable
to the Agent and (ii) payment of premiums thereon.
<PAGE> 54
(f) Surveys. To the extent not previously delivered, the Agent
shall have received a metes-and-bounds survey of each tract or parcel of the
Realty being encumbered by the lien of the Mortgages, in form and substance
satisfactory to the Agent.
(g) Environmental Assessments. To the extent not previously
delivered, the Agent shall have received an environmental assessment with
respect to each tract or parcel of the Realty, in form and substance
satisfactory to the Agent.
(h) Landlord Consents. To the extent not previously delivered or
waived, a Landlord Consent with respect to each of the Facility Leased
Properties shall have been duly authorized, executed and delivered to the Agent
by the tenant and the landlord with respect thereto, shall be in full force and
effect and no Default shall exist thereunder, shall be recorded, registered and
filed in the appropriate real estate records in a manner acceptable to the
Agent, and the Agent shall have received a fully executed copy thereof.
(i) Certain Subordinated Debt. To the extent not previously
subordinated, the obligations of the Borrower and its Subsidiaries under the
Intercompany Management Agreements existing as of the Amendment Effective Date
shall be subordinated to the Credit Obligations and the Guaranty Obligations on
terms acceptable to the Lenders in their sole discretion.
3.2.2. Closing Certificates; Etc.
(a) Certificate of the Borrower. The Agent and each Lender shall
have received a certificate dated as of the Amendment Effective Date from the
Chief Executive Officer, Chief Financial Officer, Vice President-Finance or Vice
President-Controller of the Borrower, in form and substance satisfactory to the
Lenders, to the effect that, to their knowledge, (i) all representations and
warranties of the Borrower contained in this Agreement and the other Loan
Documents are true, correct and complete in all material respects as of the
Amendment Effective Date, (ii) neither the Borrower nor any of its Subsidiaries
is in violation of any of the covenants contained in this Agreement and the
other Loan Documents, (iii) after giving effect to the transactions contemplated
by this Agreement, no Default or Event of Default has occurred and is
continuing, and (iv) the Borrower has satisfied each of the conditions set forth
in this Section to be satisfied by the Borrower.
(b) Secretaries' Certificates. The Agent and each Lender shall
have received a certificate dated as of the Amendment Effective Date from the
Secretary or an Assistant Secretary of the Borrower and each Guarantor, in form
and substance satisfactory to the Lenders, certifying: (i) that the articles or
certificate of incorporation delivered to the Agent and each Lender in
connection with the closing of the Original Credit Agreement are in full force
and effect on the Amendment Effective Date and have not been amended since
December 17, 1996 (or if such articles or certificate of incorporation have been
amended thereafter, that attached thereto is a copy of such articles or
certificate of incorporation and all amendments thereto, certified as of a
recent date by the Secretary of State (or other equivalent officer) of the
relevant state of incorporation, which documents have not been amended since
such date of certification); (ii) that the bylaws delivered to the Agent and
each Lender in connection with the closing of the Original Credit Agreement are
in full force and effect on the Amendment Effective Date and have not been
amended since December 17, 1996 (or if such bylaws have been amended thereafter,
that attached thereto is a copy of such bylaws and all amendments thereto);
(iii) that attached thereto is a true and complete copy of resolutions adopted
by the Board of Directors and stockholders (if necessary) of such corporation,
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, as applicable; and (iv) as to the incumbency and
genuineness of the signature of each officer of such corporation executing this
Agreement or any of the other Loan Documents and authorized
<PAGE> 55
to request any Borrowing, as applicable. The Agent and each Lender shall also
have received a similar certificate dated as of the Amendment Effective Date
from the General Partner of the Palestine Limited Partnership and the General
Partner of Mexia Principal Healthcare Limited Partnership, respectively, in form
and substance satisfactory to the Agent.
(c) Certificates of Existence or Good Standing. The Agent and each
Lender shall have received (i) long-form certificates as of a recent date of the
good standing or existence of the Borrower and each Guarantor under the laws of
its state of incorporation or organization and each state where the Borrower and
each Guarantor is qualified to transact business, and (ii) where reasonably
available, certificates as of a recent date from the department of revenue or
other appropriate Governmental Authority of each such state indicating that the
Borrower or such Guarantor, as appropriate, has filed all required tax returns
and owes no delinquent taxes.
(d) Opinion of Counsel to the Borrower and the Guarantors. The
Agent and each Lender shall have received the favorable opinions of Tonkon,
Torp, Galen, Marmaduke & Booth, Oregon counsel to the Borrower, Waller Lansden,
Dortch & Davis, Tennessee counsel to the Borrower and the Guarantors, Faegre &
Benson LLP, Colorado counsel to the Borrower and the Guarantors, Donohoe,
Jamerson & Carroll, Texas counsel to the Borrower and the Guarantors, Argue
Pearson Harbison & Myers, LLP, California counsel to the Borrower and the
Guarantors, Barnes & Thornburg, Indiana counsel to the Borrower and the
Guarantors, each such opinion to be addressed to the Agent, for the benefit of
the Lenders, the Issuing Bank and each Lender, and in form and substance
satisfactory to the Agent and each Lender.
(e) UCC Search. The Agent and each Lender shall have received the
results of a search of all filings made against the Borrower and each Guarantor
under the Uniform Commercial Code as in effect in any state in which any assets
of any Borrower or any Guarantor are located, indicating that the Collateral is
free and clear of any liens or encumbrances except for Permitted Liens or for
which UCC-3 termination statements are being delivered.
(f) Insurance. The Agent shall have received certificates, and
certified copies of policies, of insurance, in form and substance satisfactory
to the Agent, upon the Collateral and the business of the Borrower and each
Guarantor, with the additional insured, mortgagee and loss payable clauses and
endorsements required by Section 5.4.
(g) Termination of Golder, Thoma Agreement. The Professional
Services Agreement between the Borrower and GTCR Fund IV shall have been
terminated and of no further force or effect.
3.2.3. Consents; No Adverse Change.
(a) Consents and Approvals. All necessary approvals,
authorizations and consents, if any are required, of any Person and all
Governmental Authorities having jurisdiction with respect to the Collateral and
the transactions contemplated by this Agreement shall have been obtained.
(b) No Injunction, Etc. No action, proceeding, investigation,
claim, regulation or legislation shall have been instituted, threatened or
proposed before any court or other Governmental Authority to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or that is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or that, in the Required Lenders' discretion, would make
inadvisable the consummation of the transactions contemplated by this Agreement.
<PAGE> 56
(c) No Material Adverse Change. Since the date of the most recent
audited Financial Statements of the Borrower and each Guarantor, there shall not
have occurred any Material Adverse Change or any event, condition or state of
facts that could reasonably be expected to have a Material Adverse Effect, other
than as specifically contemplated by this Agreement.
(d) Event of Default. No Default or Event of Default shall have
occurred and be continuing.
3.2.4. Financial Matters.
(a) Financial Statements. The Lenders shall have received the
Financial Statements from the Borrower, in form and substance satisfactory to
the Lenders.
(b) Financial Condition Certificate. The Agent and each Lender
shall have received a Financial Condition Certificate together with the
attachments required thereby (including, without limitation, the Projections),
all in substantially the form of EXHIBIT E.
(c) Taxes. All taxes, fees and other charges then due in
connection with the execution, delivery, recording, filing and registration of
any of the Loan Documents shall have been paid by the Borrower.
3.2.5. End Loaded Lease Facility Documentation. All documentation
under the End Loaded Lease Facility shall be satisfactory in form and substance
to the Agent and the Lenders.
3.2.6. Miscellaneous. (a) Disbursement Instructions; Account
Designation Letter. The Agent shall have received an Account Designation Letter,
together with written instructions from an Authorized Officer of the Borrower,
including wire transfer information, directing the payment of the proceeds of
Loans to be made hereunder on the Amendment Effective Date. If any Debt is being
refinanced or otherwise paid off on the Amendment Effective Date with the
proceeds of the Loans, the funds required for such payoff shall be earmarked by
the Agent for the benefit of the refinanced lender and shall be paid directly
from the Agent to the refinanced lender pursuant to a payoff letter under which
the refinanced lender agrees to release any and all liens on the assets of the
Borrower and its Subsidiaries upon payment in full.
(b) Proceedings and Documents. The Agent and the Lenders shall
have received copies of all other documents, certificates, opinions, instruments
and other evidence as each may reasonably request, in form and substance
reasonably satisfactory to the Agent and the Lenders, with respect to the
transactions contemplated by this Agreement and the taking of all actions in
connection therewith.
3.3 Conditions to All Loans and Advances. The obligation of the
Lenders to make any Loan hereunder (including any Loans made on the Amendment
Effective Date, but excluding Revolving Loans made for the purpose of repaying
Refunded Swingline Loans or to fund Reimbursement Obligations) and the
obligation of the Issuing Bank to issue any Letters of Credit are subject to the
continued validity of all Loan Documents and the satisfaction of the following
conditions precedent on the relevant Borrowing Date:
(a) Each of the representations and warranties made by the
Borrower contained in ARTICLE IV shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of the Borrowing Date,
except to the extent the facts upon which such representation and warranty are
based may be changed as a result of transactions or occurrences permitted or
contemplated hereby or such representation or warranty relates solely to a prior
date;
<PAGE> 57
(b) No Default or Event of Default shall have occurred on the
Borrowing Date or after giving effect to the Loans to be made or Letters of
Credit to be issued on such Borrowing Date; and
(c) Since the date of the most recent audited consolidated
financial statements of the Borrower, to the knowledge of the Borrower, there
shall not have occurred any Material Adverse Change or a Material Adverse
Effect, other than as specifically contemplated by this Agreement.
3.4 Waiver of Conditions Precedent. If any Lender makes any Loan
hereunder, or if the Issuing Bank issues any Letter of Credit, prior to the
fulfillment of any of the conditions precedent set forth in this ARTICLE III,
the making of such Loan or the issuance of such Letter of Credit shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and unless the Required Lenders indicate otherwise in
writing, the Borrower shall thereafter use its best efforts to fulfill each such
condition promptly.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit Agreement, to
make the Loans and to continue to make the Loans, and to induce the Issuing Bank
to issue, and the Lenders to participate in, the Letters of Credit, the Borrower
makes the following warranties and representations to the Agent, the Issuing
Bank and each Lender on the date hereof and on the date of each Borrowing
(except to the extent any such representation or warranty relates solely to a
prior date and except to the extent that the facts upon which such
representation or warranty is based have changed as a result of a transaction or
occurrence permitted or contemplated by this Agreement), after giving effect to
the transactions contemplated hereby, except as specifically provided otherwise:
4.1. Corporate Organization and Power; Capital Structure. (a) The
Borrower and each of its Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (ii) is qualified to do business and is in good standing in every
other jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified and where the failure to be so
qualified could reasonably be expected to have a Material Adverse Effect, which
jurisdictions as of the Amendment Effective Date are set forth on SCHEDULE
4.1(A); (iii) except as set forth on SCHEDULE 4.2 and except for Subsidiaries
acquired or created after the Amendment Effective Date in compliance with
SECTIONS 5.12 and 6.7, has no Subsidiaries or Affiliates (other than its
officers, directors and shareholders) and, except for investments made in
compliance with SECTION 6.7, is not a partner or joint venturer in any
partnerships or joint ventures; (iv) has the corporate power to own and give a
lien on and security interest in its Collateral and to engage in the
transactions contemplated hereby; and (v) has the full corporate power,
authority and legal right to execute and deliver this Agreement and the other
Loan Documents to which it is a party and to perform and observe the terms and
provisions thereof. Neither the Borrower nor any of its Subsidiaries has, during
the preceding five (5) years, been known as or used any other corporate,
fictitious or trade names in the United States other than as set forth on
SCHEDULE 4.1(A).
<PAGE> 58
(b) The authorized capital stock of the Borrower consists of
twenty-five thousand (25,000) shares of Series A Senior Preferred Stock, no par
value, of which zero (0) shares are issued and outstanding, fifty thousand
(50,000) shares of Series B Junior Preferred Stock, no par value, of which zero
(0) shares are issued and outstanding, one hundred thousand (100,000) shares of
Preferred Stock, par value $0.01 per share, of which zero (0) shares are issued
and outstanding and twenty-five million (25,000,000) shares of Common Stock, par
value $0.01 per share, of which twelve million three hundred- four thousand
seven hundred sixty-eight (12,304,768) shares are issued and outstanding. All of
the outstanding capital stock of the Borrower is duly and validly issued, fully
paid and non-assessable and was offered, issued and sold in compliance with all
federal and state securities laws applicable to the Borrower. None of the
outstanding capital stock of the Borrower has been issued in violation of any
preemptive or other rights of its shareholders. The Borrower does not have
outstanding any securities or other rights which are either by their terms or by
contract convertible or exchangeable into capital stock of or other equity
interest in the Borrower, as the case may be nor any preemptive or similar
rights to subscribe for or to purchase, or any options or warrants or agreements
for the purchase or issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or other
equity interest or securities convertible into its capital stock or other equity
interest, except, as set forth on SCHEDULE 4.1(B).
4.2. Subsidiaries. SCHEDULE 4.2 contains a complete and accurate
list of the Subsidiaries of the Borrower as of the Amendment Effective Date
showing, as to each Subsidiary, the number of shares of Stock or other Interests
and the owner of each class of Stock or other Interests authorized and
outstanding. Except as set forth on SCHEDULE 4.2, all of such issued and
outstanding shares of Stock or other Interests of all of such of Borrower's
Subsidiaries that are owned by the Borrower or its Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Borrower or its Subsidiaries, free and clear of any liens, charges,
encumbrances, security interests, claims or restrictions of any nature
whatsoever, except for liens in favor of the Agent, for the benefit of the
Lenders, granted under the Loan Documents, and there are no other equity
securities of any such Subsidiaries issued and outstanding or reserved for any
purpose.
4.3. Enforceability of Loan Documents; Compliance with Other
Instruments. Except as set forth on SCHEDULE 4.3, each of the Loan Documents to
which the Borrower or any Guarantor is a party, as the case may be, has been
duly authorized by all necessary corporate action on the part of the Borrower or
such Guarantor, has been validly executed and delivered by the Borrower or such
Guarantor and is the legal, valid and binding obligation of the Borrower or such
Guarantor, enforceable against the Borrower or such Guarantor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity. Neither the Borrower nor
any of its Subsidiaries is in default with respect to any indenture, loan
agreement, mortgage, lease, deed or similar agreement to which it is a party or
by which it, or any of its property, is bound which default could reasonably be
expected to have a Material Adverse Effect. Neither the execution, delivery or
performance of the Loan Documents by the Borrower and the Guarantors, nor
compliance by the Borrower and the Guarantors therewith: (a) conflicts or will
conflict with or results or will result in any breach of, or constitutes or will
constitute with the passage of time or the giving of notice or both, a default
under, (i) any Requirement of Law or (ii) any material agreement or instrument
to which the Borrower or any Guarantor is a party or by which it, or any of its
property, is bound or (b) results or will result in the creation or imposition
of any lien, charge or encumbrance upon the properties of the Borrower or any of
its Subsidiaries pursuant to any such agreement or instrument, except for
Permitted Liens.
<PAGE> 59
4.4. Governmental Authorization.
(a) No authorization, consent or approval of, or declaration or
filing with, any Governmental Authority is required for the valid execution and
delivery by the Borrower and its Subsidiaries of the Loan Documents to which
they are a party or the consummation by the Borrower and its Subsidiaries of the
loan transactions contemplated hereby and thereby, including repayment of the
Credit Obligations and pledging the Collateral, except for the filing and
recording of the Financing Statements, the Mortgages, the Landlord Consents and
collateral assignments of registered trademarks, patents and copyrights which
constitute Collateral, and except for filings and notices unrelated to
perfection of security interests and liens in Collateral and required to be made
or given by the Borrower and its Subsidiaries after the Amendment Effective Date
in the ordinary conduct of their business operations. The Borrower and its
Subsidiaries have, and are in good standing with respect to, all governmental
approvals, permits, certificates, inspections, consents and franchises necessary
to continue to conduct business as heretofore conducted and to own or lease and
operate its properties as now owned or leased by it where the failure to have
and maintain the same could reasonably be expected to have a Material Adverse
Effect.
(b) The Borrower and each of its Subsidiaries has, to the extent
applicable, (i) obtained (or been duly assigned) all required certificates of
need or determinations of need, as required by the relevant state Governmental
Authority, for the ownership and operation of their businesses as currently
operated; and (ii) obtained and maintains in good standing all licenses required
by any Requirement of Law or required based on the operation of the applicable
business, where the failure to have and maintain the same could reasonably be
expected to have a Material Adverse Effect.
(c) Each professional employee, officer and director of the
Borrower and its Subsidiaries providing professional services to patients of the
Borrower or any such Subsidiary is duly licensed (where license is required) by
each state or state agency or commission, or any other governmental agency
having jurisdiction over the provisions of such services by such employee,
officer or director, in which the Borrower or any of its Subsidiaries is
located, required to enable such employee, officer or director to provide the
professional services necessary to enable the Borrower or such Subsidiary to
operate as currently operated and as presently contemplated to be operated
except to the extent the failure to have such a license could not reasonably be
expected to have a Material Adverse Effect. All such required licenses are in
full force and effect on the date hereof and have not been revoked or suspended
or otherwise limited except to the extent such resolution, suspension or
limitation could not reasonably be expected to have a Material Adverse Effect.
Each physician retained or otherwise engaged as an independent contractor by the
Borrower or any of its Subsidiaries possesses a valid narcotics number issued by
the United States Drug Enforcement Administration and a valid state narcotics
registration if required by any Requirement of Law or by the nature of the
services provided by such physician.
4.5. Financial Statements.
(a) The Borrower has heretofore furnished to each Lender copies of
the Financial Statements. The Financial Statements have been prepared in
accordance with Generally Accepted Accounting Principles (subject, with respect
to the unaudited Financial Statements, to the absence of notes required by
Generally Accepted Accounting Principles and to normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby on a consolidated basis as of the dates thereof
and the consolidated results of operations of the Persons covered thereby for
the periods then ended. Except as fully reflected in the most recent Financial
Statements and the notes thereto, as of the Amendment Effective Date, and taking
into account the Loans to be made on the Amendment Effective Date and the other
transactions contemplated by the Loan Documents, there will be
<PAGE> 60
no material liabilities or obligations with respect to the Borrower or any of
its Subsidiaries of any nature whatsoever (whether absolute, contingent or
otherwise and whether or not due). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change. Neither the Borrower nor
any of its Subsidiaries has directly or indirectly declared, ordered, paid, made
or set apart any amounts or property for any dividend, share acquisition or
other distribution, or agreed to do so, except as permitted by SECTION 6.8.
(b) The Borrower has prepared, and has heretofore furnished to
each Lender copies of, annual projected balance sheets and statements of income
and cash flows of the Borrower and its Subsidiaries for the three-year period
commencing on the date set forth therein (the "Projections"). In the opinion of
the Borrower's management, the assumptions used in preparation of the
Projections were reasonable when made and are reasonable as of the Amendment
Effective Date. The Projections have been prepared in good faith by the
executive and financial personnel of the Borrower in light of the historical
financial performance and the financial and operating condition of the Borrower
and its Subsidiaries prior to the Amendment Effective Date, give effect to the
transactions contemplated by the Loan Documents, the End Loaded Lease Facility
and the Borrower's initial public equity offering and, in the opinion of the
Borrower's management, represent, as of the Amendment Effective Date, a
reasonable estimate of the future performance and financial condition of the
Borrower and its Subsidiaries, subject to the uncertainties and approximations
inherent in any projections and without representation or warranty that such
projected performance and financial condition will actually be achieved, it
being acknowledged by the Lenders and the Agent that the actual results may
differ from the projected results and the differences may be material.
4.6. Solvency. (i) On the Amendment Effective Date, prior to the
transactions contemplated by this Agreement, the Borrower and each of its
Subsidiaries (taking into account rights of contribution) is, and the Borrower
and its Subsidiaries, on a consolidated basis are, Solvent, and (ii) after
giving effect to the transactions contemplated hereby, the Borrower and each of
its Subsidiaries (taking into account rights of contribution) will be Solvent,
and the Borrower and its Subsidiaries on a consolidated basis will be Solvent.
4.7. Places of Business. SCHEDULE 4.7 lists, as of the Amendment
Effective Date, (i) the chief executive office and places of business (including
county or town designation), as provided in the Uniform Commercial Code, of the
Borrower and each of its Subsidiaries, (ii) the locations at which the Borrower
and each of its Subsidiaries maintains, or presently intends to maintain,
billing and related records relating to Accounts Receivable, and (iii) all
locations where personal property valued at $100,000 or more in the aggregate of
the Borrower and each of its Subsidiaries is presently maintained.
4.8. Leased Properties. SCHEDULE 4.8 lists, as of the Amendment
Effective Date, (i) all material real property leased by the Borrower or any of
its Subsidiaries, and (ii) all personal property leased by the Borrower or any
of its Subsidiaries requiring lease payments in excess of $100,000 per year,
including in each case the name of the lessors and a description of the
locations of such property. The Borrower and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all of its real property leases, and
all such leases are valid and in full force and effect. The Borrower has
delivered complete and accurate copies of all such leases to the Agent and the
Lenders.
4.9. Realty. SCHEDULE 4.9 lists all real property owned as of the
Amendment Effective Date by the Borrower or any of its Subsidiaries.
<PAGE> 61
4.10. Assets for Conduct of Business. The Borrower and each of its
Subsidiaries possesses adequate assets, licenses, patents, copyrights,
trademarks and trade names necessary to continue to conduct its business
substantially as heretofore conducted without any material conflict with the
rights of other Persons.
4.11. Insurance. SCHEDULE 4.11 accurately summarizes all insurance
policies or programs of the Borrower and its Subsidiaries in effect as of the
Amendment Effective Date, and indicates the insurer's name, policy number,
expiration date, amount of coverage, type of coverage, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
4.12. Ownership of Properties. Except as set forth on SCHEDULE 4.12,
(a) each of the Borrower and its Subsidiaries has good and marketable title to
all real property owned by it, holds interests as lessee under valid leases in
full force and effect with respect to all leased real and material personal
property used in connection with its business, and has good title to all of its
other properties and assets, including, without limitation, the assets reflected
in the most recent Financial Statements (except as sold or otherwise disposed of
since the date thereof in the ordinary course of business), in each case free
and clear of all liens, claims or encumbrances other than Permitted Liens; and
(b) other than the Financing Statements in favor of the Agent and protective
filings with respect to operating leases that may be filed after the Amendment
Effective Date or with respect to Permitted Liens, no financing statement that
names the Borrower or any of its Subsidiaries as debtor has been filed and is
still in effect, and neither the Borrower nor any of its Subsidiaries has signed
any other financing statement or any security agreement authorizing any secured
party thereunder to file any such financing statement.
4.13. First Priority. The provisions of the Loan Documents (whether
executed and delivered prior to or on the Amendment Effective Date or
thereafter), are and will be effective to create in favor of the Agent, for the
benefit of the Lenders, upon the proper filing of all Financing Statements and
other recordations contemplated thereunder in the jurisdictions and locations
contemplated thereby (or, in the case of the Pledge Agreement, the possession by
the Agent of certificates evidencing the securities pledged thereby without
notice of an adverse claim or, in the case of motor vehicles, the endorsement of
certificates of title), a valid and enforceable first priority perfected
security interest in and lien upon all right, title and interest of the Borrower
and its Subsidiaries in the Collateral described therein, subject only to
Permitted Liens, and except as and to the extent the Agent's liens cannot be
perfected by filing under the Uniform Commercial Code. Upon (i) delivery and
continued possession by the Agent, without notice of adverse claim, of
certificates evidencing the securities pledged pursuant to the Security and
Pledge Agreement, (ii) endorsement and delivery to the Agent of certificates of
title for motor vehicles, and (iii) the filing of collateral assignments of
patents and trademarks with the U.S. Patent and Trademark Office, the Agent
shall have a valid and enforceable first priority security interest in and lien
upon all right, title and interest of the Borrower and its Subsidiaries in such
Collateral, subject only to Permitted Liens.
4.14. Litigation; Government Regulation. Except as set forth in
SCHEDULE 4.14, (a) there are no judgments, injunctions or similar orders or
decrees and no actions, suits, investigations or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries or its business that could reasonably be expected to have a
Material Adverse Effect, or that question the validity of this Agreement or any
of the Loan Documents, at law or in equity before any applicable court,
arbitrator or Governmental Authority with appropriate jurisdiction, and (b)
neither the Borrower nor any of its Subsidiaries is in violation of or in
default under any Requirement of Law where such violation could reasonably be
expected to have a Material Adverse Effect.
<PAGE> 62
4.15. Taxes. Except as set forth in SCHEDULE 4.15, neither the
Borrower nor any of its Subsidiaries is delinquent in the payment of any taxes
that have been levied or assessed by any Governmental Authority against it or
its assets where such delinquency could reasonably be expected to have a
Material Adverse Effect. Except as set forth in SCHEDULE 4.15, as of the
Amendment Effective Date, each of the Borrower and its Subsidiaries (a) has
timely filed all tax returns that are required by law to be filed prior to the
date hereof, and has paid all taxes shown on said returns and all other
assessments or fees levied upon it or upon its properties to the extent that
such taxes, assessments or fees have become due, and if not due, such taxes have
been adequately provided for and sufficient reserves therefor established on its
books of account, in each case where the failure to do so could reasonably be
expected to have a Material Adverse Effect, and (b) is current with respect to
payment of all federal and state withholding taxes, social security taxes and
other payroll taxes, in each case where the failure to do so could reasonably be
expected to have a Material Adverse Effect.
4.16. ERISA; Employee Benefits.
(a) SCHEDULE 4.16 lists, as of the Amendment Effective Date, all
Employee Plans and Pension Plans ("Plans") maintained or sponsored by the
Borrower and its Subsidiaries or to which the Borrower or any of its
Subsidiaries is obligated to contribute and separately identifies all Qualified
Plans (as defined below) and all Multiemployer Plans. The Borrower has delivered
true and correct copies of all such Plans to the Agent.
(b) Each such Plan is in compliance with the applicable provisions
of ERISA, the Internal Revenue Code and other federal or state law, including
all requirements under the Internal Revenue Code or ERISA for filing reports
(which are true and correct in all material respects as of the date filed), the
noncompliance with which could reasonably be expected to have a Material Adverse
Effect, and benefits have been paid in accordance with the provisions of each
such Plan.
(c) The form of each Plan intended to be qualified under Section
401 of the Internal Revenue Code ("Qualified Plan") to the knowledge of the
Borrower qualifies under Section 401 of the Internal Revenue Code, and the
trusts created thereunder are, to the knowledge of the Borrower, exempt from tax
under the provisions of Section 501 of the Internal Revenue Code, and to the
knowledge of the Borrower nothing has occurred that would cause the loss of such
qualification or tax-exempt status.
(d) There is no outstanding liability under Title IV of ERISA with
respect to any Plan maintained or sponsored by the Borrower and its Subsidiaries
(as to which the Borrower or any of its Subsidiaries is or may be liable), nor
with respect to any Plan to which any of the Borrower or its Subsidiaries
(wherein the Borrower or any of its Subsidiaries is or may be liable)
contributes or is obligated to contribute that could reasonably be expected to
have a Material Adverse Effect.
(e) None of the Qualified Plans subject to Title IV of ERISA has
any unfunded benefit liability as defined in Section 4001(a)(18) of ERISA (as to
which the Borrower or any of its Subsidiaries is or may be liable) that could
reasonably be expected to have a Material Adverse Effect.
(f) No Plan maintained or sponsored by the Borrower or any of its
Subsidiaries provides medical or other welfare benefits or extends coverage
relating to such benefits beyond the date of a participant's termination of
employment with the Borrower or such Subsidiary, except to the extent required
by Section 4980B of the Internal Revenue Code and at the sole expense of the
participant or the beneficiary of the participant to the fullest extent
permissible under such Section of the Internal Revenue Code. The Borrower and
its Subsidiaries have
<PAGE> 63
complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Internal Revenue Code.
(g) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan maintained or sponsored by the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is obligated to
contribute.
(h) As of the Amendment Effective Date, there are no pending or,
to the knowledge of the Borrower, threatened claims, actions or lawsuits, other
than routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Borrower and its
Subsidiaries or their assets, or (ii) any fiduciary with respect to any Plan for
which the Borrower or any of its Subsidiaries may be directly or indirectly
liable, through indemnification obligations or otherwise.
(i) Neither the Borrower nor any of its Subsidiaries has incurred
or, to the knowledge of the Borrower, reasonably expects to incur (i) any
liability (and no event has occurred that, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan or (ii) any liability under
Title IV of ERISA (other than premiums due and not delinquent under Section 4007
of ERISA) with respect to a Plan.
(j) Neither the Borrower nor any of its Subsidiaries has engaged,
directly or indirectly, in a nonexempt prohibited transaction (as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA) in connection
with any Plan that could reasonably be expected to have a Material Adverse
Effect.
4.17. Compliance with Laws. The Borrower and each of its
Subsidiaries has duly complied with, and the Collateral and their business
operations and leaseholds are in compliance with, all Requirements of Law,
including, without limitation, all federal and state securities laws, OSHA, and
Titles XVIII and XIX of the Social Security Act (42 U.S.C. ss.ss. 1395 et seq.
and ss.ss. 1396 et seq., respectively, as amended from time to time), the
Bloodborne Pathogens Standard, the Medicare Regulations, the Medicaid
Regulations and the MediCal Regulations, except to the extent that noncompliance
could not reasonably be expected to have a Material Adverse Effect; provided,
that with respect to compliance with Environmental Laws, this representation
shall be made to the best of Borrower's knowledge to the extent and solely to
the extent that representations made pursuant to SECTION 4.18 regarding
compliance with Environmental Laws are so qualified.
4.18. Environmental Matters. Except as could not reasonably be
expected to result in a Material Adverse Effect:
(a) Except as reflected in SCHEDULE 4.18 (i) no Hazardous Material
is or has been generated, used, released, treated, disposed of or stored, or
otherwise located, in, on or under the Realty (or any portion thereof), and no
part of the Realty or other property owned, leased or operated by the Borrower
or its Subsidiaries (now or in the past), including without limitation the soil
and groundwater located thereon and thereunder, has been contaminated by any
Hazardous Material; (ii) no improvements on the Realty contain any asbestos or
substances containing asbestos; (iii) none of the Realty has been the subject of
a remedial action; and (iv) to the best of the Borrower's knowledge, the
foregoing statements are true and correct with respect to all of the real
property adjoining any of the Realty.
<PAGE> 64
(b) To the best of the Borrower's knowledge, no portion of the
Realty has been used as or for a mine, a landfill, a dump or other disposal
facility, a gasoline service station, or a petroleum products storage facility,
and none of the Realty or other property owned, leased or operated by the
Borrower or its Subsidiaries (now or in the past) has, pursuant to any
Environmental Law, been placed on the "National Priorities List" or "CERCLIS
List" (or any similar federal, state or local list) of sites subject to possible
environmental problems.
(c) Except as set forth in SCHEDULE 4.18, there are no underground
storage tanks situated on the Realty and, to the best of the knowledge of the
Borrower, no underground storage tanks have ever been situated on the Realty.
(d) Except as set forth in SCHEDULE 4.18, all activities and
operations of the Borrower and its Subsidiaries meet the requirements of all
applicable Environmental Laws, Borrower and its Subsidiaries have not violated
any Environmental Law in the past, and the Realty has never been the site of a
violation of any Environmental Law.
(e) Except as set forth on SCHEDULE 4.18, neither the Borrower nor
its Subsidiary has sent a Hazardous Material to a site which, pursuant to any
Environmental Law, (1) has been placed on the "National Priorities List" or
"CERCLIS List" (or any similar federal, state or local list) of sites subject to
possible environmental problems, or (2) is subject to or the source of a claim,
an administrative order or other request to take "response," "removal,"
"corrective" or "remedial" action, as defined in any Environmental Law, or to
pay for or contribute to the costs of cleaning up the site.
(f) Neither the Borrower nor any of its Subsidiaries is involved
in any suit or proceeding and or has received any notice from any Governmental
Authority or other third party, with respect to a release or threat of release
of any Hazardous Material, or violation or alleged violation of any
Environmental Law, and neither the Borrower nor any of its Subsidiaries has
received notice of any claim from any person or entity relating to property
damage or to personal injuries from exposure to any Hazardous Material.
(g) The Borrower and its Subsidiaries have timely filed all
reports required to be filed, has acquired all necessary certificates, approvals
and permits, and have generated and maintained in all material respects all
required data, documentation and records required under all Environmental Laws.
4.19. Margin Securities.
(a) Neither the Borrower nor any of its Subsidiaries owns any
"margin stock" within the meaning of Regulation U. None of the proceeds of the
Loans will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock, maintaining, reducing or retiring any Debt that was
originally incurred to purchase or carry margin stock or for any other purpose
that would violate Regulation G, Regulation U, Regulation T or Regulation X or
any other regulation of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time, or for any purpose that would
violate the Exchange Act.
(b) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds of the Loans) will
violate or result in a violation of Section 7 of the Exchange Act. Neither the
Borrower nor any of its Subsidiaries owns or intends to carry or purchase
directly or indirectly any "margin security" within the meaning of the Exchange
Act.
4.20. Full Disclosure. None of the Loan Documents or any other
written statements furnished to the Agent or any Lender by or on behalf of the
Borrower or any of its Subsidiaries in connection with the Loan Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein or herein, in light of
the circumstances under which they were made, not misleading.
<PAGE> 65
4.21. Contracts; Labor Disputes. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charge,
corporate restriction, judgment, injunction, decree, rule, regulation or order
of any court or other Governmental Authority, that has or could reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries is a party to, and there is not pending or, to the Borrower's
knowledge, threatened, any labor dispute, strikes, lock-out, grievance, work
stoppage or walkouts relating to any labor contract to which the Borrower or any
of its Subsidiaries is a party that has or could reasonably be expected to have
a Material Adverse Effect.
4.22. Reimbursement from Third Party Payors. The accounts receivable
of the Borrower and its Subsidiaries have been and will continue to be adjusted
to reflect reimbursement policies of third party payors such as Medicare,
Medicaid, MediCal, Blue Cross/Blue Shield, private insurance companies, 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.
4.23. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor
any of its stockholders, officers or directors, acting on behalf of the Borrower
or any Subsidiary, have engaged on behalf of Borrower or any Subsidiary in any
of the following: (i) knowingly 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, Medicaid or MediCal programs; (ii) knowingly
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, Medicaid or MediCal programs; (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment under Medicare, Medicaid or MediCal programs on its
own behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully making or causing to be made
a payment, directly or indirectly, to a physician as an inducement to reduce or
limit services provided with respect to individuals who are entitled to any
benefit or payment under Medicare, Medicaid or MediCal programs and are under
the direct care of the physician; (v) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering or paying
such remuneration (a) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid or MediCal, or (b)
in return for purchasing, leasing or ordering or arranging for or recommending
the purchasing, leasing or ordering of any good, facility, service, or item for
which payment may be made in whole or in part by Medicare, Medicaid or MediCal;
(vi) knowingly and willfully offering or paying any remuneration (including any
kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind to any person to induce such person (x) to refer an individual
to a person for the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by Medicare, Medicaid
or MediCal, or (y) to purchase, lease, order, or arrange for or recommend
purchasing, leasing, or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare, Medicaid or MediCal. With
respect to this Section, knowledge by any employees, representatives and agents
of the Borrower or a Subsidiary of any of the events described in this Section
shall not be imputed to the Borrower or such Subsidiary unless such knowledge
was obtained or learned by a Senior Officer in his or her official capacity as a
Senior Officer of the Borrower or such Subsidiary. No activity of the Borrower
or any Subsidiary shall be considered to be a breach of this Section, except in
the case of an intentional violation thereof, until the Borrower or such
Subsidiary has received notification, written or oral, by a
<PAGE> 66
Governmental Authority of competent jurisdiction as to any such violation. In
addition, neither the Borrower nor any Subsidiary shall be considered to have
breached this section so long as (a) they shall have taken such actions
(including implementation of appropriate internal controls) as may be reasonably
necessary to avoid such breaches and (b) such breaches, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.24. Event of Default. No Default or Event of Default has occurred
and is continuing.
4.25. Single Business Enterprise. The Borrower and the Guarantors
operate, and intend to operate, as a single business enterprise. Although
separate entities, the Borrower and the Guarantors operate under a common
business plan. Each of the Borrower and the Guarantors will accordingly benefit
from the financing arrangement established by this Agreement. The Borrower
acknowledges that the Agent and the Lenders are relying on the agreement by each
Guarantor to execute and deliver the Guaranty Documents in committing to the
Facilities.
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of all Credit Obligations and the termination of
the Lenders' obligation to make Loans and the Issuing Bank's obligation, on
behalf of the Lenders, to issue Letters of Credit, the Borrower covenants and
agrees that:
5.1. Financial and Business Information about the Borrower. The
Borrower shall deliver to the Agent and the Lenders:
(a) Within forty-five (45) days after the close of each of the
first three fiscal quarters of each fiscal year of the Borrower, beginning with
the current fiscal quarter, an unaudited consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as of the close of such fiscal
quarter, and unaudited consolidated and consolidating statements of income, and
consolidated retained earnings and cash flows for the Borrower and its
Subsidiaries for the fiscal quarter then ended and for that portion of the
fiscal year then ended, in each case beginning with the fiscal quarter ending
March 31, 1998 setting forth comparative figures for the corresponding fiscal
quarter in the preceding fiscal year, and in each case setting forth comparable
budgeted figures for the fiscal quarter then ended, together with a breakdown of
such income statements per hospital, all prepared in accordance with Generally
Accepted Accounting Principles (subject to the absence of notes required by
Generally Accepted Accounting Principles and subject to normal and reasonable
year-end audit adjustments) applied on a basis consistent with that of the
preceding quarter or containing disclosure of the effect on the financial
position or results of operation of any change in the application of accounting
principles and practices during the quarter, and certified by the Chief
Executive Officer, Chief Financial Officer, Vice President-Finance or Vice
President-Controller of the Borrower to be true and accurate in all material
respects (subject to normal and reasonable year-end audit adjustments);
(b) As soon as practicable and in any event within one hundred
(100) days after the close of any fiscal year of the Borrower, beginning with
the close of the current fiscal year, an audited consolidated balance sheet and
unaudited consolidating balance sheet of the Borrower and its Subsidiaries as of
the close of such fiscal year, audited consolidated and
<PAGE> 67
unaudited consolidating statements of income and audited consolidated retained
earnings and cash flows for the Borrower and its Subsidiaries for the fiscal
year then ended, in each case beginning with the fiscal year ending December 31,
1997 setting forth unaudited comparative figures for the preceding fiscal year
and in each case, setting forth comparable budgeted figures for the fiscal year
then ended, including the notes to each, audited (except as previously noted) by
a nationally recognized, "Big Six" independent certified public accountant or
other independent certified public accountant reasonably acceptable to the
Required Lenders, and together with a breakdown of such income statements per
hospital, all such audited statements prepared in accordance with Generally
Accepted Accounting Principles applied on a basis consistent with those of the
preceding year or containing disclosure of the effect on the financial position
or results of operations of any change in the application of accounting
principles and practices during the year, certified by the Chief Executive
Officer, Chief Financial Officer, Vice President-Finance or Vice
President-Controller of the Borrower to be true and accurate in all material
respects, and, with respect to audited statements, accompanied by a report
thereon by such certified public accountants, containing an opinion that is not
qualified in any materially negative respect, including as to going concern or
scope of audit;
(c) Concurrently with the delivery of the financial statements
described in subsection (B) above, a letter from the independent certified
public accountants that, based on the independent certified public accountant's
examination of the financial statements of the Borrower and its Subsidiaries,
the accountants did not obtain knowledge of the occurrence or existence of any
Default or Event of Default, or a statement specifying the nature and period of
existence of any such condition or event disclosed by their examination;
provided, however, that such accountants shall not be liable to anyone by reason
of their failure to obtain knowledge of any Event of Default or Default that
would not be disclosed in the course of an audit conducted in accordance with
generally accepted auditing standards;
(d) Concurrently with the delivery of the financial statements
described in subsections (A) and (B) above, a Compliance Certificate with
respect to the period covered by the financial statements then being delivered,
together with an Interest Rate Calculation Worksheet and a Covenant Compliance
Worksheet reflecting the computation of the financial covenants set forth in
ARTICLE VI as of the last day of the period covered by such financial
statements;
(e) As soon as practicable and in any event within thirty (30)
days after the close of each fiscal year of the Borrower, beginning with the
current fiscal year, an annual operating budget and capital budget prepared on a
quarterly basis for the Borrower and its Subsidiaries on a consolidated basis,
in form and detail reasonably acceptable to the Agent, including, without
limitation, a breakdown per hospital;
(f) Promptly upon their becoming available, copies of (i) all
financial statements, material reports and proxy statements that the Borrower or
any of its Subsidiaries shall send or make available generally to its
stockholders, (ii) all registration statements and prospectuses that the
Borrower or any of its Subsidiaries shall render to or file with the Securities
and Exchange Commission, the National Association of Securities Dealers or any
national securities exchange, (iii) all material reports and other statements
(other than routine reports prepared in the ordinary course of business that
would not result in any adverse action) that the Borrower or any of its
Subsidiaries may render to or file with any other Governmental Authority,
including, without limitation, the Environmental Protection Agency, OSHA and
state environmental and health authorities and agencies, and (iv) all press
releases and other statements that the Borrower or any of its Subsidiaries shall
make available generally to the public concerning developments in the business
of the Borrower or any of its Subsidiaries, other than press releases or
statements issued in the ordinary course of business;
<PAGE> 68
(g) Promptly after review by the Borrower's Board of Directors,
but in any event within thirty (30) days after the Borrower's receipt thereof,
copies of any management letters from certified public accountants;
(h) Upon request by the Agent, but no more frequently than
quarterly (except during the continuance of an Event of Default), concurrently
with each delivery of the financial statements described in subsections (A) and
(B), an aging of the Accounts of the Borrower on a consolidated basis as of the
end of such fiscal quarter;
(i) Concurrently with each delivery of the financial statements
described in subsection (A) and (B), a statistical summary of management
contracts between the Borrower or any of its Subsidiaries and hospitals and
other healthcare facilities;
(j) Promptly upon the reasonable request therefor, copies of any
annual report required to be filed under ERISA in connection with any Employee
Plan and such other additional information about any Employee Plan as may be
reasonably requested;
(k) Promptly after receipt, copies of any environmental
assessments or audits on properties owned, operated or leased by the Borrower or
its Subsidiaries; and
(l) Upon the Agent's or any Lender's request, such other
information about the Collateral or the financial condition and operations of
the Borrower and its Subsidiaries as the Agent or any Lender may from time to
time reasonably request.
5.2. Notice of Certain Events. The Borrower shall promptly, but in
no event later than five (5) Business Days after a Senior Officer of the
Borrower obtains knowledge thereof, give written notice to the Agent and the
Lenders of:
(a) Any litigation or proceeding brought against the Borrower or
any of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect;
(b) Any written notice of a violation of a Requirement of Law
received by the Borrower or any of its Subsidiaries from any Governmental
Authority that, if such violation were established and not promptly corrected,
could reasonably be expected to have a Material Adverse Effect;
(c) Any attachment, judgment, lien, levy or order in excess of
$500,000 that may be placed on or assessed against the Borrower or any of its
Subsidiaries or any of the Collateral, except for Permitted Liens;
(d) Any Default or Event of Default; provided that the notice
period provided above shall not be deemed to be a cure period or extension for
any Default or Event of Default;
(e) Receipt by any Borrower or any of it Subsidiaries of (i) any
notice of loss of Joint Commission on Accreditation of Healthcare Organizations
accreditation, loss of participation under any material reimbursement program or
loss of applicable health care licenses at any facility owned or lease or
managed by the Borrower or any of its Subsidiaries; and (ii) any other material
deficiency notice, compliance order or adverse report issued by any Governmental
Authority or accreditation commission having jurisdiction over licensing,
accreditation or operation of any such facility or by any Governmental Authority
or private insurance company pursuant to a provider agreement, which, if not
promptly complied with or cured, could result in the suspension or forfeiture of
any license, certification, or accreditation
<PAGE> 69
necessary for any such facility to carry on its business as then conducted or
the suspension or termination of any insurance or reimbursement program
available to the facility;
(f) Receipt or delivery by the Borrower or any of its Subsidiaries
of any material notice (including without limitation any first refusal, put or
call notice) pursuant to the Palestine Limited Partnership Agreement or any
other material shareholder, partnership, operating or similar agreement;
(g) Any default or event of default under any lease relating to
the Leased Properties under which the Borrower or any Subsidiary is lessee which
could reasonably be expected to have a Material Adverse Effect; or
(h) Any default or event of default under any agreement or
instrument to which the Borrower or any of its Subsidiaries is a party or by
which the Borrower or any of its Subsidiaries, or any of their property, is
bound, the termination of which could reasonably be expected to have a Material
Adverse Effect.
5.3. Corporate Existence and Maintenance of Properties. The
Borrower shall, and shall cause each of its Subsidiaries to:
(a) Maintain and preserve in full force and effect its corporate
existence, except as otherwise permitted by SECTION 6.1, and all material
rights, privileges and franchises; provided, however, that the Borrower may
permit the liquidation or dissolution of any of its Subsidiaries (and any such
Subsidiary may suffer such liquidation or dissolution) if, at the time of such
liquidation or dissolution, such Subsidiary has no assets, engages in no
business and otherwise has no activities other than activities related to the
maintenance of its corporate existence and good standing; provided, further,
however that the Borrower may sell, divest or transfer any assets or its
ownership of Telplan, Inc. without respect to the provisions hereof;
(b) Conduct its business in an orderly and efficient manner, keep
its properties in good working order and condition (normal wear and tear
excepted) and from time to time make all needed repairs to, renewals of or
replacements of its properties (except to the extent that any of such properties
are obsolete or are being replaced) so that the efficiency of its business
operations shall be maintained and preserved; and
(c) File or cause to be filed in a timely manner all reports,
applications, estimates and licenses required by any Governmental Authority
that, if not timely filed, could reasonably be expected to have a Material
Adverse Effect.
5.4. Maintenance of Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to,
maintain and pay for insurance upon all of its assets and properties, including
the Collateral, wherever located, and all real property owned or leased by it,
in such amounts and against such risks as is customarily maintained by similar
businesses in similar locations, and will (if not previously delivered), at the
Amendment Effective Date, deliver certificates of such insurance to the Agent
with satisfactory loss payable endorsements naming the Agent as an additional
loss payee, additional insured and/or mortgagee thereunder, as its interests may
appear, as appropriate. Within thirty (30) days after the Amendment Effective
Date, the Borrower shall deliver (if not previously delivered) to the Agent
certified copies of the original policies of all insurance on the Collateral.
<PAGE> 70
(b) Each such policy of insurance shall contain a clause requiring
the insurer to give not less than thirty (30) days (or ten (10) days for
nonpayment) prior written notice to the Agent before any cancellation of the
policies for any reason whatsoever. The Borrower hereby directs, and will cause
each of its Subsidiaries to direct, all insurers under policies of property and
casualty insurance on the Collateral to pay all proceeds payable thereunder
directly to the Agent when such proceeds, on an aggregate basis for any claim or
series of related claims, exceed $1,000,000. The Agent, on behalf of the
Lenders, shall hold all such proceeds for the account of the Borrower and its
Subsidiaries. So long as no Default or Event of Default has occurred and is
continuing, the Agent shall immediately deliver to the Borrower any insurance
proceeds received by the Agent in the amount of $1,000,000 or less, in the
aggregate, for any claim or series of related claims. So long as no Default or
Event of Default has occurred and is continuing, the Agent shall, at the
Borrower's request, disburse proceeds in excess of $1,000,000 for the purpose of
replacing or repairing destroyed or damaged assets, as and when required to be
paid and upon presentation of evidence satisfactory to the Agent of such repair
estimates and other documents as the Agent may reasonably request, or, if the
Borrower has not requested any such disbursement for one hundred twenty (120)
consecutive days, shall apply such proceeds in whole or in part as a prepayment
of the Loans in accordance with SECTION 2.5(A). If an Event of Default has
occurred and is continuing, the Borrower hereby irrevocably makes, constitutes
and appoints the Agent (and all officers, employees or agents designated by the
Agent) as its true and lawful agent (and attorney-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing its name or the name of any Subsidiary on any check, draft, instrument
or other item or payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance.
(c) If the Borrower or any of its Subsidiaries fails to obtain and
maintain any of the policies of insurance required to be maintained hereunder or
to pay any premium in whole or in part, then the Agent may, at the Borrower's
expense, without waiving or releasing any obligation or Default by the Borrower
hereunder, procure the same, but shall not be required to do so. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand by the
Borrower to the Lenders and shall be additional Credit Obligations hereunder,
secured by the Collateral.
(d) Upon the reasonable request of the Agent from time to time,
the Borrower shall deliver to the Agent evidence that the insurance required to
be maintained pursuant to this Agreement is in effect.
5.5. Maintenance of Books and Records; Inspection.
(a) The Borrower shall, and shall cause each of its Subsidiaries
to, maintain adequate books, accounts and records, and prepare all financial
statements required under this Agreement in accordance with Generally Accepted
Accounting Principles and in material compliance with all Requirements of Law.
(b) The Borrower shall, and shall cause each of its Subsidiaries
to, permit employees or agents of the Agent (or any Lender, at the Lenders'
expense), during normal business hours upon reasonable notice to inspect its
properties and to examine or audit its books, records, reports, accounts and
other papers and make copies and memoranda of them, and to discuss its affairs,
finances and accounts with its officers and employees and, with advance written
approval of the Chief Executive Officer, Chief Financial Officer, Vice
President-Finance or Vice President-Controller of the Borrower (which approval
shall not be unreasonably withheld), the independent public accountants of the
Borrower and its Subsidiaries (and by this provision the Borrower and each of
its Subsidiaries authorizes said accountants to discuss the finances and affairs
of the Borrower or such Subsidiary), all at such reasonable times and as
<PAGE> 71
often as may be reasonably requested without undue interference in the business
and operations of the Borrower and its Subsidiaries.
5.6. Compliance with ERISA. The Borrower shall, and shall cause
each of its Subsidiaries to make timely payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
Employee Plan. The Employee Plans of the Borrower and each of its Subsidiaries
shall be operated in such a manner that neither the Borrower nor any Subsidiary
will incur any tax liability under Section 4980B of the Internal Revenue Code or
any liability to any qualified beneficiary as defined in Section 4980B that
could reasonably be expected to have a Material Adverse Effect.
5.7. Payment of Taxes. The Borrower shall, and shall cause each of
its Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would attach
thereto, and all lawful claims that, if unpaid, might become a material lien or
charge upon any of its properties; provided, however, that the Borrower or any
of its Subsidiaries may in good faith by appropriate proceedings and with due
diligence contest any such tax, assessment, charge, levy or claim if the
Borrower or such Subsidiary establishes reserves therefor in accordance with
Generally Accepted Accounting Principles.
5.8. Compliance with Laws. The Borrower shall, and shall cause each
of its Subsidiaries to, (i) have all licenses, permits, certifications approvals
and authorizations required by Governmental Authorities necessary to the
ownership, occupation or use of its properties or the conduct of its business,
and maintain the same at all times in full force and effect, except to the
extent that a failure to have or maintain the same could not reasonably be
expected to have a Material Adverse Effect, and (ii) comply with all
Requirements of Law in respect of the conduct of its business, the ownership of
its property and the Collateral, including, without limitation, Titles XVIII and
XIX of the Social Security Act, Medicare Regulations, Medicaid Regulations,
MediCal Regulations, ERISA, OSHA and the Bloodborne Pathogens Standard, other
than those the failure to comply with which could not reasonably be expected to
have a Material Adverse Effect.
5.9. Name Change. The Borrower shall notify the Agent and the
Lenders at least fifteen (15) days prior to the effective date of any change of
the name of the Borrower or any of its Subsidiaries, and prior to such effective
date the Borrower or such Subsidiary shall execute any amended or new Financing
Statements and other Loan Documents necessary to maintain and continue the
perfected security interest of the Agent in all of the Collateral and shall take
such other actions and execute such documents as the Agent shall reasonably
request.
5.10. Disbursement of Proceeds by the Borrower.
(a) At the request of the Agent, the Borrower shall obtain an
intercompany promissory note with respect to advances of any portion of the
Loans to any Subsidiary of the Borrower and any other amounts owing from any
Subsidiary of the Borrower to the Borrower from time to time, and shall promptly
thereafter grant to the Agent a first priority perfected security interest in
such promissory note as security for the Credit Obligations. Notwithstanding the
foregoing, the Borrower shall obtain, at or prior to the advance of any portion
of the Loans to any Non-Wholly Owned Subsidiary, an intercompany promissory note
with respect to advances of any portion of the Loans to any Non-Wholly Owned
Subsidiary and any other amounts owing from any Non-Wholly Owned Subsidiary of
the Borrower to the Borrower from time to time and shall promptly thereafter
grant to the Agent a first priority security interest in such promissory note as
security for the Credit Obligations.
<PAGE> 72
(b) If any Subsidiary becomes a debtor under the Bankruptcy Code,
the Agent, on behalf of the Lenders, is authorized, but not required, to file
proofs of claim with respect to such intercompany Debt on behalf of the Borrower
and vote the rights of the Borrower in any plan of reorganization with regard to
any Debt owed by such Subsidiary to the Borrower. The Agent, on behalf of the
Lenders, is further empowered to demand, sue for, collect and receive every
payment and distribution on such Debt owing to the Borrower in such Subsidiary's
bankruptcy proceeding.
5.11. Creation or Acquisition of New Subsidiaries. The Borrower and
its Subsidiaries may from time to time create or acquire new Subsidiaries
subject to the terms of this Agreement, provided that (i) each new Subsidiary
having assets with a gross value (determined in accordance with Generally
Accepted Accounting Principles) in excess of $100,000 (or upon obtaining assets,
including but not limited to the proceeds of Investments, loans, or other
distributions from the Borrower or another Subsidiary, in excess of $100,000 in
the case of an existing Subsidiary which previously had assets with a gross
value less than $100,000) will execute and deliver to the Agent (with sufficient
copies for each Lender) an amendment or accession to the Guaranty Agreement
(pursuant to which such new Subsidiary shall become a party thereto), an
amendment or accession to the Security and Pledge Agreement, Financing
Statements, certificates of title, stock certificates and other documents
reasonably required by the Agent, all in form and substance satisfactory to the
Agent, pursuant to which such new Subsidiary shall secure its obligations under
the Guaranty Agreement by first priority, perfected security interests in all
Stock, Interests and promissory notes owned by such Subsidiary, subject only to
Permitted Liens, (ii) the Borrower and/or the other Guarantors will execute and
deliver to the Agent (with sufficient copies for each Lender) an amendment or
supplement to the Security and Pledge Agreement, in form and substance
satisfactory to the Agent, pursuant to which all of the Stock or Interests of
such new Subsidiary that is directly or indirectly owned by the Borrower shall
be pledged to the Agent under the Security and Pledge Agreement, together with
the certificates representing such Stock or Interests and stock powers duly
executed in blank, and (iii) the Borrower will cause each such new Subsidiary to
execute and deliver, and will cause to be delivered, all documentation of the
type described in SECTIONS 3.2.2(B) and 3.2.2(C) and 3.2.2(D) as such new
Subsidiary would have had to deliver were it a Subsidiary on the Amendment
Effective Date.
5.12. Certain Permitted Acquisitions; Asset Purchases.
(a) Subject to the remaining provisions of this SECTION 5.12
applicable thereto and subject to the definition of "Permitted Acquisitions"
herein, the Borrower and its Subsidiaries may from time to time after the
Amendment Effective Date effect Permitted Acquisitions, so long as with respect
to each Permitted Acquisition, no Default or Event of Default is in existence at
the time of the consummation of such Permitted Acquisition or would exist after
giving effect thereto.
(b) At the time of each Permitted Acquisition involving the
creation or acquisition of a Subsidiary or the acquisition of Stock or other
Interest of any Person, the Borrower and the Guarantors shall have complied with
SECTION 5.11.
(c) Not less than ten (10) Business Days prior to the consummation
of any Permitted Acquisition of $5,000,000 or greater or requiring approval of
the Required Lenders, the Borrower shall deliver to the Agent and each Lender
the following items, each in form and substance reasonably satisfactory to the
Agent:
(i) a description of the material terms of such
Permitted Acquisition (including, without limitation a description of
the acquisition, a description of the acquiror,
<PAGE> 73
the Acquisition Amount and method and structure of payment), of each
facility, Person, business, lease or asset that is the subject of such
Acquisition, (each, a "Target"), together with the most current draft
of the acquisition or other purchase or lease agreement;
(ii) historical financial statements of each
Target (if applicable) for the two (2) most recent fiscal years
available and for any interim periods since the most recent fiscal
year-end for which such interim statements are available;
(iii) projected revenue and EBITDAR contribution
levels for the Target for a three-year period following the
consummation of such Permitted Acquisition or such asset purchase or
lease, together with any appropriate statement of assumptions and pro
forma adjustments and including a detailed report of expense
adjustments requested by the Borrower; and
(iv) a description of all Debt and liens being
assumed in connection with such Permitted Acquisition.
(d) The Borrower will deliver to the Agent and each Lender (i)
copies of any material modifications or supplements to the draft agreements
submitted pursuant to CLAUSE (C)(I) above prior to the closing of the
Acquisition and (ii) a copy of the fully executed acquisition or other purchase
or lease agreement (including schedules and exhibits thereto) within sixty (60)
days after the closing thereof, except as set forth in subsection (E) below.
(e) Within thirty (30) days after the end of each fiscal quarter,
the Borrower will deliver to the Agent and each Lender the documents required by
subsections (C)(I), (C)(II) and (D) above for each Permitted Acquisition of less
than $5,000,000 that does not require the consent of the Required Lenders.
(f) No Acquisition may be effected unless:
(i) calculations are made by the Borrower of compliance
with the covenants contained in SECTIONS 6.9 through 6.16, inclusive,
for the most recent calculation period ended immediately prior to the
date of such Acquisition, on a pro forma basis as if the Acquisition
had occurred on the first day of such period, and shall show that all
such covenants will be complied with, giving effect to the pro forma
consolidation of the business acquired, and if such Acquisition is
$2,500,000 or greater or requires approval of the Required Lenders,
such calculations shall be reasonably satisfactory to the Agent;
(ii) the Borrower in good faith believes that the
financial covenants contained in such SECTIONS 6.9 through 6.16,
inclusive, will continue to be met on a quarterly basis for the one
year period following the date of the consummation of the Acquisition
on a quarterly basis;
(iii) prior to the consummation of the Acquisition of
$2,500,000 or greater or that requires consent of the Required Lenders,
the Borrower shall furnish the Agent and the Lenders with an officer's
certificate executed by an Authorized Officer of the Borrower,
certifying to the best of his knowledge as to compliance with the
requirements of preceding clauses (I) and (II) and SECTION 5.12(C), and
containing the pro forma calculations required by the preceding clause
(I); and
<PAGE> 74
(iv) except for Acquisitions for which the Acquisition
Amounts are within the Dollar limits set forth in the definition of
"Permitted Acquisitions" herein, the Required Lenders shall have
consented thereto in writing.
(g) The consummation of each Permitted Acquisition, shall be
deemed to be a representation and warranty by the Borrower that all conditions
to be satisfied by the Borrower hereon have been satisfied, that the same is
permitted in accordance with the terms of this Agreement and that the
information submitted by the Borrower pursuant to subsections (C) through (F)
above, as appropriate, is true and correct in all material respects as of the
date such certificate is given, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder,
including, without limitation, for purposes of SECTIONS 3.3 and 7.1.
5.13. Lease of Realty. Subject to SECTION 6.15 hereof, promptly, and
in any event within ten (10) days after any lease of any Realty by the Borrower
or any Subsidiary, the Borrower will deliver a Landlord Consent with respect to
each Facility Leased Property.
5.14. Further Assurances. The Borrower shall, and shall cause each
of its Subsidiaries to, make, execute, endorse, acknowledge and deliver to the
Agent and the Lenders any amendments, restatements, modifications or supplements
hereto and any other agreements, instruments or documents, and take any and all
such other actions, as may from time to time be reasonably requested by the
Agent or the Lenders to effect, confirm or further assure or protect and
preserve the interests, rights and remedies of the Lenders and the Agent under
this Agreement and the other Loan Documents.
5.15. Cash Deposits. Commencing ninety (90) days after the Amendment
Effective Date, all cash in excess of ten percent (10%) of the aggregate amount
of all cash of the Borrower and its Subsidiaries (excluding deposits in transit)
shall be consolidated no less frequently than once a week in an account or
accounts maintained with one or more Lenders.
5.16. Year 2000. The Borrower shall use its best commercial efforts
to assure that the Borrower's and its Subsidiaries' computer based systems are
able to operate and effectively process data including dates on and after
January 1, 2000. At the request of the Agent, the Borrower shall provide the
Agent assurance acceptable to the Agent of the Borrower's and its Subsidiaries'
year 2000 capability.
5.17. Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto (other than
Schedules relating solely to representations and warranties made as of the
Amendment Effective Date or any other specific date) become outdated or
incorrect in any material respect, the Borrower shall promptly provide the Agent
in writing such revisions or updates to such Schedules as may be necessary or
appropriate to update or correct the same; provided, however, that the Schedules
will be deemed automatically updated without any further action on the part of
the Borrower, the Agent, or the Required Lenders with respect to information
provided by the Borrower in writing to the Agent in connection with a Permitted
Acquisition, so long as the Borrower indicates to the Agent that such
information is intended to update the Schedules; and provided, further, that no
Schedule shall be deemed to have been amended, modified or superseded by any
such correction or update that would disclose the occurrence of an event or
condition which constitutes a Default or Event of Default, nor shall any breach
of warranty or representation resulting from the inaccuracy or incompleteness of
any such Schedule be deemed to have been cured thereby, unless such inaccuracy
or incompleteness is the result of transactions or events expressly permitted
hereunder (including Permitted Acquisitions) or unless the Required Lenders, in
their sole and absolute discretion, shall have accepted in writing such
revisions or updates to such Schedule.
<PAGE> 75
5.18. Use of Proceeds. The Borrower shall use the proceeds of any Loans
made by the Lenders to the Borrower pursuant to this Agreement for legal and
proper corporate uses, duly authorized by the Board of Directors of the
Borrower, consistent with all applicable laws and statutes, as in effect from
time to time.
ARTICLE VI
NEGATIVE COVENANTS
Until payment in full of the Credit Obligations and termination of the
Lenders' obligation to make Loans and the Issuing Bank's obligation, on behalf
of the Lenders, to issue Letters of Credit, the Borrower covenants and agrees
that it will not, and will not permit any of its Subsidiaries to, individually
or in the aggregate:
6.1. Merger, Consolidation. Except as permitted by SECTION 5.3,
liquidate, wind up or dissolve, or enter into any consolidation, merger or other
combination, or agree to do any of the foregoing; provided, however, that:
(i) the Borrower may merge or consolidate with another
Person so long as (x) the Borrower is the surviving corporation, (y) if
such merger or consolidation is in connection with a Permitted
Acquisition, the applicable conditions of SECTIONS 5.11 and 5.12 shall
be satisfied, and (z) immediately after giving effect thereto, no
Default or Event of Default would exist; and
(ii) any Subsidiary may merge or consolidate with another
Person so long as (w) the Person surviving such merger or consolidation
is the Borrower or a Guarantor, (y) if such merger or consolidation is
in connection with a Permitted Acquisition, the applicable conditions
of SECTIONS 5.11 and 5.12 shall be satisfied, and (z) immediately after
giving effect thereto, no Default or Event of Default would exist.
6.2. Debt. Create, incur, assume or suffer to exist any Debt other
than:
(i) Debt incurred pursuant to this Agreement and the other
Loan Documents;
(ii) Debt in an aggregate principal amount not in excess of
$35,000,000 incurred pursuant to the End Loaded Lease Facility.
(iii) Debt existing on the date hereof as set forth in
SCHEDULE 6.2 attached hereto; provided that the Debt is not increased
above the amount then outstanding;
(iv) accrued expenses, current trade payables and other
current liabilities arising in the ordinary course of business and not
incurred through the borrowing of money;
(v) unsecured intercompany Debt (x) of any Subsidiary to the
Borrower, (y) of any Subsidiary to a Guarantor, and (z) of the Borrower
to any Guarantor, provided that any such Debt under this clause (V) is
incurred in the ordinary course of business and, if requested by the
Agent or required pursuant to SECTION
<PAGE> 76
5.10(A), is evidenced by one or more promissory notes pledged to the
Agent pursuant to the Security and Pledge Agreement, is payable on
demand and, is fully subordinated in right of payment to the Credit
Obligations and the Guaranty Obligations, as applicable; and provided
further, that intercompany Debt for money borrowed by the Palestine
Limited Partnership shall not exceed those obligations evidenced by the
Palestine Limited Partnership Note and that all other intercompany Debt
owed by Palestine Limited Partnership shall not exceed amounts
currently payable pursuant to the Hospital Management Agreement dated
in or about June, 1996, between Palestine-Principal, Inc., a Tennessee
corporation, and the Palestine Limited Partnership, as such agreement
may be amended, supplemented or renewed from time to time in compliance
with SECTION 6.25 hereof.
(vi) Contingent Obligations permitted by SECTION 6.3;
(vii) Debt of the Borrower under any Swap Agreement relating
to the Debt incurred under this Agreement; provided that the notional
amount of all such agreements at any time shall not exceed the
aggregate amount of the Commitments at such time;
(viii) Debt assumed or incurred in connection with a Permitted
Acquisition to the extent such Debt is (i) approved by and, if required
by the Required Lenders, subordinated on terms acceptable to the
Required Lenders or (ii) permitted pursuant to clause (xii) of this
SECTION 6.2;
(ix) Debt with respect to financed insurance premiums not
past due;
(x) unsecured Subordinated Debt;
(xi) Capital Lease Obligations for a Facility lease, which
Capital Lease Obligations were assumed or incurred as a Permitted
Acquisition;
(xii) Debt in an aggregate principal amount not in excess of
$5,000,000 incurred by the Borrower pursuant to the Cash Management
Line of Credit; and
(xiii) other Debt (including, without limitation, Debt secured
by purchase money liens described in clause (E) of the definition of
Permitted Liens and Capital Lease Obligations) in an aggregate
principal amount at any time outstanding not to exceed $7,500,000 for
the Borrower and its Subsidiaries.
6.3. Contingent Obligations. Create, incur, assume or suffer to exist
any Contingent Obligation other than:
(i) endorsements of instruments or items of payment for
deposit or collection in the ordinary course of business;
(ii) Contingent Obligations incurred pursuant to the Loan
Documents;
(iii) Contingent Obligations consisting of the
indemnification by the Borrower or any of its Subsidiaries of (x) the
officers, directors, employees and agents of the Borrower or such
Subsidiary, to the extent permissible under the corporation law of the
jurisdiction in which the Borrower or such Subsidiary is organized, (y)
commercial banks, investment bankers and other independent consultants
or professional advisors
<PAGE> 77
pursuant to agreements relating to the underwriting of the Borrower's
or such Subsidiary's securities or the rendering of banking or
professional services to the Borrower or such Subsidiary and (z)
landlords, licensors, licensees and other parties pursuant to
agreements entered into in the ordinary course of business by the
Borrower or such Subsidiary;
(iv) customary indemnification obligations of the Borrower
and its Subsidiaries incurred in connection with Permitted Acquisitions
made in compliance with SECTION 5.12;
(v) unsecured amounts payable under earnouts, approved by
and subordinated on terms acceptable to the Required Lenders, and other
contingent obligations, in each case incurred by any Borrower or any
Subsidiary in connection with a Permitted Acquisition, whether or not
earned or matured;
(vi) performance, appeal and bid bonds and pledges and
deposits pursuant to workers' compensation and similar requirements, in
each case to the extent permitted under the definition of "Permitted
Liens" contained herein;
(vii) obligations under Letters of Credit issued under
SECTION 2.18;
(viii) Contingent Obligations described on SCHEDULE 6.3
attached hereto, without giving effect to any increases thereof without
the written consent of the Required Lenders;
(ix) guarantees by the Borrower or any of its Subsidiaries
of obligations of the Borrower or its Subsidiaries under leases
permitted hereunder;
(x) guarantees by the Borrower or any of its Subsidiaries
of any other Debt permitted under SECTION 6.2 and guaranties permitted
by SECTION 6.7;
(xi) guarantees by the Borrower or any of its Subsidiaries
of physician compensation to the extent such guarantees under Generally
Accepted Accounting Principles would not be reflected as a specific
Dollar amount on the liability side of such Person's balance sheet;
(xii) other Contingent Obligations not to exceed $2,000,000
at any time.
6.4. Liens and Encumbrances. Create, assume or suffer to exist any deed
of trust, mortgage or encumbrance, lien (including a lien of attachment,
judgment or execution) or security interest (including the interest of a
conditional seller of goods) securing a charge or obligation, in or on any of
its property, real or personal, whether now owned or hereafter acquired, except
for Permitted Liens.
6.5. Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or property, including, without limitation, the
Collateral, except for (i) sales of inventory in the ordinary course of
business; (ii) the sale of worn out or obsolete equipment for fair market value
or the exchange of used or obsolete equipment for replacement equipment; (iii)
the sale of permitted temporary or overnight investments; (iv) dispositions not
otherwise permitted by this SECTION 6.5, not exceeding $2,000,000 in the
aggregate, for the Borrower and its Subsidiaries, for any fiscal year; (v) any
sale, lease, transfer or conveyance from one Subsidiary to another Subsidiary or
to the Borrower, or from the Borrower to any Subsidiary, in
<PAGE> 78
accordance with SECTION 6.6, provided that, immediately after giving effect
thereto, no Default or Event of Default would exist; and provided, further, that
no sale, lease, transfer, conveyance or other disposition of Collateral may be
made from a Subsidiary existing on the Amendment Effective Date to any
Subsidiary created or acquired after the Amendment Effective Date unless such
sale, lease, transfer, conveyance or other disposition falls within the
$2,000,000 basket set forth in clause (iv) above; (vi) the sale of any
investment products sold to the Borrower by any Lender or any Affiliate thereof;
(vii) the sale, divestiture or transfer of any assets of, or the Borrower's
ownership interest in, Telplan, Inc.; and (viii) dispositions made in compliance
with the terms of the End Loaded Lease Facility of property (y) financed with
the proceeds of the End Loaded Lease Facility or (z) conveyed to the Trust by
the Borrower or any Subsidiary.
6.6. Transactions with Related Persons. Except for Subordinated Debt
and except as set forth on SCHEDULE 6.6 or as expressly permitted by SECTIONS
5.12, 6.1, 6.2, 6.3(II, III, VII, VIII and IX), 6.5, 6.7, 6.8, 6.17 and 6.20 or
otherwise contemplated by this Agreement, directly or indirectly make any loan
or advance to, or purchase, assume or guarantee any Debt to or from, any of its
officers, directors, stockholders or Affiliates, or subcontract any operations
to any Affiliate, or enter into any other transaction with any Affiliate, except
(a) in the ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and (b) upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
6.7. Restricted Investments. Except as otherwise permitted in SECTIONS
6.2, 6.3, 6.5 and 6.8, directly or indirectly, purchase, own, invest in or
otherwise acquire any capital stock, evidence of indebtedness or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or become a
partner or joint venturer in any partnership or joint venture, or consummate an
Acquisition, or make a commitment or otherwise agree to do any of the foregoing,
other than:
(a) Cash Investments;
(b) loans and advances to employees for reasonable travel, moving
and business expenses incurred in the ordinary course of
business;
(c) Accounts owing to the Borrower or any of its Subsidiaries
created in the ordinary course of business and payable in
accordance with customary terms prevailing in the industry;
(d) prepaid expenses incurred in the ordinary course of business;
(e) loans, advances, or extensions of credit to, guaranties of and
investments existing as of the Amendment Effective Date in
corporations, partnerships and other Persons as of the
Amendment Effective Date as set forth on SCHEDULE 6.7;
(f) investments in Subsidiaries and Permitted Acquisitions made in
accordance with terms of this Agreement, including SECTIONS
5.11 and 5.12;
(g) investments by the Borrower under any Swap Agreement relating
to the Debt incurred under this Agreement; provided that the
notional amount of all such Swap Agreements at any time shall
not exceed the aggregate amount of the Commitments at such
time;
<PAGE> 79
(h) physician loans, guaranties and similar obligations incurred
in connection with the recruitment of physicians in the
ordinary course of business and customary for hospitals
similar to those operated by the Borrower and its
Subsidiaries;
(i) loans or advances from a Subsidiary to the Borrower or to
another Subsidiary that is a Guarantor or from the Borrower to
a Subsidiary that is a Guarantor so long as the requirements
of SECTION 5.10(A) and SECTION 6.2(V) are satisfied;
(j) loans, advances and extensions of credit acquired in
connection with a disposition of assets permitted by SECTION
6.5 hereof;
(k) notes and other investments received in connection with
bankruptcy in settlement of claims;
(l) temporary or overnight investments and any other investment
products sold to the Borrower by any Lender or any Affiliate
thereof; and
(m) any other investments which are not described in clauses (A)
through (L) above, not to exceed during the term of the Loans,
$2,000,000 in the aggregate at any one time outstanding.
6.8. Restricted Payments; Certain Distributions; Preferred Stock.
(a) Declare or pay any dividends or distributions upon any of its Stock
or Interest (other than dividends paid in Stock of the Borrower and dividends or
distributions paid or payable by a Subsidiary to the Borrower or another
Subsidiary), except as set forth on SCHEDULE 6.8; or
(b) purchase, redeem, retire or otherwise acquire, directly or
indirectly, any shares of its Stock or other Interests, any shares of Stock or
other Interests of any Affiliate or any option, warrant or other right to
acquire shares of its Stock or Stock or other Interests of any Affiliate (other
than purchases, redemptions, retirements and other acquisitions by a Subsidiary
of shares, Interests, options, warrants or other rights issued thereby held by
the Borrower or another Subsidiary), except the Palestine Limited Partnership
may purchase the partnership interests (or a portion thereof) of Mother Frances
Hospital Regional Health Care Center under the Palestine Limited Partnership
Agreement so long as no Default or Event of Default then exists or would result
immediately after giving effect thereto; or
(c) make any distribution of cash, property or assets other than Stock
among the holders of shares of its Stock (other than distributions made by
Subsidiaries to the Borrower or another Subsidiary); or
(d) enter into or amend any agreement relating to any of the foregoing
(excluding agreements relating only to Subsidiaries with the Borrower or another
Subsidiary) including without limitation any agreement restricting or imposing
requirements regarding the payment of dividends and distributions; or
(e) issue any preferred stock or other equity with redemption features
without the consent of the Required Lenders.
<PAGE> 80
6.9. Consolidated Adjusted Debt to Annualized Consolidated EBITDAR.
Permit the ratio of Consolidated Adjusted Debt to Annualized Consolidated
EBITDAR to be greater than 4.5 to 1.0 as of the end of any fiscal quarter,
beginning with the fiscal quarter ending March 31, 1998 to and including the
fiscal quarter ending December 31, 1998; and to be greater than 5.0 to 1.0 for
any fiscal quarter thereafter; provided, that not withstanding the foregoing, if
the Borrower completes a subordinated debt offering in an aggregate principal
amount greater than or equal to $75,000,000 at any time prior to December 31,
1998, then the Borrower shall not permit the ratio of Consolidated Adjusted Debt
to Annualized Consolidated EBITDA to be greater than 5.0 to 1.0 for any period
following the completion of such offering.
6.10. Consolidated Adjusted Senior Debt to Annualized Consolidated
EBITDAR. Permit the ratio of Consolidated Adjusted Senior Debt to Annualized
Consolidated EBITDAR to be greater than 4.5 to 1.0 as of the end of any fiscal
quarter, beginning with the fiscal quarter ending March 31, 1998 to and
including the fiscal quarter ending December 31, 1998; to be greater than 4.0 to
1.0 for any fiscal quarter thereafter through the fiscal quarter ending March
31, 2000; and to be greater than 3.50 to 1.0 for any fiscal quarter thereafter;
provided, that notwithstanding the foregoing, if the Borrower completes a
subordinated debt offering in an aggregate principal amount greater than or
equal to $75,000,000 at any time prior to December 31, 1998, then the Borrower
shall not permit the ratio of Consolidated Adjusted Senior Debt to Annualized
Consolidated EBITDAR to be greater than 4.0 to 1.0 for any period following the
completion of such offering through the quarter ending March 31, 2000; and to be
greater than 3.5 to 1.0 for any fiscal quarter thereafter.
6.11. Joint Venture EBITDAR. Permit Annualized Joint Venture EBITDAR as
of the end of any fiscal quarter beginning with the fiscal quarter ending
December 31, 1997 to exceed an amount equal to twenty percent (20%) of
Annualized Consolidated EBITDAR as of the end of such fiscal quarter.
6.12. Minimum Net Worth. Permit Consolidated Net Worth to be less than
$84,000,000 as of the end of any fiscal quarter beginning with the fiscal
quarter ending on December 31, 1997; plus eighty-five percent (85%) of
Consolidated Net Income (but excluding any net loss) for all periods from and
after April 1, 1998; plus ninety percent (90%) of the aggregate amount of all
increases in the stated capital and additional paid in capital accounts of the
Borrower resulting from the issuance of equity securities or other capital
investments after the Amendment Effective Date.
6.13. Fixed Charge Coverage. Permit the ratio of Annualized
Consolidated EBITDAR to Fixed Charges to be less than or equal to 1.2 to 1.0 for
any fiscal quarter beginning with the fiscal quarter ending December 31, 1997.
6.14. Capital Expenditures. Permit Capital Expenditures (excluding, for
measurement dates on or prior to September 30, 1998, aggregate acquisition
expenditures and current building programs incurred on or prior to December 31,
1997 at Parkview Regional Hospital, Mexia, Texas and Colorado Plains Medical
Center, Fort Morgan, Colorado, not to exceed $3,200,000) for the four (4)
consecutive fiscal quarters ending on the last day of any fiscal quarter
beginning with the fiscal quarter ending December 31, 1997 to exceed five
percent (5%) of Consolidated Net Revenues for the four (4) consecutive fiscal
quarters then ending.
6.15. Landlord Consents. Permit Annualized Non-Landlord Consent EBITDAR
as of the end of any fiscal quarter beginning with the fiscal quarter ending
December 31, 1997 to exceed an amount equal to ten percent (10%) of Annualized
Consolidated EBITDAR as of the end of such fiscal quarter.
<PAGE> 81
6.16. Parkview Regional Hospital/EBITDAR to Facility Rent Expense.
Permit the ratio of EBITDAR of Parkview Regional Hospital to Facility Rent
Expense of Parkview Regional Hospital to be less than 1.75 to 1.0 at any time.
6.17. Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any of its Subsidiaries of any
asset that has been sold or transferred by the Borrower or such Subsidiary to
such Person, except that (a) the Borrower or any of its Subsidiaries between
themselves may enter any sale and leaseback so long as the provisions of SECTION
6.6 are satisfied, (b) the Borrower or any of its Subsidiaries may enter into a
sale and leaseback transaction regarding the purchase and subsequent sale and
leaseback of new equipment and machinery so long as the Borrower complies with
the covenants set forth in SECTIONS 6.2(XII), 6.6, 6.9, 6.10, 6.11, 6.12, 6.13,
6.14 and 6.15 and there is otherwise no Default or Event of Default, (c) the
Borrower may enter into a sale and leaseback transaction regarding the
Headquarters Building, Portland, Multnomah County, Oregon upon fair and
reasonable terms in an arm's length transaction so long as (i) the Borrower
complies with the covenants set forth in SECTION 6.2(XII), 6.6, 6.9, 6.10, 6.11,
6.12, 6.13, 6.14, 6.15 and 6.16, (ii) there is otherwise no Default or Event of
Default, (iii) in connection with such transaction, the Borrower delivers a
Landlord Consent to the Agent and such other items described in SECTION 3.2 that
would have been required had such Realty been leased on the Amendment Effective
Date, and such other documents relating to such Realty as the Required Lenders
shall reasonably request and (d) the Borrower may enter into a sale and
leaseback pursuant to the End Loaded Lease Facility of property transferred
under SECTION 6.5(VIII).
6.18. New Business. Engage in any business other than businesses
primarily within the Line of Business or make any material change in any of its
business objectives, purposes and operations that could reasonably be expected
to result in a Material Adverse Effect.
6.19. Subsidiaries or Partnerships. Except as otherwise permitted by
the terms of this Agreement (including but not limited to SECTIONS 5.11, 5.12
and 6.7 hereof), (a) become a partner or joint venturer in any partnership or
joint venture, or (b) create or acquire any new Subsidiary.
6.20. Management Contracts. Enter into any agreements whereby the
management or control of its business as a whole or the business of any Facility
as a whole shall be delegated to or placed in any persons other than its
governing body and officers, the Borrower or one of the Borrower's Subsidiaries,
other than the Intercompany Management Agreements. All Intercompany Management
Agreements existing as of the Amendment Effective Date are described on SCHEDULE
6.20.
6.21. Limitation on Certain Restrictions. Directly or indirectly create
or otherwise cause or suffer to exist or become effective any restriction or
encumbrance on (a) the ability of the Borrower and its Subsidiaries to perform
and comply with their obligations under the Loan Documents or (b) the ability of
any Subsidiary of the Borrower to make any dividend payments or other
distributions in respect of its capital stock, to repay Debt owed to the
Borrower or any other Subsidiary, to make loans or advances to the Borrower or
any other Subsidiary, or to transfer any of its assets or properties to the
Borrower or any other Subsidiary, in each case other than such restrictions or
encumbrances existing under or by reason of (i) the Loan Documents, (ii)
applicable Requirements of Law and (iii) customary non-assignment and no-sale
provisions in any lease governing a leasehold interest or any installment
purchase agreement governing purchase money Debt.
<PAGE> 82
6.22. No Other Negative Pledges. Directly or indirectly permit, enter
into or suffer to exist any agreement or restriction that prohibits or
conditions the creation, incurrence or assumption of any lien, security interest
or other encumbrance upon or with respect to any part of its property or assets,
whether now owned or hereafter acquired, or agree to do any of the foregoing,
other than as set forth in this Credit Agreement and the other Loan Documents.
6.23. Hazardous Wastes. Violate any Environmental Law or permit any
Hazardous Material to be brought onto any of the Realty or any other property
owned, leased or operated by the Borrower or its Subsidiaries, if the results
thereof could reasonably be expected to have a Material Adverse Effect. If any
material Hazardous Material is brought or found thereon or therein, except as
may be permitted above (and then only in compliance with all applicable
Environmental Laws), Borrower, at its expense, shall immediately remove it, with
proper disposal, and perform all required environmental response, removal,
corrective and remedial actions in a diligent manner and in accordance with all
Environmental Laws, the Borrower's obligations hereunder to survive any
foreclosure of any Mortgage or other deed of trust or mortgage. The Borrower
shall promptly, after any officer of either of the Borrower learns or obtains
knowledge of the occurrence thereof, give written notice to the Agent of receipt
of any written notice of any material violation or noncompliance, order or
request for information from any Governmental Agency with respect to any
Environmental Law, and shall promptly remedy any breach of any Environmental Law
by the Borrower or its Subsidiaries. Agent shall have the right (at the expense
of the Borrower during the continuance of an Event of Default or if required by
any Governmental Authority regulating the Agent) to enter upon the Realty or
other property owned, leased or operated by the Borrower or its Subsidiaries, or
any part thereof (through its employees and/or agents), to verify compliance by
the Borrower and its Subsidiaries with the terms of this Agreement and to
conduct such environmental assessments and audits as Agent shall deem advisable
to facilitate such verification; provided, however, BORROWER AND ITS
SUBSIDIARIES HEREBY ACKNOWLEDGE THAT ALL HAZARDOUS MATERIAL HANDLING PRACTICES
AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE RESPONSIBILITY OF THE
BORROWER AND ITS SUBSIDIARIES, AND THE BORROWER AND ITS SUBSIDIARIES HAVE FULL
DECISION-MAKING POWER WITH RESPECT THERETO. BORROWER AND ITS SUBSIDIARIES
FURTHER ACKNOWLEDGE THAT NEITHER THE AGENT NOR ANY LENDER IS AN ENVIRONMENTAL
CONSULTANT, ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE WHATSOEVER. NO ACT
(OR DECISION NOT TO ACT) OF THE AGENT OR ANY LENDER RELATED TO THIS AGREEMENT OR
ANY LOAN DOCUMENT SHALL GIVE RISE TO ANY OBLIGATION OR LIABILITY ON THE PART OF
THE AGENT OR ANY LENDER WITH RESPECT TO ENVIRONMENTAL MATTERS. IN NO EVENT SHALL
ANY INFORMATION OBTAINED FROM THE AGENT OR ANY LENDER OR THEIR RESPECTIVE AGENTS
PURSUANT TO THIS AGREEMENT OR ANY LOAN DOCUMENT CONCERNING THE ENVIRONMENTAL
CONDITION OF THE REALTY OR OTHER PROPERTY BE CONSIDERED BY THE BORROWER OR ANY
SUBSIDIARY (OR ANY OTHER RECIPIENT OF SAID INFORMATION) AS CONSTITUTING LEGAL OR
ENVIRONMENTAL CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND
NEITHER THE BORROWER NOR ANY OF ITS SUBSIDIARIES (NOR ANY OTHER RECIPIENT OF
SAID INFORMATION) SHALL RELY ON SAID INFORMATION. THE RESPONSIBILITY FOR
COMPLIANCE WITH ENVIRONMENTAL LAWS RESTS SOLELY WITH THE BORROWER AND ITS
SUBSIDIARIES.
6.24. Fiscal Year. Change its fiscal year from a calendar year ending
December 31.
<PAGE> 83
6.25. Amendments; Prepayments of Debt, Etc. (a) Amend in any respect
the certificate or articles of incorporation, bylaws, partnership agreement,
operating agreement or similar governing document of the Borrower or any of its
Subsidiaries (other than to permit a name change or other immaterial amendment
not inconsistent with this Agreement), any Intercompany Management Agreement,
any shareholder agreement (to the extent such amendment would impose any
obligation on the Borrower or any of its Subsidiaries inconsistent with this
Agreement), or (b) except with respect to the Debt created under the Loan
Documents, customary trade discounts, purchase money Debt, Capital Leases,
financed insurance premiums, Swap Agreements and permitted intercompany Debt,
make any voluntary or optional payment or prepayment or redemption or
acquisition for value of (including, without limitation, by way of depositing
with any trustee with respect thereto money or securities before due for the
purpose of paying when due), or exchange, any Debt.
6.26. Location of Assets; Places of Business. Without thirty (30) days'
prior written notice to the Agent and the execution and delivery of Financing
Statements reasonably satisfactory to the Agent, (i) maintain any Inventory or
Equipment that constitutes Collateral (other than items in transit or under
repair) at any location other than the locations set forth on SCHEDULE 4.7 or
(ii) change its principal place of business to a location other than that set
forth on SCHEDULE 4.7.
6.27. Account Documents. Without thirty (30) days' prior written notice
to the Agent and the execution and delivery of Financing Statements reasonably
satisfactory to the Agent, remove the billing and related records relating to
Accounts from the locations set forth on SCHEDULE 4.7.
6.28. No Inconsistent Transactions or Agreements. Enter into any
transaction or agreement, or enter into any amendment or other modification to
any currently existing agreement, that by its terms prohibits or materially
restricts the ability of the Borrower to pay the principal of or interest on the
Loans.
6.29. Fraud and Abuse. Neither the Borrower nor any Subsidiary, nor any
of its stockholders, officers or directors, acting on behalf of the Borrower or
any Subsidiary, shall engage on behalf of Borrower or any Subsidiary in any of
the following: (i) knowingly 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, Medicaid or MediCal programs; (ii) knowingly
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, Medicaid or MediCal programs; (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment under Medicare, Medicaid or MediCal programs on its
own behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully making or causing to be made
a payment, directly or indirectly, to a physician as an inducement to reduce or
limit services provided with respect to individuals who are entitled to any
benefit or payment under Medicare, Medicaid or MediCal programs and are under
the direct care of the physician; (v) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering or paying
such remuneration (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid or MediCal, or (b)
in return for purchasing, leasing or ordering or arranging for or recommending
the purchasing, leasing or order of any good, facility, service, or item for
which payment may be made in whole or in part by Medicare, Medicaid or MediCal;
or (vi) knowingly and willfully offering or paying any remuneration (including
any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind to any person to induce such person (x) to refer an individual
to a person for the furnishing or arranging for the furnishing of
<PAGE> 84
any item or service for which payment may be made in whole or in part by
Medicare, Medicaid or MediCal, or (y) to purchase, lease, order, or arrange for
or recommend purchasing, leasing, or ordering any good, facility, service, or
item for which payment may be made in whole or in part by Medicare, Medicaid or
MediCal. With respect to this Section, knowledge by any employees,
representatives and agents of the Borrower or a Subsidiary of any of the events
described in this Section shall not be imputed to the Borrower or such
Subsidiary unless such knowledge was obtained or learned by a Senior Officer in
his or her official capacity as a Senior Officer of the Borrower or such
Subsidiary. Neither the Borrower nor any Subsidiary shall be considered to have
breached this Section, except in the case of an intentional violation thereof,
until the Borrower or such Subsidiary has received notification, written or
oral, by a Governmental Authority of competent jurisdiction as to any such
violation. In addition, neither the Borrower nor any Subsidiary shall be
considered to have breached this Section so long as (a) they shall have taken
such actions (including implementation of appropriate internal controls) as may
be reasonably necessary to avoid such breaches and (b) such breaches,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
6.30. Compliance with ERISA. (a) Take any action or fail to take any
action, the result of which action or inaction could be a liability of the
Borrower or any of its Subsidiaries to the pension Benefit Guaranty Corporation
or to a Multiemployer Plan or (ii) participate in any Prohibited Transaction
that could subject the Borrower or any of its Subsidiaries to any civil penalty
under ERISA or tax under the Internal Revenue Code, in each case that could
reasonably be expected to have a Material Adverse Effect.
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrower (i) fails to pay any principal amount of the Credit
Obligations when due, or (ii) fails to pay any interest and fees on the Credit
Obligations within two (2) Business Days after the due date thereof;
(b) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained in SECTION 5.3(A), 5.12, 5.13 or ARTICLE VI;
(c) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained in SECTION 5.1, 5.2(C), 5.2(E), 5.2(F) or 2.13, and the same is not
cured to the Required Lenders' satisfaction within fifteen (15) days after the
earlier of (i) written notice to the Borrower by the Agent of the existence of
such Default, or (ii) the date on which the Borrower or such Subsidiary acquires
knowledge thereof;
(d) The Borrower or any of its Subsidiaries fails or neglects to
observe, perform or comply with any term, provision, condition or covenant
contained herein except those specified in subsections (A), (B) and (C) above,
and the same is not cured to the Required Lenders' satisfaction within thirty
(30) days after the earlier of (i) written notice to the Borrower by the Agent
of the existence of such Default, or (ii) the date on which the Borrower or such
Subsidiary acquires knowledge thereof;
<PAGE> 85
(e) If any representation or warranty made in writing by or on behalf
of the Borrower or any of its Subsidiaries in this Agreement, in the other Loan
Documents or in any other agreement now existing or hereafter executed between
the Borrower or any of its Subsidiaries and the Agent or any Lender shall prove
to have been false or misleading in any material respect when made;
(f) The occurrence of any default or event of default on the part of
the Borrower or any of its Subsidiaries (including specifically, but without
limitation, defaults due to nonpayment) under the terms of any agreement,
document or instrument (including without limitation any Swap Agreement, or any
other similar agreement with any other Person, and any Operative Agreement (as
defined by reference in the definition of End Loaded Lease Facility herein)
under the End Loaded Lease Facility) pursuant to which the Borrower or such
Subsidiary has incurred any Debt (other than the Credit Obligations) in excess
of $1,000,000, which default or event of default would permit acceleration of
such Debt and which is not cured within any applicable grace or cure period;
(g) (i) The termination of any hospital lease agreement; or (ii) the
termination of any other agreement, contract or instrument to which the Borrower
or any of its Subsidiaries is a party or by which it or any of its properties
are bound where such termination could reasonably be expected to result in a
Material Adverse Effect;
(h) The occurrence of an event of default under any of the Material
Loan Documents (other than a Landlord's Consent) or in any other agreement now
existing or hereafter executed evidencing or securing any of the Credit
Obligations, taking into account any applicable grace or cure provisions
thereof;
(i) The occurrence of an event of default under the Participation
Agreement, the Lease, each applicable Ground Lease, the Agency Agreement, the
Credit Agreement, the Notes, the Trust Agreement, the Certificates, the Security
Agreement and each applicable Mortgage Instrument (each as defined in the
Participation Agreement) under the End Loaded Lease Facility or in any other
agreement now existing or hereafter executed evidencing or securing any of the
obligations of the Trust, the Borrower or its Subsidiaries under such Operative
Documents (other than due to the Agent's or any Lender's failure to file a
continuation statement), taking into account any applicable grace or cure
provisions thereof;
(j) The occurrence of any uninsured damage to or loss, theft or
destruction of the Collateral or other assets of the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect;
(k) The filing by the Borrower or any of its Subsidiaries (with assets
having a value of $250,000 or more) of any voluntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing;
(l) The filing against the Borrower or any of its Subsidiaries (with
assets having a value of $250,000 or more) of any involuntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any other
relief under the Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign, now or hereafter
existing, which petition is not dismissed discharged, stayed or bonded within
sixty (60) days after the date of filing;
<PAGE> 86
(m) A custodian, trustee, receiver or assignee for the benefit of
creditors is appointed or takes possession of the Collateral or any other assets
of the Borrower or any of its Subsidiaries (with assets having a value of
$250,000 or more) which appointment continues undischarged, undismissed,
unstayed or unbonded for 60 days or more;
(n) The Borrower or any of its Subsidiaries (with assets having a value
of $250,000 or more) ceases, or the Borrower and its Subsidiaries, on a
consolidated basis, cease, to be Solvent (taking into account any rights of
contribution);
(o) A notice of lien, levy or assessment is filed of record against any
portion of the assets of the Borrower or any of its Subsidiaries by the United
States, or any department, agency or instrumentality thereof, or by any other
Governmental Authority or any other Person, including, without limitation, the
Pension Benefit Guaranty Corporation, or if any taxes or debts owing at any time
or times hereafter to any one of them becomes a lien or encumbrance (other than
a Permitted Lien) upon the Collateral or any other asset of the Borrower or any
of its Subsidiaries, and the same is not dismissed, released, bonded or
discharged within five (5) days after the same becomes a lien or encumbrance or,
in the case of ad valorem taxes, prior to the last day when payment may be made
without penalty and, if bonded, such bond (or a replacement bond) shall not
continue in effect at all times until such judgment is dismissed or discharged,
and any such event could reasonably be expected to have a Material Adverse
Effect;
(p) The entry of judgments or the issuance of warrants of attachment,
execution or similar process against the Borrower or any of its Subsidiaries or
any of their assets of $500,000 or more in the aggregate in excess of the
proceeds of insurance available therefor, which shall not be paid, dismissed,
discharged, stayed pending appeal or bonded within fifteen (15) days after entry
and, if bonded, such bond (or a replacement bond) shall not continue in effect
at all times until such judgment is dismissed or discharged;
(q) The occurrence of any of the following events: (i) the happening of
a Reportable Event that could give rise to liability (that is not waived by the
Pension Benefit Guaranty Corporation or by the Required Lenders, or if such
liability can be avoided by any corrective action of the Borrower, such
corrective action is not completed within ninety (90) days after the occurrence
of such Reportable Event) with respect to any Pension Plan; (ii) the termination
of any Pension Plan in a "distress termination" under the provisions of Section
4041 of ERISA; (iii) the appointment of a trustee by an appropriate United
States District Court to administer any Pension Plan; (iv) the institution of
any proceedings by the Pension Benefit Guaranty Corporation to terminate any
Pension Plan or to appoint a trustee to administer any such plan; and (v) the
failure of the Borrower to notify the Lenders promptly upon receipt by the
Borrower of any notice of the institution of any proceeding or any other actions
that may result in the termination of any such plan;
(r) (i) The guaranty given by any Guarantor of the Borrower under the
Guaranty Agreement shall, for any reason other than the satisfaction in full of
all Credit Obligations and termination of this Agreement or the release of such
Subsidiary from its Guaranty Obligations under the Guaranty Agreement in
accordance with the terms thereof, cease to be in full force and effect at any
time or is declared to be null and void or (ii) any such Subsidiary denies that
it has any further liability under the Guaranty Agreement or gives notice to
such effect, and such denial or notice is not revoked within one Business Day
after the earlier of (A) receipt by the Borrower of notice from the Agent or any
Lender of such denial or notice or (B) the Borrower becomes aware of such denial
or notice being made or given, as the case may be;
(s) The occurrence of a Change of Control;
<PAGE> 87
(t) Martin S. Rash or Richard D. Gore shall cease to be the Chief
Executive Officer and Chief Financial Officer, respectively, of the Borrower or
involved in the day-to-day operations of the Borrower and its Subsidiaries, and
within 120 days following the cessation of their respective involvement, the
relevant executive is not succeeded by a chief executive officer or chief
financial officer, as applicable, reasonably acceptable to the Required Lenders;
or
(u) The Borrower or any Subsidiary, to the extent, if any, presently
participating or required by law to participate, in Medicaid, Medicare or
MediCal programs shall fail to be eligible for any reason to participate in
Medicaid, Medicare or MediCal programs or to accept assignments or rights to
reimbursement under Medicaid Regulations, Medicare Regulations or MediCal
Regulations, 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.
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies; Termination of Commitments, Acceleration, Etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Revolving Credit Commitments of each Lender, the
Swingline Commitment of the Swingline Lender, and the Issuing Bank's obligation
to issue Letters of Credit, to be terminated, whereupon the same shall terminate
(provided that, upon the occurrence of an Event of Default with respect to the
Borrower pursuant to SECTIONS 7.1(K), (L) or (M), all of the Revolving Credit
Commitments and the Swingline Commitment, together with the Issuing Bank's
obligation to issue Letters of Credit, shall automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans, all unpaid interest accrued thereon, and all other amounts payable under
this Agreement, the Notes and the other Loan Documents to be immediately due and
payable, whereupon such outstanding principal amounts, accrued interest and
other such amounts shall become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower (provided that, upon the occurrence of an Event of Default with respect
to the Borrower pursuant to SECTIONS 7.1(K), (L) or (M), all such outstanding
principal amounts, accrued interest and other such amounts shall automatically
become immediately due and payable);
(c) Direct the Borrower to deliver (and the Borrower hereby agrees,
upon receipt of notice of such direction from the Agent, to deliver) to the
Agent from time to time such additional amount of cash as is equal to the
difference between the aggregate Stated Amount of all Letters of Credit then
outstanding (whether or not any beneficiary under any Letter of Credit shall
have drawn or be entitled at such time to draw thereunder) and the amount then
on deposit in the Cash Collateral Account, such amount to be held by the Agent
in the Cash Collateral Account as security for the Borrower's Reimbursement
Obligations as described in SECTION 2.18(I); and
<PAGE> 88
(d) Exercise all rights and remedies available to it under this
Agreement, the other Loan Documents and applicable law.
8.2. Right of Setoff. Upon the occurrence and during the continuance
of, and prior to any express written waiver by the Required Lenders of, an Event
of Default, the Agent and each Lender may, and are hereby authorized by the
Borrower, at any time and from time to time, to the fullest extent permitted by
applicable law, without advance notice to the Borrower (any such notice being
expressly waived by the Borrower) and irrespective of demand for payment, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held in other than a fiduciary account and any
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any or all of the Credit Obligations now or
hereafter existing, whether or not such Credit Obligations have matured. The
Agent agrees to notify the Borrower after any such setoff or application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Agent and each Lender under this
SECTION 8.2 are in addition to the other rights and remedies (including other
rights of setoff) that such Lender may have. NOTWITHSTANDING THE FOREGOING,
NEITHER THE AGENT NOR ANY LENDER SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY
RIGHT OF SETOFF, BANKER'S LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR
PROPERTY OF THE BORROWER HELD BY THE AGENT OR ANY LENDER, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE REQUIRED LENDERS, AND ANY LENDER VIOLATING THIS PROVISION
SHALL INDEMNIFY THE AGENT AND THE OTHER LENDERS FROM ANY AND ALL COSTS,
EXPENSES, LIABILITIES AND DAMAGES RESULTING THEREFROM. The contractual
restriction on the exercise of setoff rights provided in the foregoing sentence
is solely for the benefit of the Agent and the Lenders and may not be enforced
by the Borrower.
8.3. Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration
of the Agent's and the Lenders' rights and remedies set forth in this Agreement
is not intended to be exhaustive, and the exercise by the Agent or any Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder, under the Loan Documents or under any
other agreement between the Borrower or any of its Subsidiaries and the Agent or
the Lenders or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower or any of its
Subsidiaries and the Agent or the Lenders or their agents or employees shall be
effective to change, modify or discharge any provision of this Agreement or any
of the other Loan Documents or to constitute a waiver of any Event of Default.
ARTICLE IX
THE AGENT
9.1. Appointment. Each Lender hereby irrevocably appoints and
authorizes First Union to act as Agent hereunder and under the other Loan
Documents and to take such actions as agent on its behalf hereunder and under
the other Loan Documents, and to exercise such powers and to perform such
duties, as are specifically delegated to the Agent by the terms hereof or
thereof, together with such other powers and duties as are reasonably incidental
thereto.
<PAGE> 89
9.2. Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Loan Documents. The Agent shall not have, by reason of this Agreement or
any other Loan Document, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any other Loan Document, express or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
or liabilities in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents or
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact that it selects with reasonable care. The
Agent shall be entitled to consult with legal counsel, independent public
accountants and other experts selected by it with respect to all matters
pertaining to this Agreement and the other Loan Documents and its duties
hereunder and thereunder and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts. The Lenders hereby acknowledge that the Agent shall not
be under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders).
9.3. Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by it or such Person under or
in connection with the Loan Documents, except for its or such Person's own gross
negligence or willful misconduct, (ii) responsible in any manner to any Lender
for any recitals, statements, information, representations or warranties herein
or in any other Loan Document or in any document, instrument, certificate,
report or other writing delivered in connection herewith or therewith, for the
execution, effectiveness, genuineness, validity, enforceability or sufficiency
of this Agreement or any other Loan Document, or for the financial condition of
the Borrower, its Subsidiaries or any other Person, or (iii) required to
ascertain or make any inquiry concerning the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Loan Document
or the existence or possible existence of any Default or Event of Default, or to
inspect the properties, books or records of the Borrower or any of its
Subsidiaries.
9.4. Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any notice, statement, consent or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons. The Agent may deem and treat each Lender as the owner of its interest
hereunder for all purposes hereof unless and until a written notice of the
assignment, negotiation or transfer thereof shall have been given to the Agent
in accordance with the provisions of this Agreement. The Agent shall be entitled
to refrain from taking or omitting to take any action in connection with this
Agreement or any other Loan Document (i) if such action or omission would, in
the reasonable opinion of the Agent, violate any applicable law or any provision
of this Agreement or any other Loan Document or (ii) unless and until it shall
have received such advice or concurrence of the Required Lenders (or, where a
higher percentage of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first have been indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking, continuing to take or omitting to take
any such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against the Agent as a result of the Agent's acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of the Required Lenders (or, where a higher percentage of
the Lenders is expressly required
<PAGE> 90
hereunder, such Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding upon all of the Lenders (including all
subsequent Lenders).
9.5. Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by the Agent or any such Person hereafter
taken, including any review of the affairs of the Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that (i) it has, independently and
without reliance upon the 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, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries
and made its own decision to enter into this Agreement and extend credit to the
Borrower hereunder, and (ii) it will, independently and without reliance upon
the 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 hereunder and under the
other Loan Documents and to make such investigation as it deems necessary to
inform itself as to the business, prospects, operations, properties, financial
and other condition and creditworthiness of the Borrower and its Subsidiaries.
Except as expressly provided in this Agreement and the other Loan Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information concerning the
business, prospects, operations, properties, financial or other condition or
creditworthiness of the Borrower, its Subsidiaries or any other Person that may
at any time come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.6. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Agent
shall have received written notice from the Borrower or a Lender 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 Agent receives such
a notice, the Agent will give notice thereof to the Lenders as soon as
reasonably practicable; provided, however, that if any such notice has also been
furnished to the Lenders, the Agent shall have no obligation to notify the
Lenders with respect thereto. The Agent shall (subject to SECTIONS 9.4 and 10.8)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action (except for
those actions specified in SECTION 8.1(A), (B), (C) OR (D)), with respect to
such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders. Each Lender shall promptly give the Agent such a
notice upon its actual knowledge of a Default or an Event of Default; provided,
however, that the failure of any Lender to deliver such notice shall not, in the
absence of gross negligence or willful misconduct, affect its rights hereunder
or under the other Loan Documents. Each Lender agrees that the rights and
remedies granted under this Agreement and the other Loan Documents shall be
exercised solely by the Agent, at the direction or with the consent of the
Required Lenders, and that no Lender shall have any right individually to
exercise any such right or remedy except to the extent, if any, expressly
provided herein or therein.
9.7. Indemnification. To the extent the Agent is not reimbursed by or
on behalf of the Borrower, and without limiting the obligation of the Borrower
to do so, the Lenders agree (i) to indemnify the Agent and its officers,
directors, employees, agents, attorneys-in-fact and Affiliates, ratably in
proportion to their percentages as used in determining the Required Lenders as
of the date of determination, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses (including,
<PAGE> 91
without limitation, reasonable attorneys' fees and expenses) or disbursements of
any kind or nature whatsoever that may at any time (including at any time
following the repayment in full of the Loans and the termination of the
Commitments) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing, and (ii) to reimburse the Agent upon
demand, ratably in proportion to their percentages as used in determining the
Required Lenders as of the date of determination, for any reasonable expenses
incurred by the Agent in its capacity as Agent in connection with the
preparation, negotiation, execution, delivery, administration, amendment,
modification, waiver or enforcement (whether through renegotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Loan Documents
(including, without limitation, reasonable attorneys' fees and expenses and
compensation of agents and employees paid for services rendered on behalf of the
Lenders); provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, reasonable expenses or disbursements to the extent resulting from
the gross negligence or willful misconduct of the party to be indemnified.
9.8. The Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it, the Letters of Credit issued or participated
in by it and the Notes issued to it, the Agent in its individual capacity and
not as Agent shall have the same rights and powers under the Loan Documents as
any other Lender and may exercise the same as though it were not performing the
agency duties specified herein; and the terms "Lenders," "Required Lenders,"
"holders of Notes" and any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, make investments in, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Borrower, any of its Subsidiaries or any of their Affiliates
as if the Agent were not performing the agency duties specified herein, and may
accept fees and other consideration from any of them for services in connection
with this Agreement and otherwise without having to account for the same to the
Lenders.
9.9. Successor Agent. The Agent may resign at any time by giving thirty
(30) days' prior written notice to the Borrower and the Lenders. Upon any such
notice of resignation and with the prior consent of the Borrower, which consent
shall not be unreasonably withheld, the Required Lenders will appoint prior to
the effectiveness of the retiring Agent's resignation from among the Lenders a
successor to the Agent (provided that the Borrower's consent shall not be
required in the event a Default or Event of Default shall have occurred and be
continuing). If no successor to the Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within such thirty
(30)-day period, then the retiring Agent may, on behalf of the Lenders and after
consulting with the Lenders and the Borrower, appoint a successor Agent from
among the Lenders. Upon the acceptance of any appointment as Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring Agent's
resignation as Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent. If no
successor to the Agent has accepted appointment as Agent by the thirtieth (30th)
day following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Lenders shall
thereafter perform all of the duties of the Agent hereunder and under the other
Loan Documents until such time, if any, as the Required Lenders appoint a
successor Agent as provided for hereinabove.
<PAGE> 92
9.10. Collateral Matters.
(a) The Agent is hereby authorized on behalf of the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Security Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments, termination or expiration of
all outstanding Letters of Credit and payment in full of all of the Credit
Obligations and termination of the End Loaded Lease Facility, (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition expressly permitted hereunder or under any other Loan Document or to
which the Required Lenders have consented or (iii) otherwise pursuant to and in
accordance with the provisions of any applicable Loan Document. Upon request by
the Agent at any time, the Lenders will confirm in writing the Agent's authority
to release Collateral pursuant to this subsection (B).
9.11. Issuing Bank and Swingline Lender. The provisions of this ARTICLE
IX (other than SECTION 9.9) shall apply to the Issuing Bank and the Swingline
Lender mutatis mutandis to the same extent as such provisions apply to the
Agent.
ARTICLE X
MISCELLANEOUS
10.1. Survival.
(a) The representations and warranties made by or on behalf of the
Borrower or any of its Subsidiaries in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document. Notwithstanding any other provision herein or anything
provided or implied by law to the contrary, no termination or cancellation
(regardless of cause or procedure) of the Commitments, this Agreement or any of
the other Loan Documents shall in any way affect or impair the rights and
obligations of the parties hereto with respect to any of the provisions of (i)
SECTION 10.3, (ii) SECTION 2.15 or (iii) this Agreement and the other Loan
Documents relating to indemnification or payment of costs and expenses,
including, without limitation, all of the provisions of SECTIONS 2.11(A),
2.11(B), 2.12, 2.13, 2.18(H), 9.7, 10.6 and 10.7, and, in each case, such
provisions shall survive any such termination or cancellation and the making and
repayment of the Loans.
(b) The Borrower, the Agent and the Lenders agree that: (i) ARTICLES IV
and V and the other applicable provisions of this Credit Agreement are intended
as the Agent's (on behalf of the Lenders) written request for information (and
the Borrower's response) concerning the environmental condition of the real
property; and (ii) each provision in this Credit Agreement (together with any
indemnity applicable to a breach of any such provision) with respect to the
environmental condition of the Realty is intended to be an "environmental
provision" and as such it is expressly understood that the Borrower's duty to
indemnify the Agent and the Lenders as specified hereunder shall survive the
termination or cancellation of the Commitments or this Agreement and the making
and repayment of the Loans.
<PAGE> 93
10.2. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
DEEMED TO HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN NORTH CAROLINA AND SHALL
BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
OF THE STATE OF NORTH CAROLINA; PROVIDED THAT EACH LETTER OF CREDIT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OR
RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE
DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM
CUSTOMS") AND, AS TO MATTERS NOT GOVERNED THEREBY, THE INTERNAL LAWS OF THE
STATE OF THE DOMICILE OF THE ISSUING BANK. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY RECEIVED, THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT
LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA FOR ANY
PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, OR ANY PROCEEDING TO WHICH THE AGENT, THE ISSUING BANK, ANY LENDER OR
THE BORROWER IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN
CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE ISSUING BANK, ANY LENDER OR THE
BORROWER. THE BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE
RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER
WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. THE
BORROWER CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED
MAIL DIRECTED TO BORROWER (ATTENTION: GENERAL COUNSEL) AT ITS ADDRESS SET FORTH
HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR FIFTEEN (15) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
10.3. Arbitration; Remedies.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any of the Loan
Documents ("Disputes") between or among parties hereto or thereto shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from documents executed in the future,
or claims arising out of or connected with the transactions contemplated by this
Agreement or any of the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA"), as in
effect from time to time, and Title 9 of the U.S. Code, as amended. All
arbitration hearings shall be conducted in Charlotte, North Carolina. The
expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall
<PAGE> 94
apply to any Dispute. A judgment upon the award may be entered in any court
having jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted, or if such person is not available, the single arbitrator may be a
licensed attorney. Notwithstanding the foregoing, this arbitration provision
does not apply to Disputes under or related to any interest rate protection
agreements.
(b) Notwithstanding the preceding binding arbitration provisions, the
Borrower and the Agent, on behalf of the Lenders, agree to preserve, without
diminution, certain remedies, more particularly described below, that any party
hereto may employ or exercise freely, independently or in connection with an
arbitration proceeding or after an arbitration action is brought. The Agent, on
behalf of the Lenders, and the Borrower shall have the right to proceed in any
court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under any Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, setoff,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of any arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
The Borrower and the Agent, on behalf of the Lenders, agree that they
shall not have a remedy of punitive or exemplary damages against the other in
any Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially.
10.4. Notice. All notices and other communications provided for
hereunder shall be in writing (including facsimile transmission) and mailed,
telecopied or delivered to the party to be notified at the following addresses
(provided, however, that Syndication Agency Services of First Union National
Bank will not receive copies of regular financial reports and the attorneys
listed below will receive neither regular financial reports nor the business
information submitted to the Agent and the Lenders):
If to Borrower: Province Healthcare Company
105 Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: Vice President - Finance
Telephone: (615) 370-1377
Telecopy: (615) 370-1259
with a copy (which
copy shall not
constitute notice) to: Waller Lansden Dortch & Davis, PLLC
Nashville City Center
511 Union Street, Suite 2100
Nashville, Tennessee 37219-1760
Attention: Ralph W. Davis
Telephone: (615) 252-2481
Telecopy: (615) 244-6804
<PAGE> 95
If to the Agent
or the Issuing Bank: First Union National Bank
One First Union Center, TW-10
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone: (704) 374-2698
Telecopy: (704) 383-0288
with a copy to: First Union National Bank
150 Fourth Avenue North
2nd Floor
Nashville, Tennessee 37219
Attention: Carolyn Hannon
Telephone: (615) 251-9374
Telecopy: (615) 251-9247
with a copy to: First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Valerie Cline
Telephone: (704) 383-6237
Telecopy: (704) 383-9144
with a copy to: Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28246
Attention: Stokely G. Caldwell, Jr.
Telephone: (704) 377-8332
Telecopy: (704) 378-4000
If to any Lender: At the address set forth on its
signature page hereto.
or to such other address as any party may designate for itself by like notice to
all other parties hereto. All such notices and communications shall be deemed to
have been given (i) if mailed as provided above by any method other than
overnight delivery service, on the third Business Day after deposit in the
mails, postage prepaid, (ii) if transmitted by overnight delivery service or
telecopied, when delivered for overnight delivery or transmitted by telecopier,
respectively, with appropriate confirmation of delivery, or (iii) if delivered
by hand, upon delivery; provided that notices and communications to the Agent
shall not be effective until received by the Agent.
All wire transfers to the Agent shall be sent to First Union National
Bank, ABA Routing #053000219, to the credit of First Union National Bank,
Charlotte, North Carolina, Attention: Syndication Agency Services, G/L #465906,
RC #5007, RE: Province Healthcare Company, unless otherwise instructed by the
Agent.
10.5. Assignments, Participations.
<PAGE> 96
(a) With the prior consent of the Agent and the Borrower, which consent
shall not be unreasonably withheld (except in the case of a Default or Event of
Default in which case no consent of the Borrower shall be required), each Lender
may assign to one or more other Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the outstanding Loans made by it and the Note or
Notes held by it); provided, however, that (i) each such assignment shall be of
an equal, pro rata percentage of such Lender's rights and obligations (including
its Commitments and its End Loaded Lease Commitment) under this Agreement and
the End Loaded Lease Credit Agreement, (ii) except in the case of an assignment
to an Affiliate of such Lender or a Person that, immediately prior to such
assignment, was a Lender, (1) the amount of the Commitments of such assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to each such assignment)
shall in no event be less than the lesser of (y) the aggregate Commitments of
such Lender immediately prior to such assignment or (z) $5,000,000, and (2) the
amount of the Swingline Commitment being assigned pursuant to any such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than Swingline Commitment,
(iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to
each such assignment will execute and deliver to the Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance, together with any
Note or Notes subject to such assignment, and will pay a processing fee of
$3,000 to the Agent for its own account, and (v) the assignee shall prepare and
deliver to the Agent (for delivery to the Borrower) any forms and other
documents required by SECTION 2.12(C). Upon such execution, delivery, acceptance
and recording of the Assignment and Acceptance, from and after the effective
date specified therein (a) the assignee thereunder shall be deemed a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of such Lender hereunder with respect thereto, and (b) the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree with each
other, and with the other parties hereto, as follows: (i) other than as may be
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished hereto or pursuant
thereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their obligations under this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee has received a copy of
this Agreement, together with copies of the Financial Statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; (iv) such assignee will,
independently and without reliance upon the Agent, the assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder, as are specifically delegated to
or required of the Agent by the terms hereof or
<PAGE> 97
thereof and such other powers as are reasonably incidental thereto; and (vii)
such assignee will perform in accordance with their terms all of the obligations
that by the terms of this Agreement are required to be performed by it as a
Lender.
(c) The Agent will maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower, the Issuing Bank or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent will, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT D, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give notice thereof to the Borrower. Within five (5) Business
Days after its receipt of such notice, the Borrower, at its own expense, will
execute and deliver to the Agent in exchange for the surrendered Note or Notes a
new Note or Notes to the order of such assignee in an amount equal to the
Commitment or Commitments assumed by it pursuant to such Assignment and
Acceptance and, to the extent the assigning Lender has retained its Commitments
hereunder, a new Note or Notes to the order of the assigning Lender in an amount
equal to the Commitment or Commitments retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the forms of EXHIBITS A-1 and A-2, as appropriate.
(e) Each Lender may sell to one or more other Persons participations in
any portion comprising less than all of its rights and obligations under this
Agreement (including, without limitation, a portion of its Commitments, the
outstanding Loans made by it and the Note or Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower, the Issuing Bank, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (iv)
any such participation shall be in an amount of not less than $5,000,000, (v) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement (including, without limitation, all of its
Commitments, the outstanding Loans made by it and the Note or Notes held by it),
(vi) each such participation shall be of an equal, pro rata percentage of such
Lender's rights and obligations (including its Commitments), (vii) no Lender
shall permit any participant to have any voting rights or any right to control
the vote of such Lender with respect to any amendment, modification, waiver,
consent or other action hereunder or under any other Loan Document except as to
actions of the type described in SECTION 10.8(A), and (viii) the parties to each
such participation shall pay a processing fee of $3,000 to the Agent for its own
account. In the case of a participation, the participant shall not have any
rights under this Agreement or any of the other Loan Documents, the
participant's rights against the granting Lender in respect of such
participation to be those set forth in the participation agreement, and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not sold such participation; provided, however, that each such participant
shall have the rights of a Lender for purposes of SECTIONS 2.11(A),
<PAGE> 98
2.11(B), 2.12, 2.13 and 8.2, and shall be entitled to the benefits thereof, to
the extent that the Lender selling such participation would be entitled to such
benefits if the participation had not been sold.
(f) With the prior consent of the Required Lenders and the Borrower,
which consent shall not be unreasonably withheld, the Issuing Bank may assign
all, but not less than all, of its rights and obligations as Issuing Bank under
this Agreement, including, without limitation, its commitment to issue Letters
of Credit, to any Eligible Assignee, and upon acceptance of such assignment, the
successor Issuing Bank shall succeed to such rights and obligations and the
assigning Issuing Bank shall be discharged therefrom.
(g) The Agent, the Issuing Bank and each Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Section, disclose to the assignee or participant, or proposed assignee
or participant, any information relating to the Borrower and its Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
assignee or participant or proposed assignee or participant agrees in writing to
the Agent, the Issuing Bank or such Lender, as the case may be, to keep such
information confidential to the same extent required of the Lenders under
SECTION 10.17.
(h) Nothing in this Agreement or the other Loan Documents shall
prohibit any Lender or participant from pledging or assigning its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the outstanding Loans made by it and the Note or
Notes held by it, including Collateral therefor) to any Federal Reserve Bank in
accordance with applicable law.
10.6. Fees and Expenses. Whether or not the transactions contemplated
by this Agreement shall be consummated, the Borrower shall be obligated:
(a) to pay or reimburse the Agent upon demand and after notice in
accordance with SECTION 10.4 for all reasonable expenses (including, without
limitation, reasonable attorneys' fees, but excluding salaries of the Agent's
regularly employed personnel and overhead) incurred or paid by the Agent in
connection with: (i) the preparation, execution, delivery, interpretation,
modification, amendment or termination of this Agreement or the other Loan
Documents or any consent or waiver requested by the Borrower hereunder or
thereunder; (ii) upon the occurrence and during the continuance of any Event of
Default, charges for appraisers, examiners, environmental consultants, auditors
or similar Persons whom the Agent may engage with respect to rendering opinions
concerning the financial condition of the Borrower and its Subsidiaries; and
(iii) upon the occurrence and during the continuance of any Event of Default,
any commercially reasonable attempt to inspect, verify, protect, preserve,
collect, sell, liquidate or otherwise dispose of the Collateral or any other
assets of the Borrower or any Guarantor;
(b) to pay or reimburse the Agent and each Lender upon demand and after
notice in accordance with SECTION 10.4 for all reasonable expenses (including,
without limitation, reasonable attorneys' fees, but excluding salaries of the
Agent's or such Lender's regularly employed personnel and overhead) incurred or
paid by the Agent or such Lender in connection with: (i) any litigation,
contest, dispute, suit or proceeding or action (whether instituted by the Agent,
the Lenders, or any of them, the Borrower or any other Person) in any way
relating to this Agreement or the other Loan Documents (other than a dispute
solely between or among the Lenders or the Lenders and the Agent); (ii) any
attempt by the Agent or such Lender to enforce any of its rights against the
Borrower or any other Person that may be obligated to the Agent or such Lender
by virtue of this Agreement or the other Loan Documents; and (iii) any
refinancing or restructuring of the credit arrangement provided under this
Agreement in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding;
<PAGE> 99
(c) to pay and hold the Agent and each Lender harmless from and against
any and all liability and loss with respect to or resulting from the nonpayment
or delayed payment of any and all intangibles, documentary stamp and other
similar taxes, fees and excises, if any, including any interest and penalties,
that may be, or be determined to be, payable in connection with the transactions
contemplated by this Agreement and the other Loan Documents or in any
modification hereof or thereof; and
(d) to pay and hold the Agent and each Lender harmless from and against
any and all finder's or brokerage fees and commissions that may be payable in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, other than any fees or commissions of finders or brokers engaged
by the Agent or any Lender.
10.7. Indemnification. From and at all times after the date of this
Agreement, and in addition to the costs and expenses payable under SECTION 10.6
and all of the Agent's and the Lenders' other rights and remedies against the
Borrower, the Borrower agrees to indemnify and hold harmless the Agent, the
Issuing Bank and each Lender and each of their directors, officers, employees,
agents and their Affiliates (each, an "Indemnified Person") against any and all
claims, losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever, including, without limitation, reasonable attorneys' fees,
reasonable costs and expenses (collectively, "Indemnified Costs") incurred by or
asserted against any such Indemnified Person from and after the date hereof,
whether direct or indirect, as a result of or arising from or in any way
relating to any suit, action or proceeding (including any inquiry or
investigation) by any Person, whether threatened or initiated, asserting a claim
for any legal or equitable remedy under any statute or regulation, including,
without limitation, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or enforcement of this
Agreement or the other Loan Documents or any of the transactions contemplated
herein or therein, and including, without limitation, Environmental Claims,
whether or not such Indemnified Person is a party to any such action, proceeding
or suit or the target of any such inquiry or investigation; provided, however,
that no Indemnified Person shall have the right to be indemnified hereunder for
any Indemnified Costs resulting from the gross negligence or willful misconduct
of such Indemnified Person (as finally determined by a court of competent
jurisdiction or pursuant to arbitration as set forth in SECTION 10.3) or
resulting from any dispute solely between or among the Lenders or the Lenders
and the Agent. Without limiting the generality of the foregoing, the Indemnified
Costs with respect to Environmental Claims shall include, without limitation,
amounts paid in settlement of claims, all consultant and expert fees and
expenses of any Indemnified Person incurred in connection with any investigation
of site conditions, any abatement, cleanup, remediation, removal or restoration
work, or liability for any damages or injuries of any Person or to land, air,
water or other natural resources. All of the foregoing losses, damages, costs
and expenses of any Indemnified Person shall be payable by the Borrower within
thirty (30) days after demand, and shall be additional Credit Obligations
hereunder. In the event that the foregoing indemnity is unavailable or
insufficient to hold each Indemnified Person harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Persons in respect of
their losses, claims, damages or liabilities in such proportions as
appropriately reflect the relative benefits received by and fault of the
Borrower and such Indemnified Persons in connection with the matters as to which
such losses, claims, damages or liabilities relate and other equitable
considerations. Any Indemnified Party may submit a claim for indemnification
hereunder by delivering written notice of such claim to the Borrower and, unless
the claimant is the Agent, to the Agent, and such notice shall describe in
reasonable detail the basis for the claim, the amount or estimated amount of the
claim, and such other information as the Borrower or the Agent shall reasonable
request.
<PAGE> 100
10.8. Amendments, Waivers, Etc. Except as may be otherwise specifically
set forth in this Agreement or the other Loan Documents, neither this Agreement
nor any other Loan Document nor any provision hereof or thereof may be amended,
modified, waived, discharged or terminated, and no consent to any departure by
the Borrower from any provision hereof or thereof may be given, except in a
writing signed by the Required Lenders; provided, however, that:
(a) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of each Lender holding Credit Obligations
directly affected thereby, (i) reduce the principal amount of, or rate of
interest on, any Loan, or reduce any fees or other Credit Obligations (other
than fees payable to the Agent for its own account) or any obligations of any
Person now or hereafter primarily or contingently liable with respect to the
Credit Obligations or (ii) postpone any date fixed for any payment of principal,
interest (other than additional interest payable under SECTION 2.6(B) during the
continuance of an Event of Default), fees (other than fees payable to the Agent
for its own account) or any other Credit Obligations;
(b) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of all Lenders, (i) increase the Commitments
of any Lender (it being understood that a waiver of any Default or Event of
Default or of any mandatory reduction in the Total Commitments shall not
constitute such an increase), (ii) change the definition of "Required Lenders"
or otherwise change the number or percentage of Lenders that shall be required
for the Lenders or any of them to take or approve, or direct the Agent to take,
any action hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to extend, the term of the Revolving Credit Facility,
(iv) affect the obligation of the Lenders having Revolving Credit Commitments to
become L/C Participants, (v) amend any provision of this SECTION 10.8, (vi)
release all or substantially all of the Collateral or (vii) consent to the
assignment or transfer by the Borrower, or by any other Person now or hereafter
primarily or contingently liable with respect to the Credit Obligations, of any
of its rights and obligations under this Agreement or any of the other Loan
Documents;
(c) no provision relating to the rights or obligations of the Swingline
Lender or the Issuing Bank under this Agreement or any of the other Loan
Documents may be amended, modified or waived without the consent of such Person;
and
(d) no provision relating to the rights or obligations of the Agent
under this Agreement or any of the other Loan Documents may be amended, modified
or waived without the consent of the Agent.
10.9. Rights and Remedies Cumulative, Non-Waiver, Etc. The enumeration
of the Agent's and the Lenders' rights and remedies set forth in this Agreement
and the other Loan Documents is not intended to be exhaustive, and the exercise
by the Agent or any Lender of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder, under the
other Loan Documents or under any other agreement between the Borrower and the
Lenders, or any of them (or the Agent on their behalf), or that may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take action on the part of the Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any of the Borrower and the Agent or the Lenders or their agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default. No
<PAGE> 101
notice to or demand upon the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of the Agent or any Lender to exercise any
right or remedy or take any other or further action in any circumstances without
notice or demand.
10.10. Binding Effect, Assignment. All of the terms of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
successors and assigns of the Borrower, the Agent, the Issuing Bank and each
Lender; provided, however, that (i) the Borrower may not sell, assign or
transfer this Agreement or any portion hereof or thereof, including, without
limitation, any of its rights, title, interests, remedies, powers and duties
hereunder or thereunder and (ii) any assignees and participants of the Lenders
and any successor Issuing Bank shall have such rights and obligations with
respect to this Agreement and the other Loan Documents as are provided for in
and pursuant to SECTION 10.5.
10.11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.12. Entire Agreement. THIS AGREEMENT AND THE LOAN DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF, INCLUDING WITHOUT LIMITATION THE COMMITMENT LETTER. THIS
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS AND THE INSTRUMENTS AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
10.13. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders.
10.14. Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which shall together constitute one and the same
instrument. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
10.15. Conflict of Terms. The Exhibits and Schedules hereto and the
other Loan Documents are incorporated in this Agreement by this reference
thereto. Except as otherwise provided in this Agreement and except as otherwise
provided in the other Loan Documents, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision of the other
Loan Documents, the provision contained in this Agreement shall control.
10.16. Injunctive Relief. The Borrower recognizes that in the event it
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Agent and the Lenders. The Borrower therefore
<PAGE> 102
agrees that the Agent and the Lenders, if the Agent so requests, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages in any case where a remedy at law, in the reasonable good
faith opinion of the Required Lenders, may prove to be inadequate relief.
10.17. Confidentiality. Each Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all nonpublic confidential information provided in connection with this
Agreement or any other Loan Document and agrees and undertakes that it shall not
use any such information for any purpose or in any manner other than pursuant to
the terms contemplated by this Agreement. Any Lender may disclose such
information (i) at the request of any bank regulatory authority or in connection
with an examination of such Lender by any such authority, (ii) pursuant to
subpoena or other court process, (iii) when required to do so in accordance with
the provisions of any applicable law, (iv) at the express direction of any
agency of any State of the United States of America or of any other jurisdiction
in which such Lender conducts its business or (v) to such Lender's independent
auditors and other professional advisors that have a reasonable need or basis
for access thereto. The Lenders agree to use reasonable efforts to notify the
Borrower within a reasonable period of time prior to any such disclosure, except
no Lender shall be required to notify the Borrower of disclosures pursuant to a
bank examination or audit. Notwithstanding the foregoing, the Borrower agrees
and consents to the Agent's disclosure of information relating to this
transaction to Gold Sheets and other similar bank trade publications. Such
information will consist of deal terms and other information customarily found
in such publications.
10.18. Effect of Amendment and Restatement. This Agreement amends and
restates the Original Credit Agreement in its entirety; provided, however, that
the provisions of the Original Credit Agreement and the other Credit Documents
relating to indemnification or payment of fees, costs and expenses for the
benefit of the Agent and the Lenders (in each case, as defined in the Original
Credit Agreement), including, without limitation, the provisions of SECTIONS
2.11(A), 2.11(B), 2.12, 2.13, 2.18(H), 9.7, 10.6 and 10.7 of the Original Credit
Agreement, shall survive the effectiveness of this Agreement and the amendment
and restatement of the Original Credit Agreement effected hereby; provided,
further, however, that the Original Credit Agreement remains in full force and
effect until the Amendment Effective Date. Upon the effectiveness of this
Agreement, (i) all Existing Loans (if any) shall be deemed to be Revolving
Credit Loans hereunder, shall be evidenced by the Revolving Credit Notes and
shall be entitled to all of the benefits of this Agreement and the other Loan
Documents, and (ii) all other Loan Documents, instruments, certificates,
financial statements and other documents executed or delivered by or on behalf
of the Borrower or any of its Subsidiaries pursuant to the Original Credit
Agreement at any time prior to the effectiveness of this Agreement shall be
deemed to have been executed or delivered pursuant to this Agreement.
[Signature page to follow]
<PAGE> 103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
PROVINCE HEALTHCARE COMPANY
By: /s/ CHRISTOPHER T. HANNON
----------------------------------------
Name: Christopher T. Hannon
-----------------------------------
Title: Vice President of Finance
----------------------------------
FIRST UNION NATIONAL BANK,
AS AGENT AND AS ISSUING BANK
By: /s/ JOSEPH H. TOWELL
----------------------------------------
Name: Joseph H. Towell
-----------------------------------
Title: Senior Vice President
----------------------------------
(signatures continued)
<PAGE> 104
FIRST UNION NATIONAL BANK
By: /s/ JOSEPH H. TOWELL
----------------------------------------
Name: Joseph H. Towell
-----------------------------------
Title: Senior Vice President
----------------------------------
Revolving Credit Commitment: $23,460,127
Address:
First Union National Bank
One First Union Center, DC-5
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Healthcare Finance Group
Telephone: (704) 383-7121
Telecopy: (704) 383-9144
First Union National Bank
150 Fourth Avenue North
2nd Floor
Nashville, Tennessee 37219
Attention: Carolyn Hannon
Telephone: (615) 251-9374
Telecopy: (615) 251-9247
Wiring Instructions:
First Union National Bank
Charlotte, North Carolina
ABA# 053000219
For further credit to:
Syndication Agency Services
GL# 465906
RC# 5007
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 105
BANQUE PARIBAS
By: /s/ ROGER MAY
----------------------------------------
Name: Roger May
-----------------------------------
Title: AVP
----------------------------------
By: /s/ LARRY ROBINSON
----------------------------------------
Name: Larry Robinson
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $22,547,789
Lending Office, Hand Delivery Address
and Mailing Address:
Banque Paribas Houston Agency
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telephone: (713) 659-4811
Telecopy: (713) 659-5234
Attention: Glenn Mealey
Wiring Instructions:
Bankers Trust Company New York
ABA # 021001033
For Account 04202195 - Banque Paribas
New York
For further credit to:
Acct. # 2144-001545 - Banque Paribas
Houston Agency
Reference: Province Healthcare Company
Loan Operations Activity Contact:
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telephone: (713) 659-4811
Telecopy: (713) 659-5305
Primary Contact: Leah Evans-Hughes
Secondary Contact: Kim Miller
(signatures continued)
<PAGE> 106
Banque Paribas Houston Agency
Letter of Credit Activity Contact:
Primary Contact:
Bank Paribas New York
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telephone: (713) 659-4811
Telecopy: (713) 659-3832
Telex: 166514 or 166343
Primary Contact: Cheryl Johnson
Secondary Contact: Melissa Health
Wiring Instructions for Letter of Credit Activity:
Bankers Trust Company, New York
ABA # 021001033
For Acct. # 04-204254 - Banque Paribas Houston Agency
(signatures continued)
<PAGE> 107
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ JOHN OBERLE
----------------------------------------
Name: John Oberle
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $20,853,447
Lending Office, Hand Delivery Address
and Mailing Address:
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Telephone: (212) 261-7791
Telecopy: (212) 261-3440
Attention: Martin D. Golden
Wiring Instructions:
Credit Lyonnais
New York, New York
ABA # 0260-0807-3
Acct. # 01-88179-3701
Attention: Loan Servicing
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 108
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ ELIZABETH L. KNOX
----------------------------------------
Name: Elizabeth L. Knox
-----------------------------------
Title: Senior Vice President
----------------------------------
Revolving Credit Commitment: $20,853,447
Lending Office, Hand Delivery Address
and Mailing Address:
NationsBank of Tennessee, N.A.
1 NationsBank Plaza
TN1 100 04 17
Nashville, Tennessee 37239-1697
Telephone: (615) 749-3918
Telecopy: (615) 749-4951
Attention: Elizabeth Knox, SVP
Wiring Instructions:
NationsBank of Tennessee, N.A.
Nashville, TN
ABA # 064000020
Cr. GL 136621-0082
Specialized Loan Support
Attn: Lareen Matthews
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 109
AMSOUTH BANK
By: /s/ CATHY M. WIND
----------------------------------------
Name: Cathy M. Wind
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office, Hand Delivery Address
and Mailing Address:
AmSouth Bank
333 Union Street, Suite 200
Nashville, Tennessee 37201
Telephone: (615) 291-5268
Telecopy: (615) 291-5257
Attention: Cathy Wind
Wiring Instructions:
AmSouth Bank
ABA # 062000019
Attn: Kristi Mann (notify at 205-801-0250)
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 110
FIRST AMERICAN NATIONAL BANK
By: /s/ SANDY HAMRICK
----------------------------------------
Name: Sandy Hamrick
-----------------------------------
Title: Senior Vice President
----------------------------------
Revolving Credit Commitment: $13,033,404
Lending Office, Hand Delivery Address
and Mailing Address:
First American Center
2nd Floor - Healthcare Division
Nashville, Tennessee 37237-0203
Telephone: (615) 748-2191
Telecopy: (615) 748-8480
Attention: Sandy Hamrick
Wiring Instructions:
First American National Bank
Nashville, Tennessee
ABA #: 064000017
For further credit to:
WTCA# 901256
Attention: Frenisa Joy (615-365-5683)
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 111
KEY CORPORATE CAPITAL, INC.
By: /s/ CHARLES J. SHOOP
----------------------------------------
Name: Charles J. Shoop
-----------------------------------
Title: AVP
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office, Hand Delivery Address
and Mailing Address:
KeyBank, N.A.
525 Vine Street, 6th Floor
Cincinnati, Ohio 45202
Telephone: (513) 762-8292
Telecopy: (513) 762-8450
Attention: Charlie Shoop
Wiring Instructions:
KeyBank, N.A.
ABA # 041001039
Commercial Loan Operations
Acct. # 3057
Attn: Gina Iannaggi (216-689-3580)
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 112
LEHMAN COMMERCIAL PAPER INC.
By: /s/ MICHELE SWANSON
----------------------------------------
Name: Michele Swanson
-----------------------------------
Title: Authorized Signatory
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office:
Lehman Commercial Paper Inc.
c/o Bankers Trust Company
Corporate Trust & Agency Group, Loan Services
4 Albany Street, 7th Floor
New York, New York 10006
Telephone: (212) 250-7262
Telecopy: (212) 250-6151
Attention: Chris Wahl
and
Lehman Commercial Paper Inc.
101 Hudson Street, 30th Floor
Jersey City, New Jersey 07302
Telephone: (201) 524-4518
Telecopy: (201) 524-5847
Attention: Tom Wilson
With copies of modifications to
Credit Agreement and financial
information only to:
Michele Swanson
Lehman Commercial Paper Inc.
3 World Financial Center, 10th Floor
New York, New York 10285
Telephone: (212) 526-0330
Telecopy: (212) 528-0819
Lehman Commercial Paper Inc.
Wiring Instructions:
Bankers Trust ABA # 021-001-033 For
further credit to:
Favor NY Ltd. Loan Services / Lehman
Acct. # 01-442-898
Attention: Chris Wahl
(signatures continued)
<PAGE> 113
NATIONAL CITY BANK OF KENTUCKY
By: /s/ RODERIC M. BROWN
----------------------------------------
Name: Roderic M. Brown
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office, Hand Delivery Address
and Mailing Address:
National City Bank of Kentucky
101 South Fifth Street
Louisville, Kentucky 40202
Telephone: (502) 581-4369
Telecopy: (502) 581-4424
Attention: Roderic M. Brown
Wiring Instructions:
National City Bank of Kentucky
ABA # 083000056
For further credit to:
G/L # 151804
Commercial Loan Department
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 114
UNION BANK OF CALIFORNIA, N.A.
By: /s/ ALBERT W. KELLEY
----------------------------------------
Name: Albert W. Kelley
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office, Hand Delivery Address
and Mailing Address:
Union Bank of California
445 South Figueroa Street, 16th Floor
Los Angeles, California 90071
Telephone: (213) 236-4284
Telecopy: (213) 236-7814
Attention: Albert W. Kelley, VP
Wiring Instructions:
Union Bank of California
ABA # 1220-00496
For further credit to:
Acct. # 070196431
Attn: Wire Clearing Account
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 115
FLEET NATIONAL BANK
By: /s/ MARYANN S. SMITH
----------------------------------------
Name: MaryAnn S. Smith
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $17,377,872
Lending Office, Hand Delivery Address
and Mailing Address:
Fleet National Bank
75 State Street, MA BOF 04 A
Boston, Massachusetts 02109
Telephone: (617) 346-1594
Telecopy: (617) 346-0610
Attention: Maryann S. Smith
Wiring Instructions:
Fleet National Bank
ABA # 011000138
G/L # 1510351-03156
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 116
MELLON BANK, N.A.
By: /s/ MARSHA WICKER
----------------------------------------
Name: Marsha Wicker
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $13,033,404
Lending Office, Hand Delivery Address
and Mailing Address:
Mellon Bank, N.A.
One Mellon Bank Center, Room 151-0370
Pittsburgh, Pennsylvania 15258-0001
Telephone: (412) 234-4458
Telecopy: (412) 236-0287
Attention: Scott Hennessee, Vice President
Wiring Instructions:
Mellon Bank, N.A.
ABA # 0430-0026-1
Acct. # 990873800
Attn: Dan Steele
Reference: Province Healthcare Company
(signatures continued)
<PAGE> 117
CORESTATES BANK, N.A.
By: /s/ ELIZABETH D. MORRIS
----------------------------------------
Name: Elizabeth D. Morris
-----------------------------------
Title: Vice President
----------------------------------
Revolving Credit Commitment: $6,951,149
Lending Office, Hand Delivery Address
and Mailing Address:
CoreStates Bank, N.A.
1339 Chestnut Street
FC 1-8-3-22
Philadelphia, Pennsylvania 19101
Telephone: (215) 786-7275
Telecopy: (215) 973-2738
Attention: Liz Morris
Wiring Instructions:
CoreStates Bank, N.A.
ABA # 031000011
A/C# 132-0452
Commercial Loan Services RC 2490
Reference: Province Healthcare Company
<PAGE> 118
Annex 1 to Amended and Restated
Credit Agreement
First Union National Bank, as Agent
Province Healthcare Company
March 30, 1998 / $225,000,000
-----------------------------------
<TABLE>
<CAPTION>
================================================================================================================================
EXISTING LOANS EXISTING LOANS AMOUNT
(PRIOR TO (AFTER PURCHASED
LENDER AGREEMENT) ASSIGNMENTS) (SOLD) PRO RATA SHARE COMMITMENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First Union National Bank $ 6,750,000 $4,692,025.49 ($2,057,974.51) 10.4267233067% $ 23,460,127
- --------------------------------------------------------------------------------------------------------------------------------
AmSouth Bank $ 6,075,000 $3,475,574.44 ($2,599,425.56) 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
Lehman Commercial Paper Inc. $ 5,625,000 $3,475,574.44 ($2,149,425.56) 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
Credit Lyonnais New York Branch $ 5,175,000 $4,170,689.32 ($1,004,310.68) 9.2681984933% $ 20,853,447
- --------------------------------------------------------------------------------------------------------------------------------
Banque Paribas Houston Agency $ 4,500,000 $4,509,557.83 $ 9,557.83 10.0212396222% $ 22,547,789
- --------------------------------------------------------------------------------------------------------------------------------
Key Bank of Oregon $ 4,500,000 $ 0 0% 7.7234987467% $ 0
- --------------------------------------------------------------------------------------------------------------------------------
Key Corporate Capital Inc. $ 0 $3,475,574.44 $ 3,475,574.44 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
National City Bank of Kentucky $ 4,500,000 $3,475,574.44 ($1,024,425.56) 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
Union Bank of California $ 4,500,000 $3,475,574.44 ($1,024,425.56) 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
First American National Bank $ 3,375,000 $2,606,680.83 ($ 768,319.17) 5.7926240578% $ 13,033,404
- --------------------------------------------------------------------------------------------------------------------------------
Nationsbank of Tennessee, N.A. $ 0 $4,170,689.32 $ 4,170,689.32 9.2681984933% $ 20,853,477
- --------------------------------------------------------------------------------------------------------------------------------
Corestates Bank, N.A $ 0 $1,390,229.77 $ 1,390,229.77 3.0893994978% $ 6,951,149
- --------------------------------------------------------------------------------------------------------------------------------
Fleet National Bank $ 0 $3,475,574.44 $ 3,475,574.44 7.7234987467% $ 17,377,872
- --------------------------------------------------------------------------------------------------------------------------------
Mellon Bank, N.A $ 0 $2,606,680.83 $ 2,606,680.83 5.7926240578% $ 13,033,404
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL $45,000,000 $ 45,000,000 100.0000% $225,000,000
================================================================================================================================
</TABLE>
The Schedules and Exhibits to the Amended and Restated Credit Agreement are on
file at the Company's offices in Nashville, TN.
<PAGE> 1
EXHIBIT 4.6
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
Dated as of March 30, 1998
among
PROVINCE HEALTHCARE COMPANY
as the Construction Agent and as the Lessee,
THE VARIOUS PARTIES HERETO
FROM TIME TO TIME,
as the Guarantors,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the PHC Real Estate Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
FIRST UNION NATIONAL BANK,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. THE LOANS.............................................................................................1
SECTION 2. HOLDER ADVANCES.......................................................................................2
SECTION 3. SUMMARY OF TRANSACTIONS...............................................................................2
3.1. Operative Agreements................................................................................2
3.2. Property Purchase...................................................................................2
3.3. Construction of Improvements; Lease or Disposition of Property......................................3
SECTION 4. THE CLOSINGS..........................................................................................3
4.1. Initial Closing Date................................................................................3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances; Construction Advances...........3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS ON COMPLETION DATE; THE LESSEE'S
DELIVERY OF NOTICES; RESTRICTIONS ON LIENS............................................................4
5.1. General.............................................................................................4
5.2. Procedures for Funding..............................................................................4
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Initial
Closing Date and the Advance of Funds for the Acquisition of a Property.............................6
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to the Advance
of Funds after the Acquisition Advance.............................................................11
5.5. Additional Reporting and Delivery Requirements on Completion Date and on Construction Period
Termination Date...................................................................................13
5.6. The Construction Agent Delivery of Construction Budget Modifications...............................14
5.7. Restrictions on Liens..............................................................................14
5.8. Punch List Items...................................................................................14
5.9. Joinder Agreement Requirements.....................................................................14
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................................................................15
6.2. Representations and Warranties of the Borrower.....................................................15
6.3. Representations and Warranties of Each Credit Party................................................18
SECTION 6B. GUARANTY............................................................................................23
6B.1. Guaranty of Payment and Performance...............................................................23
6B.2. Obligations Unconditional.........................................................................23
6B.3. Modifications.....................................................................................24
6B.4. Waiver of Rights..................................................................................24
6B.5. Reinstatement.....................................................................................25
6B.6. Remedies..........................................................................................25
6B.7. Limitation of Guaranty............................................................................25
6B.8. Payment of Amounts to the Agent...................................................................26
6B.9. Release of Guarantors.............................................................................26
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 7. PAYMENT OF CERTAIN EXPENSES...........................................................................26
7.1. Transaction Expenses...............................................................................26
7.2. [Intentionally Omitted]............................................................................27
7.3. Certain Fees and Expenses..........................................................................28
7.4. Facility Fee.......................................................................................28
SECTION 8. OTHER COVENANTS AND AGREEMENTS.......................................................................28
8.1. Cooperation with the Construction Agent or the Lessee..............................................28
8.2. Covenants of the Owner Trustee and the Holders.....................................................29
8.3. Credit Party Covenants, Consent and Acknowledgment.................................................30
8.4. Sharing of Certain Payments........................................................................34
8.5. Grant of Easements, etc............................................................................34
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee...........................35
8.7. Collection and Allocation of Payments and Other Amounts............................................35
8.8. Release of Properties, etc.........................................................................39
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.................................................................39
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights..................................39
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights...................................40
SECTION 10. TRANSFER OF INTEREST................................................................................40
10.1. Restrictions on Transfer..........................................................................40
10.2. Effect of Transfer................................................................................41
SECTION 11. INDEMNIFICATION.....................................................................................41
11.1. General Indemnity.................................................................................41
11.2. General Tax Indemnity.............................................................................44
11.3. Increased Costs, Illegality, etc..................................................................47
11.4. Funding/Contribution Indemnity....................................................................49
11.5. Withholding Taxes.................................................................................49
11.6. Replacement of Lenders and Holders................................................................52
11.7. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC............................53
SECTION 12. MISCELLANEOUS.......................................................................................54
12.1. Survival of Agreements............................................................................54
12.2. No Broker, etc....................................................................................54
12.3. Notices...........................................................................................54
12.4. Counterparts......................................................................................56
12.5. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters...................................56
12.6. Headings, etc.....................................................................................58
12.7. Parties in Interest...............................................................................58
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE; ARBITRATION...............58
12.9. Severability......................................................................................60
12.10. Liability Limited................................................................................60
12.11. Rights of the Credit Parties.....................................................................62
12.12. Further Assurances...............................................................................62
12.13. Calculations under Operative Agreements..........................................................62
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
12.14. Confidentiality..................................................................................62
12.15. Financial Reporting/Tax Characterization.........................................................64
12.16. Set-off..........................................................................................64
</TABLE>
EXHIBITS
A Requisition Form (Sections 4.2, 5.2, 5.3 and 5.4)
B Outside Counsel Opinion for the Lessee (Section 5.3(j))
C [Intentionally Omitted]
D Officer's Certificate (Section 5.3(aa))
E Officer's Certificate (Section 5.3(bb))
F Officer's Certificate (Section 5.3(dd))
G Officer's Certificate (Section 5.3(ee))
H Legal Opinion of Owner Trustee's Counsel (Section 5.3(ff))
I Outside Counsel Opinion for the Lessee (Section 5.3(gg))
J Officer's Certificate (Section 5.5)
K Description of Material Litigation (Section 6.3(d))
L Compliance Certificate
M Form of Joinder Agreement (Section 5.9)
N States of Incorporation/Formation and Principal Place of
Business of Each Guarantor (Section 6.3(i))
Appendix A Rules of Usage and Definitions
iii
<PAGE> 5
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of March 30, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among PROVINCE HEALTHCARE COMPANY a Delaware
corporation (the "Lessee" or the "Construction Agent"); the various parties
hereto from time to time as guarantors (subject to the definition of Guarantors
in Appendix A hereto, individually, a "Guarantor" and collectively, the
"Guarantors"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (in its individual capacity, the "Trust Company"),
except as expressly stated herein, but solely as the Owner Trustee under the PHC
Real Estate Trust 1998-1 (the "Owner Trustee", the "Borrower" or the "Lessor");
the various banks and other lending institutions which are parties hereto from
time to time as lenders (subject to the definition of Lenders in Appendix A
hereto, individually, a "Lender" and collectively, the "Lenders"); FIRST UNION
NATIONAL BANK, a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests (in such capacity, the "Agent"); the various
banks and other lending institutions which are parties hereto from time to time
as holders of certificates issued with respect to the PHC Real Estate Trust
1998-1 (subject to the definition of Holders in Appendix A hereto, individually,
a "Holder" and collectively, the "Holders"). Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and in reliance
on the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto, the Lenders have agreed to make Loans to the
Lessor from time to time in an aggregate principal amount of up to the aggregate
amount of the Commitments of the Lenders in order for the Lessor to acquire the
Properties and certain Improvements, to develop and construct certain
Improvements in accordance with the Agency Agreement and the terms and
provisions hereof, to construct Modifications and for the other purposes
described herein, and in consideration of the receipt of proceeds of the Loans,
the Lessor will issue the Notes. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement
and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from
time to time at the request of (a) the Construction Agent in consideration for
the Construction Agent agreeing for the benefit of the Lessor, pursuant to the
Agency Agreement, to acquire the Properties, to acquire the Equipment, to
construct certain Improvements and to cause the Lessee to lease the Properties,
each in accordance with the Agency Agreement and the other Operative Agreements
or (b) the Lessee in consideration for the Lessee agreeing for the benefit of
the
<PAGE> 6
Lessor, pursuant to the Lease, to construct Modifications in accordance with the
Lease and the other Operative Agreements. The Loans and the obligations of the
Lessor under the Credit Agreement shall be secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and in reliance
on the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto, on each date Advances are requested to be made
in accordance with Section 5 hereof, each Holder shall make a Holder Advance on
a pro rata basis to the Lessor with respect to the PHC Real Estate Trust 1998-1
based on its Holder Commitment in an amount in immediately available funds such
that the aggregate of all Holder Advances on such date shall be three percent
(3%) of the amount of the Requested Funds on such date; provided, that no Holder
shall be obligated for any Holder Advance in excess of its pro rata share of the
Available Holder Commitment. The aggregate amount of Holder Advances shall be up
to the aggregate amount of the Holder Commitments. No prepayment or any other
payment with respect to any Advance shall be permitted such that the Holder
Advance with respect to such Advance is less than three percent (3%) of the
outstanding amount of such Advance, except in connection with termination or
expiration of the Term or in connection with the exercise of remedies relating
to the occurrence of a Lease Event of Default. The representations, warranties,
covenants and agreements of the Holders herein and in the other Operative
Agreements are several, and not joint or joint and several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, each applicable Ground
Lease, the Agency Agreement, the Credit Agreement, the Notes, the Trust
Agreement, the Certificates, the Security Agreement, each applicable Mortgage
Instrument and such other documents, instruments, certificates and opinions of
counsel as agreed to by the parties hereto.
3.2. PROPERTY PURCHASE.
On each Property Closing Date and subject to the terms and conditions
of this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title to
or ground lease pursuant to a Ground Lease, the applicable Property, each to be
within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Bill of Sale or Ground Lease, as the case may be, and grant
the Agent a lien on such Property by execution of
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the required Security Documents, (d) the Agent, the Lessee and the Lessor shall
execute and deliver a Lease Supplement relating to such Property and (e) the
Term shall commence with respect to such Property.
3.3. CONSTRUCTION OF IMPROVEMENTS; LEASE OR DISPOSITION OF PROPERTY.
Construction Advances will be made with respect to particular
Improvements to be constructed and with respect to ongoing Work regarding the
Equipment and construction of particular Improvements, in each case, pursuant to
the terms and conditions of this Agreement, the Agency Agreement or Section
11.1(c) of the Lease. The Construction Agent (or, respecting Section 11.1(c) of
the Lease, the Lessee) will act as a construction agent on behalf of the Lessor
respecting the Work regarding the Equipment, the construction of such
Improvements (or, respecting Section 11.1(c) of the Lease, the Modifications)
and the expenditures of the Construction Advances related to the foregoing. The
Construction Agent shall promptly notify the Lessor upon Completion of the
Improvements and the Lessee shall commence to pay Basic Rent as of the Rent
Commencement Date. The Lessee shall promptly notify the Lessor upon completion
of each Modification.
SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of Moore & Van Allen, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by the
Lessor, the Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION
ADVANCES; CONSTRUCTION ADVANCES.
The Construction Agent (or, respecting Section 11.1(c) of the Lease,
the Lessee) shall deliver to the Agent a requisition (a "Requisition"), in the
form attached hereto as EXHIBIT A or in such other form as is satisfactory to
the Agent, in its reasonable discretion, in connection with (a) the Transaction
Expenses and other fees, expenses and disbursements payable, pursuant to Section
7.1, by the Lessor and (b) each Acquisition Advance pursuant to Section 5.3 and
(c) each Construction Advance pursuant to Section 5.4.
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SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
(a) To the extent funds have been advanced to the Lessor as
Loans by the Lenders and to the Lessor as Holder Advances by the
Holders, the Lessor will use such funds from time to time in accordance
with the terms and conditions of this Agreement and the other Operative
Agreements (i) at the direction of the Construction Agent to acquire
the Properties in accordance with the terms of this Agreement, the
Agency Agreement and the other Operative Agreements, (ii) to make
Advances to the Construction Agent to permit the acquisition, testing,
engineering, installation, development, construction, modification,
design, and renovation, as applicable, of the Properties (or components
thereof) in accordance with the terms of the Agency Agreement and the
other Operative Agreements, (iii) to make Advances to the Lessee to
fund Modifications pursuant to Section 11.1(c) of the Lease and (iv) to
pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and Holder
Yield on the Holder Advances on any Scheduled Interest Payment Date
with respect to any Property during the period prior to the Rent
Commencement Date with respect to such Property, (i) each Lender's Loan
shall automatically be increased by the amount of interest accrued and
unpaid on such Loan for such period (except to the extent that at any
time such increase would cause such Lender's Loan to exceed such
Lender's Available Commitment, in which case the Lessee shall pay such
excess amount to such Lender in immediately available funds on the date
such Lender's Available Commitment was exceeded), and (ii) each
Holder's Holder Advance shall automatically be increased by the amount
of Holder Yield accrued and unpaid on such Holder Advance for such
period (except to the extent that at any time such increase would cause
the Holder Advance of such Holder to exceed such Holder's Available
Holder Commitment, in which case the Lessee shall pay such excess
amount to such Holder in immediately available funds on the date the
Available Holder Commitment of such Holder was exceeded). Such
increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
(a) The Construction Agent (or, respecting Section 11.1(c) of
the Lease, the Lessee) shall designate the date for Advances hereunder
in accordance with the terms and provisions hereof; provided, however,
it is understood and agreed that no more than two (2) Advances
(excluding any conversion and/or continuation of any Loans or Holder
Advances) may be requested during any calendar month. Not less than (i)
three (3) Business Days prior to the Initial Closing Date and (ii)
three (3) Business Days prior to
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the date on which any Acquisition Advance or Construction Advance is to
be made, the Construction Agent shall deliver to the Agent, (A) with
respect to the Initial Closing Date and each Acquisition Advance, a
Requisition as described in Section 4.2 hereof (including without
limitation a legal description of the Land, a schedule of the
Improvements, if any, and a schedule of the Equipment, if any, acquired
or to be acquired on such date, and a schedule of the Work, if any, to
be performed, each of the foregoing in a form reasonably acceptable to
the Agent) and (B) with respect to each Construction Advance, a
Requisition identifying (among other things) the Property to which such
Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request
funds in an amount that is not in excess of the total aggregate of the
Available Commitments plus the Available Holder Commitments at such
time, and (iii) request that the Holders make Holder Advances and that
the Lenders make Loans to the Lessor for the payment of Transaction
Expenses, Property Acquisition Costs (in the case of an Acquisition
Advance) or other Property Costs (in the case of a Construction
Advance) that have previously been incurred or are to be incurred on
the date of such Advance to the extent such were not subject to a prior
Requisition, in each case as specified in the Requisition.
(c) Subject to the satisfaction of the conditions precedent
set forth in Sections 5.3 or 5.4, as applicable, on each Property
Closing Date or the date on which the Construction Advance is to be
made, as applicable, (i) the Lenders shall make Loans based on their
respective Lender Commitments to the Lessor in an aggregate amount
equal to ninety-seven percent (97%) of the Requested Funds specified in
any Requisition (ratably between the Tranche A Lenders and the Tranche
B Lenders with the Tranche A Lenders funding eighty-five percent (85%)
of the Requested Funds and the Tranche B Lenders funding twelve percent
(12%) of the Requested Funds), up to an aggregate principal amount
equal to the aggregate of the Available Commitments, (ii) each Holder
shall make a Holder Advance based on its Holder Commitment in an amount
such that the aggregate of all Holder Advances at such time shall be
three percent (3%) of the balance of the Requested Funds specified in
such Requisition, up to the aggregate advanced amount equal to the
aggregate of the Available Holder Commitments; and (iii) the total
amount of such Loans and Holder Advances made on such date shall (x) be
used by the Lessor to pay Property Costs and/or Transaction Expenses
within three (3) Business Days of the receipt by the Lessor of such
Advance or (y) be advanced by the Lessor on the date of such Advance to
the Construction Agent or the Lessee to pay Property Costs, as
applicable. Notwithstanding that the Operative Agreements state that
Advances shall be directed to the Lessor, each Advance shall in fact be
directed to the Agent (for the benefit of the Lessor) and applied by
the Agent (for the benefit of the Lessor) pursuant to the requirements
imposed on the Lessor under the Operative Agreements.
(d) With respect to an Advance obtained by the Lessor to pay
for Property Costs and/or Transaction Expenses or other costs payable
under Section 7.1 hereof and not expended by the Lessor for such
purpose on the date of such Advance, such amounts
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shall be held by the Lessor (or the Agent on behalf of the Lessor)
until the applicable closing date or, if such closing date does not
occur within three (3) Business Days of the date of the Lessor's
receipt of such Advance, shall be applied regarding the applicable
Advance to repay the Lenders and the Holders and, subject to the terms
hereof, and of the Credit Agreement and the Trust Agreement, shall
remain available for future Advances. Any such amounts held by the
Lessor (or the Agent on behalf of the Lessor) shall be subject to the
lien of the Security Agreement.
(e) All Operative Agreements which are to be delivered to the
Lessor, the Agent, the Lenders or the Holders shall be delivered to the
Agent, on behalf of the Lessor, the Agent, the Lenders or the Holders,
and such items (except for Notes, Certificates and chattel paper
originals, with respect to which in each case there shall be only one
original) shall be delivered with originals sufficient for the Lessor,
the Agent, each Lender and each Holder. All other items which are to be
delivered to the Lessor, the Agent, the Lenders or the Holders shall be
delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders
or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time
by the Lessor, any Lender or any Holder, the Agent shall provide a copy
of such item to the party requesting it.
(f) Notwithstanding the completion of any closing under this
Agreement pursuant to Sections 5.3 or 5.4, each condition precedent in
connection with any such closing may be subsequently enforced by the
Agent (unless such has been expressly waived in writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS
AND THE HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE
ADVANCE OF FUNDS FOR THE ACQUISITION OF A PROPERTY.
The obligations (i) on the Initial Closing Date of the Lessor, the
Agent, the Lenders and the Holders to enter into the transactions contemplated
by this Agreement, including without limitation the obligation to execute and
deliver the applicable Operative Agreements to which each is a party on the
Initial Closing Date, (ii) on the Initial Closing Date of the Holders to make
Holder Advances, and of the Lenders to make Loans in order to pay Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(a) of this Agreement and (iii) on a Property Closing Date for the
purpose of providing funds to the Lessor necessary to pay the Transaction
Expenses, fees, expenses and other disbursements payable by the Lessor under
Section 7.1(b) of this Agreement and to acquire or ground lease a Property (an
"Acquisition Advance"), in each case (with regard to the foregoing Sections
5.3(i), (ii) and (iii)) are subject to the satisfaction or waiver of the
following conditions precedent on or prior to the Initial Closing Date or the
applicable Property Closing Date, as the case may be (To the extent such
conditions precedent require the delivery of any agreement, certificate,
instrument, memorandum, legal or other opinion, appraisal, commitment, title
insurance commitment, lien report or any other document of any kind or type,
such shall be in form and substance satisfactory to the Agent, in its reasonable
discretion. Notwithstanding the foregoing, the
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obligations of each party shall not be subject to any conditions contained in
this Section 5.3 which are required to be performed by such party.):
(a) the correctness of the representations and warranties of
the parties to this Agreement contained herein, in each of the other
Operative Agreements and each certificate delivered pursuant to any
Operative Agreement (including without limitation the Incorporated
Representations and Warranties) on each such date, except to the extent
the facts upon which such representation and warranty are based may be
changed as a result of transactions or occurrences permitted or
contemplated hereby or such representation or warranty relates solely
to a prior date;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart
copy of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the
representations and warranties set forth in Section 6.3(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a
good standing certificate for the Construction Agent in the state where
each such Property is located (as of the applicable Property Closing
Date), the Deed with respect to the Land and existing Improvements (if
any), a copy of the Ground Lease (if any), and a copy of the Bill of
Sale with respect to the Equipment (if any), respecting such of the
foregoing as are being acquired or ground leased on each such date with
the proceeds of the Loans and Holder Advances or which have been
previously acquired or ground leased with the proceeds of the Loans and
Holder Advances and such Land, existing Improvements (if any) and
Equipment (if any) shall be located in an Approved State;
(f) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred and be continuing after giving effect to the Advance
requested by each such Requisition;
(g) the Construction Agent shall have delivered to the Agent
title insurance commitments to issue policies respecting each such
Property in favor of the Lessor and the Agent through an agent or
agency selected by the Construction Agent and from a title insurance
company acceptable to the Agent, with such title exceptions thereto as
are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent
an environmental site assessment respecting each such Property prepared
by an independent recognized professional selected by the Construction
Agent and acceptable to the Agent;
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(i) the Construction Agent shall have delivered to the Agent a
survey (with a flood hazard certification) respecting each such
Property prepared by an independent recognized professional acceptable
to the Agent;
(j) unless such an opinion has previously been delivered with
respect to a particular state, the Construction Agent shall have caused
to be delivered to the Agent a legal opinion in the form attached
hereto as EXHIBIT B or in such other form as is acceptable to the Agent
with respect to local law real property issues respecting the state in
which each such Property is located addressed to the Lessor, the Agent,
the Lenders and the Holders from counsel located in the state where
each such Property is located, and prepared by counsel selected by the
Construction Agent and acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition, ground
leasing and/or holding of each such Property and the execution of the
Mortgage Instrument and the other Security Documents will not
materially and adversely affect the rights of the Lessor, the Agent,
the Holders or the Lenders under or with respect to the Operative
Agreements;
(l) the Construction Agent shall have delivered to the Agent
invoices for, or other reasonably satisfactory evidence of, the various
Transaction Expenses and other fees, expenses and disbursements
referenced in Sections 7.1(a) or 7.1(b) of this Agreement, as
appropriate;
(m) the Construction Agent shall have caused to be delivered
to the Agent a Mortgage Instrument (substantially in such form as
necessary to conform to applicable state law), Lessor Financing
Statements and Lender Financing Statements respecting each such
Property, all fully executed and in recordable form;
(n) the Lessee shall have delivered to the Agent with respect
to each such Property a Lease Supplement and a memorandum (or short
form lease) regarding the Lease and such Lease Supplement (such
memorandum or short form lease to be substantially in the form attached
to the Lease as EXHIBIT B or in such other form as is acceptable to the
Agent, with modifications as necessary to conform to applicable state
law, and in form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of the
Available Commitment plus the Available Holder Commitment (after
deducting the Unfunded Amount, if any, and after giving effect to the
Acquisition Advance) will be sufficient to pay all amounts payable
therefrom;
(p) if any such Property is subject to a Ground Lease, the
Construction Agent shall have caused a lease memorandum (or short form
lease) to be delivered to the Agent for such Ground Lease and, if
requested by the Agent, a landlord waiver and a mortgagee waiver (in
each case, in such form as is acceptable to the Agent);
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(q) counsel (acceptable to the Agent) for the ground lessor of
each such Property subject to a Ground Lease shall have issued to the
Lessor, the Agent, the Lenders and the Holders, its opinion;
(r) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(s) the Construction Agent shall have provided evidence to the
Agent of insurance with respect to each such Property as provided in
the Lease;
(t) subject to Section 5.5 of this Agreement, the Construction
Agent shall have caused an Appraisal regarding each such Property to be
provided to the Agent from an appraiser satisfactory to the Agent;
(u) [intentionally omitted];
(v) the Construction Agent shall cause (i) Uniform Commercial
Code lien searches, tax lien searches and judgment lien searches
regarding the Lessee to be conducted (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent by a nationally recognized search company selected by the
Construction Agent and acceptable to the Agent and (ii) the liens
referenced in such lien searches which are objectionable to the Agent
to be either removed or otherwise handled in a manner satisfactory to
the Agent;
(w) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the
Operative Agreements and/or documents related thereto shall have been
paid or provisions for such payment shall have been made to the
satisfaction of the Agent;
(x) [intentionally omitted];
(y) in the opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will
not subject the Lessor, the Lenders, the Agent or the Holders to any
materially adverse regulatory prohibitions, constraints, penalties;
(z) each of the Operative Agreements to be entered into on
such date shall have been duly authorized, executed and delivered by
the parties thereto, and shall be in full force and effect, and the
Agent shall have received a fully executed copy of each of the
Operative Agreements;
(aa) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate, dated as of the Initial Closing
Date, of the Lessee in the form attached hereto as EXHIBIT D or in such
other form as is acceptable to the Agent stating that (i) each and
every representation and warranty of each Credit Party contained in the
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Operative Agreements to which it is a party is true and correct on and
as of the Initial Closing Date; (ii) no Default or Event of Default has
occurred and is continuing under any Operative Agreement; (iii) each
Operative Agreement to which any Credit Party is a party is in full
force and effect with respect to it; and (iv) each Credit Party has
duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to
be performed or complied with by it on or prior to the Initial Closing
Date;
(bb) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary
of each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as EXHIBIT E or in such other form as is acceptable to
the Agent attaching and certifying as to (1) the resolutions of the
Board of Directors of such Credit Party duly authorizing the execution,
delivery and performance by such Credit Party of each of the Operative
Agreements to which it is or will be a party, (2) the articles of
incorporation or other such similar organizational documents of such
Credit Party certified as of a recent date by the Secretary of State of
its state of incorporation and its by-laws and (3) the incumbency and
signature of persons authorized to execute and deliver on behalf of
such Credit Party the Operative Agreements to which it is or will be a
party and (ii) a good standing certificate (or local equivalent) from
the appropriate office of the respective states where such Credit Party
is incorporated and where the principal place of business of such
Credit Party is located as to its good standing in each such state;
(cc) since the date of the most recent audited Financial
Statements (as such term is defined in the Lessee Credit Agreement) of
the Lessee, there shall not have occurred any event, condition or state
of facts which shall or could reasonably be expected to have a Material
Adverse Effect, other than as specifically contemplated by the
Operative Agreements;
(dd) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as EXHIBIT F or in such other
form as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date, (ii) each Operative Agreement to which the Lessor
is a party is in full force and effect with respect to it and (iii) the
Lessor has duly performed and complied with all covenants, agreements
and conditions contained herein or in any Operative Agreement required
to be performed or complied with by it on or prior to the Initial
Closing Date;
(ee) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary,
Trust Officer or Vice President of the Trust Company in the form
attached hereto as EXHIBIT G or in such other form as is acceptable to
the Agent, attaching and certifying as to (A) the signing resolutions
duly authorizing the execution, delivery and performance by the Lessor
of each of the Operative Agreements to which it is or will be a party,
(B) its articles of association or
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other equivalent charter documents and its by-laws, as the case may be,
certified as of a recent date by an appropriate officer of the Trust
Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it
is a party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(ff) as of the Initial Closing Date only, counsel for the
Lessor acceptable to the Agent shall have issued to the Lessee, the
Holders, the Lenders and the Agent its opinion in the form attached
hereto as EXHIBIT H or in such other form as is reasonably acceptable
to the Agent; and
(gg) as of the Initial Closing Date only, the Construction
Agent shall have caused to be delivered to the Agent a legal opinion in
the form attached hereto as EXHIBIT I or in such other form as is
reasonably acceptable to the Agent, addressed to the Lessor, the Agent,
the Lenders and the Holders, prepared by counsel acceptable to the
Agent;
(hh) as of the Initial Closing Date only, the Construction
Agent shall cause (i) tax lien searches and judgment lien searches
regarding each Credit Party to be conducted by a nationally recognized
search company acceptable to the Agent (and copies thereof to be
delivered to the Agent) in such jurisdictions as determined by the
Agent and (ii) the liens referenced in such lien searches which are
objectionable to the Agent to be either removed or otherwise handled in
a manner satisfactory to the Agent; and
(ii) as of the Property Closing Date, with respect to each
Permitted Facility which is an improvement to any medical office or
acute care facility (but does not constitute the entire medical office
or acute care facility), the Construction Agent shall cause to be in
place all access easements, utility easements, parking easements and
any and all other easements and/or other documents as required by the
Agent in its reasonable discretion.
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND
THE HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE ACQUISITION
ADVANCE.
The obligations of the Holders to make Holder Advances, and the Lenders
to make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property including without limitation amounts respecting
Section 11.1(c) of the Lease (and to pay the Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent (To the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion.
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Notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party.):
(a) the correctness on such date of the representations and
warranties of the parties to this Agreement contained herein, in each
of the other Operative Agreements and each certificate delivered
pursuant to any Operative Agreement (including without limitation the
Incorporated Representations and Warranties on each such date, except
to the extent the facts upon which any such representations and
warranties are based may be changed as a result of transactions or
occurrences permitted or contemplated hereby or any such
representations or warranties relate solely to a prior date);
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart
of the Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which shall
satisfy the requirements of this Agreement, the Available Commitments
and the Available Holder Commitment (after deducting the Unfunded
Amount) will be sufficient to complete the Improvements in the
reasonable judgment of the Agent;
(e) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and
no Default or Event of Default under any of the Operative Agreements
will have occurred and be continuing after giving effect to the
Construction Advance requested by the applicable Requisition;
(f) the title insurance policy delivered in connection with
the requirements of Section 5.3(g) shall provide for (or shall be
endorsed to provide for) insurance in an amount at least equal to the
maximum total Property Cost indicated by the Construction Budget
referred to in subparagraph (d) above and there shall be no title
change or exception objectionable to the Agent;
(g) the Construction Agent shall have delivered to the Agent
copies of the Plans and Specifications for the applicable Improvements
or, respecting Section 11.1(c) of the Lease, the Lessee shall have
delivered to the Agent documentation describing each applicable
Modification;
(h) the Construction Agent shall have delivered to the Agent
invoices for, or other reasonably satisfactory evidence of, any
Transaction Expenses and other fees, expenses and disbursements
referenced in Section 7.1(b) that are to be paid with the Advance;
(i) [intentionally omitted];
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(j) the Construction Agent or the Lessee, as the case may be,
shall have delivered, or caused to be delivered to the Agent, invoices,
Bills of Sale or other documents acceptable to the Agent, in each case
with regard to any Equipment or other components of such Property then
being acquired with the proceeds of the Loans and Holder Advances and
naming the Lessor as purchaser and transferee;
(k) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the
Operative Agreements shall have been paid or provisions for such
payment shall have been made to the satisfaction of the Agent;
(l) since the date of the most recent audited Financial
Statements (as such term is defined in the Lessee Credit Agreement) of
the Lessee, there shall not have occurred any event, condition or state
of facts which shall or could reasonably be expected to have a Material
Adverse Effect, other than as specifically contemplated by the
Operative Agreements;
(m) [intentionally omitted]; and
(n) in the opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will
not subject the Lessor, the Lenders, the Agent or the Holders to any
materially adverse regulatory prohibitions, constraints, penalties or
fines.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION DATE
AND ON CONSTRUCTION PERIOD TERMINATION DATE.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as EXHIBIT J or in such other form as is reasonably acceptable to the
Agent specifying (a) the address for such Property, (b) the Completion Date for
such Property, (c) the aggregate Property Cost for such Property, (d) detailed,
itemized documentation supporting the asserted Property Cost figures and (e)
that all representations and warranties of the Construction Agent and Lessee in
each of the Operative Agreements and each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and Warranties)
are true and correct as of the Completion Date. The Agent shall have the right
to contest the information contained in such Officer's Certificate. Furthermore,
on or prior to the Completion Date for each Property, the Construction Agent
shall deliver or cause to be delivered to the Agent (unless previously delivered
to the Agent) originals of the following, each of which shall be in form and
substance acceptable to the Agent, in its reasonable discretion: (u) a title
insurance endorsement regarding the title insurance policy delivered in
connection with the requirements of Section 5.3(g), but only to the extent such
endorsement is necessary to provide for insurance in an amount at least equal to
the maximum total Property Cost and, if endorsed, the endorsement shall not
include a title change or exception objectionable to the Agent; (v) an as-built
survey for such Property, (w) insurance certificates respecting such Property as
required hereunder and under the Lease Agreement, (x) a
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memorandum (or short form) of the Lease and such Lease Supplement (in form
suitable for recording), (y) if requested by the Agent, amendments to the Lessor
Financing Statements executed by the appropriate parties and (z) an Appraisal
regarding such Property provided, however, such an Appraisal shall not be
required if, as of such Completion Date, the Agent has previously received
Appraisal(s) pursuant to Section 5.3(t) for Properties that are then subject to
the Lease and that have an aggregate value (as established by such Appraisal(s))
of at least $7,000,000. In addition, on the Completion Date for such Property
the Construction Agent covenants and agrees that the recording fees, documentary
stamp taxes or similar amounts required to be paid in connection with the
related Mortgage Instrument shall be paid in an amount required by applicable
law, subject, however, to the obligations of the Lenders and the Holders to fund
such costs to the extent required pursuant to Section 7.1.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET
MODIFICATIONS.
The Construction Agent covenants and agrees to deliver to the Agent
each month notification of any modification to any Construction Budget regarding
any Property if such modification increases the total cost to construct such
Property; provided no Construction Budget may be increased unless (a) the title
insurance policies referenced in Section 5.3(g) are also modified or endorsed,
if necessary, to provide for insurance in an amount that satisfies the
requirements of Section 5.4(f) of this Agreement and (b) after giving effect to
any such amendment, the Construction Budget remains in compliance with the
requirements of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.3(q)(i) and 6.3(q)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
5.8 PUNCH LIST ITEMS.
Lessee shall cause all punch list items respecting each Property to be
completed in a good and workmanlike manner within one hundred twenty (120) days
of the Completion Date for such Property.
5.9 JOINDER AGREEMENT REQUIREMENTS.
Each Wholly-Owned Entity formed or acquired by the Lessee or another
Wholly-Owned Entity subsequent to the Initial Closing Date shall become a
Guarantor and shall satisfy the following conditions within thirty (30) days
after such formation or acquisition of such Wholly-
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Owned Entity (provided, to the extent such Wholly-Owned Entity does not have
assets with a gross value (determined in accordance with GAAP) in excess of
$100,000 when so formed or acquired but later obtains assets, including but not
limited to investments, loans or other distributions from the Construction
Agent, the Lessee or any Subsidiary thereof in excess of $100,000, then such
Wholly-Owned Entity shall satisfy the following conditions within thirty (30)
days after obtaining such assets):
(a) such Wholly-Owned Entity shall execute and deliver to the
Agent a Joinder Agreement in the form attached hereto as EXHIBIT M;
(b) such Wholly-Owned Entity shall have delivered to the Agent
(x) an Officer's Certificate of such Wholly-Owned Entity in the form
attached hereto as EXHIBIT D, (y) a certificate of the Secretary or an
Assistant Secretary of such Wholly-Owned Entity in the form attached
hereto as EXHIBIT E and (z) good standing certificates (or local
equivalent) from the respective states where such Wholly-Owned Entity
is incorporated and where the principal place of business of such
Wholly-Owned Entity is located as to its good standing in each such
state;
(c) such Wholly-Owned Entity shall have delivered to the Agent
an opinion of counsel (acceptable to the Agent) in the form attached
hereto as EXHIBIT I; and
(d) the Agent shall have received such other documents,
certificates and information as the Agent shall have reasonably
requested.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. [INTENTIONALLY OMITTED]
6.2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
Effective as of the Initial Closing Date and the date of each Advance,
the Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly organized
and validly existing and in good standing under the laws of the United
States of America and has the power and authority to enter into and
perform its obligations under the Trust Agreement and (assuming due
authorization, execution and delivery of the Trust Agreement by the
Holders) has the corporate and trust power and authority to act as the
Owner Trustee and to enter into and perform the obligations under each
of the other Operative Agreements to which the Trust Company or the
Owner Trustee, as the case may be, is or will be a party and each other
agreement, instrument and document to be executed and delivered by it
on or before such Closing Date in connection with or as contemplated by
each such
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<PAGE> 20
Operative Agreement to which the Trust Company or the Owner Trustee, as
the case may be, is or will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may
be, has been duly authorized by all necessary action on its part and
neither the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any Legal Requirement
relating to its banking or trust powers, (iii) does or will contravene
or result in any breach of or constitute any default under, or result
in the creation of any Lien upon any of its property under, (A) its
charter or by-laws, or (B) any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement or other agreement or instrument to which it is a party or by
which it or its properties may be bound or affected, which
contravention, breach, default or Lien under clause (B) would
materially and adversely affect its ability, in its individual capacity
or as the Owner Trustee, to perform its obligations under the Operative
Agreements to which it is a party or (iv) does or will require any
Governmental Action by any Governmental Authority regulating its
banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is
the legal, valid and binding obligation of the Holders, each other
Operative Agreement to which the Trust Company or the Owner Trustee, as
the case may be, is or will be a party have been, or on or before such
Closing Date will be, duly executed and delivered by the Trust Company
or the Owner Trustee, as the case may be, and the Trust Agreement and
each such other Operative Agreement to which the Trust Company or the
Owner Trustee, as the case may be, is a party constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against the Trust Company or the Owner Trustee,
as the case may be, in accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental
Authority that, if adversely determined, would materially and adversely
affect its ability, in its individual capacity or as the Owner Trustee,
to perform its obligations under the Operative Agreements to which it
is a party or would question the validity or enforceability of any of
the Operative Agreements to which it is or will become a party;
(e) It has not assigned or transferred any of its right, title
or interest in or under the Lease, the Agency Agreement or its interest
in any Property or any portion thereof, except in accordance with the
Operative Agreements;
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(f) No Default of Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative
Agreements, the proceeds of the Loans and Holder Advances shall not be
applied by the Owner Trustee for any purpose other than (i) the
purchase and/or lease of the Properties, the acquisition, installation
and testing of the Equipment, the construction of Improvements and the
payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement
Date with respect to a particular Property and (ii) Modifications in
accordance with Section 11.1(c) of the Lease;
(h) Neither the Owner Trustee nor any Person authorized by the
Owner Trustee to act on its behalf has offered or sold any interest in
the Trust Estate or the Notes, or in any similar security relating to a
Property, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as
the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person other than, in the
case of the Notes, the Agent, and neither the Owner Trustee nor any
Person authorized by the Owner Trustee to act on its behalf will take
any action which would subject, as a direct result of such action
alone, the issuance or sale of any interest in the Trust Estate or the
Notes to the provisions of Section 5 of the Securities Act or require
the qualification of any Operative Agreement under the Trust Indenture
Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief
executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Agreement and each
other Operative Agreement are kept are located at 79 South Main Street,
Salt Lake City, Utah 84111;
(j) The Owner Trustee is not engaged principally in, and does
not have as one (1) of its important activities, the business of
extending credit for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the
proceeds of the Loans or the Holder Advances will be used by it to
purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal
Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act;
(l) Each Property is free and clear of all Lessor Liens
attributable to the Owner Trustee in its individual capacity; and
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(m) The Owner Trustee, in its trust capacity, is a party to no
documents, instruments or agreements other than the Operative
Agreements to which it is a party and any other documents delivered by
the Owner Trustee in connection with the Operative Agreements.
6.3. REPRESENTATIONS AND WARRANTIES OF EACH CREDIT PARTY.
Effective as of the Initial Closing Date, the date of each Advance, the
date each Wholly-Owned Entity delivers a Joinder Agreement and the Rent
Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Incorporated Representations and Warranties are true
and correct (unless such relate solely to an earlier point in time) and
the Lessee has delivered to the Agent the financial statements and
other reports referred to in Article IV of the Lessee Credit Agreement;
(b) The execution and delivery by each Credit Party of this
Agreement and the other applicable Operative Agreements as of such date
and the performance by each Credit Party of its respective obligations
under this Agreement and the other applicable Operative Agreements are
within the corporate powers of each Credit Party, have been duly
authorized by all necessary corporate action on the part of each Credit
Party (including without limitation any necessary shareholder action),
have been duly executed and delivered, have received all necessary
governmental approval, and do not (i) violate any Legal Requirement
which is binding on any Credit Party or any Subsidiary of any Credit
Party, (ii)contravene or conflict with, or result in a breach of, any
provision of the Articles of Incorporation, By-Laws or other such
similar organizational documents of any Credit Party or any Subsidiary
of any Credit Party or of any agreement, indenture, instrument or other
document which is binding on any Credit Party or any Subsidiary of any
Credit Party or (iii) result in, or require, the creation or imposition
of any Lien (other than pursuant to the terms of the Operative
Agreements) on any asset of any Credit Party or any of Subsidiary of
any Credit Party;
(c) This Agreement and the other applicable Operative
Agreements executed prior to and as of such date by any Credit Party
constitute the legal, valid and binding obligation of such Credit
Party, as applicable, enforceable against such Credit Party, as
applicable, in accordance with their terms, except as enforceability
may be limited by bankruptcy or general principles of equity. Each
Credit Party has executed the various Operative Agreements required to
be executed by such Credit Party as of such date;
(d) Except as described in EXHIBIT K, there are no actions,
suits or proceedings pending or, to our knowledge, threatened against
any Credit Party in any court or before any Governmental Authority (nor
shall any order, judgment or decree have been issued or proposed to be
issued by any Governmental Authority to set aside, restrain, enjoin or
prevent the full performance of any Operative Agreement or any
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transaction contemplated thereby) that (i) concern any Credit Party or
any Property or the Lessee's interest therein, that in any such case
have or could reasonable be expected to have a Material Adverse Effect
or (ii) question the validity or enforceability of any Operative
Agreement or any transaction described in the Operative Agreements;
(e) No Governmental Action by any Governmental Authority or
other authorization, registration, consent, approval, waiver, notice or
other action by, to or of any other Person pursuant to any Legal
Requirement, contract, indenture, instrument or agreement or for any
other reason is required to authorize or is required in connection with
(i) the execution, delivery or performance of any Operative Agreement,
(ii) the legality, validity, binding effect or enforceability of any
Operative Agreement, (iii) the acquisition, ownership, construction,
completion, occupancy, operation, leasing or subleasing of any Property
or (iv) any Advance, in each case, except those which have been
obtained and are in full force and effect or will be obtained prior to
the time such are required;
(f) Upon the execution and delivery of each Lease Supplement
to the Lease, (i) the Lessee will have unconditionally accepted the
Property subject to the Lease Supplement and will have a valid and
subsisting leasehold interest in such Property, subject only to the
Permitted Liens, and (ii) no offset will exist with respect to any Rent
or other sums payable under the Lease;
(g) Except as otherwise contemplated by the Operative
Agreements, the Construction Agent shall not use the proceeds of any
Holder Advance or Loan for any purpose other than (i) the purchase
and/or lease of the Properties, the acquisition, installation and
testing of the Equipment, the construction of Improvements and the
payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement
Date with respect to a particular Property and (ii) in accordance with
Section 11.1(c) of the Lease;
(h) All information heretofore or contemporaneously herewith
furnished by any Credit Party or any Subsidiary of any Credit Party to
the Agent, the Owner Trustee, any Lender or any Holder for purposes of
or in connection with this Agreement and the transactions contemplated
hereby is, and all information hereafter furnished by or on behalf of
any Credit Party or any Subsidiary of any Credit Party to the Agent,
the Owner Trustee, any Lender or any Holder pursuant hereto or in
connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or certified,
and such information, taken as a whole, does not and will not omit to
state any material fact necessary to make such information, taken as a
whole, not misleading;
(i) The principal place of business, chief executive office
and office of the Construction Agent and the Lessee where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
kept are located at 105 Westwood Place, Suite 400, Brentwood,
Williamson County,
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Tennessee 37027. The states of incorporation/formation and the
principal place of business of each Guarantor are located in the states
set forth on EXHIBIT N;
(j) The representations and warranties of each Credit Party
set forth in any of the Operative Agreements are true and correct in
all material respects on and as of each such date as if made on and as
of such date, except to the extent the facts on which any such
representation or warranty are based may be changed as result of
transactions or occurrences permitted or contemplated hereby or any
such representation or warranty relates solely to a prior date. Each
Credit Party is in all material respects in compliance with its
obligations under the Operative Agreements and there exists no Default
or Event of Default under any of the Operative Agreements which is
continuing and which has not been cured within any cure period
expressly granted under the terms of the applicable Operative Agreement
or otherwise waived in accordance with the applicable Operative
Agreement. No Default or Event of Default will occur under any of the
Operative Agreements as a result of, or after giving effect to, the
Advance requested by the Requisition on the date of each Advance;
(k) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
then being financed consists of (i) unimproved Land or (ii) Land and
existing Improvements thereon which Improvements are either suitable
for occupancy at the time of acquisition or ground leasing or will be
renovated and/or modified in accordance with the terms of this
Agreement. Each Property then being financed is located at the location
set forth on the applicable Requisition, each of which is in one (1) of
the Approved States;
(l) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, the Lessor has
good and marketable fee simple title to each Property, or, if any
Property is the subject of a Ground Lease, the Lessor will have a valid
ground leasehold interest enforceable against the ground lessor of such
Property in accordance with the terms of such Ground Lease, subject
only to (i) such Liens referenced in Sections 6.3(q)(i) and 6.3(q)(ii)
on the applicable Property Closing Date and (ii) subject to Section
5.7, Permitted Liens after the applicable Property Closing Date;
(m) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, no portion of
any Property is located in an area identified as a special flood hazard
area by the Federal Emergency Management Agency or other applicable
agency, or if any such Property is located in an area identified as a
special flood hazard area by the Federal Emergency Management Agency or
other applicable agency, then flood insurance has been obtained for
such Property in accordance with Section 14.2(b) of the Lease and in
accordance with the National Flood Insurance Act of 1968, as amended;
(n) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Insurance
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Requirements and all standards of Lessee or any other Credit Party with
respect to similar properties (in similar markets) owned or operated by
Lessee or any other Credit Party;
(o) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, each Property
complies with all Legal Requirements as of such date (including without
limitation all zoning and land use laws and Environmental Laws), except
to the extent that failure to comply therewith, individually or in the
aggregate, shall not and could not reasonably be expected to have a
Material Adverse Effect;
(p) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, all utility
services and facilities necessary for the construction and operation of
the Improvements and the installation and operation of the Equipment
regarding each Property (including without limitation gas, electrical,
water and sewage services and facilities) are available directly or
indirectly at the applicable Land or will be constructed prior to the
Completion Date for such Property;
(q) (i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement), valid
and enforceable security interests in, and Liens on, all of the
Collateral, in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and such security interests and Liens are subject
to no other Liens other than Liens that are expressly set forth as
title exceptions on the title commitment issued under Section 5.3(g)
with respect to the applicable Property, to the extent such title
commitment has been approved by the Agent. Upon recordation of the
Mortgage Instrument in the real estate recording office in the
applicable Approved State identified by the Construction Agent or the
Lessee, the Lien created by the Mortgage Instrument in the real
property described therein shall be a perfected first priority mortgage
Lien on such real property in favor of the Agent, for the ratable
benefit of the Lenders and the Holders, as their respective interests
appear in the Operative Agreements. To the extent that the security
interests in the portion of the Collateral comprised of personal
property can be perfected by filing in the filing offices in the
applicable Approved States or elsewhere identified by the Construction
Agent or the Lessee, upon filing of the Lender Financing Statements in
such filing offices, the security interests created by the Security
Agreement shall be perfected first priority security interests in such
personal property in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements;
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, each Property leased
thereunder, in favor of the Lessor, and such security interests and
Liens are subject to no other Liens other than Liens that are expressly
set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to the applicable Property, to the extent
such title commitment has been approved by the Agent. Upon recordation
of the memorandum of the Lease Agreement and the memorandum of a
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Ground Lease (or, in either case, a short form lease) in the real
estate recording office in the applicable Approved State identified by
the Construction Agent or the Lessee, the Lien created by the Lease
Agreement in the real property described therein shall be a perfected
first priority mortgage Lien on such real property in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as their
respective interests appear in the Operative Agreements. To the extent
that the security interests in the portion of any Property comprised of
personal property can be perfected by the filing in the filing offices
in the applicable Approved State or elsewhere identified by the
Construction Agent or the Lessee upon filing of the Lessor Financing
Statements in such filing offices, a security interest created by the
Lease Agreement shall be perfected first priority security interests in
such personal property in favor of the Lessor, which rights pursuant to
the Lessor Financing Statements are assigned to the Agent, for the
ratable benefit of the Lenders and the Holders, as their respective
interests appear in the Operative Agreements;
(r) [intentionally omitted];
(s) The Plans and Specifications for each Property will be
prepared prior to the commencement of construction in accordance with
all applicable Legal Requirements (including without limitation all
applicable Environmental Laws and building, planning, zoning and fire
codes), except to the extent the failure to comply therewith,
individually or in the aggregate, shall not have and could not
reasonably be expected to have a Material Adverse Effect. Upon
completion of the Improvements for each Property in accordance with the
applicable Plans and Specifications, such Improvements will be within
any building restriction lines and will not encroach in any manner onto
any adjoining land (except as permitted by express written easements,
which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property shall
be operational;
(u) As of each Property Closing Date, the date of each
subsequent Advance and the Rent Commencement Date only, acquisition,
installation and testing of the Equipment (if any) and construction of
the Improvements (if any) to such date shall have been performed in a
good and workmanlike manner, substantially in accordance with the
applicable Plans and Specifications;
(v) As of each Property Closing Date only, each Property has
been acquired or (to the extent the consent of the Agent is required)
ground leased pursuant to a Ground Lease at a price that is not in
excess of fair market value or fair market rental value, as the case
may be; and
(w) As of the Initial Closing Date, each Wholly-Owned Entity
(formed prior to or on such date) shall have executed this Agreement in
its capacity as a Guarantor.
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SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed; provided, notwithstanding the foregoing, the
obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Operative
Agreements. This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising. All rights granted to the Financing Parties under
this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
Each Guarantor agrees that the obligations of the Guarantors hereunder
are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Operative Agreements, or
any other agreement or instrument referred to therein, or any substitution,
release or exchange of any other guarantee of or security for any of the Company
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this Section 6B.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that this Section 6B may be enforced by the
Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Notes, the Certificates or any other of the
Operative Agreements or any collateral, if any, hereafter securing the Company
Obligations or otherwise and each Guarantor hereby waives the right to require
the Financing Parties to proceed against the Construction Agent, the Lessee or
any other Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it hereby waives any and all right of subrogation,
indemnity, reimbursement or contribution against the Lessee and the Construction
Agent or any other Guarantor of the Company Obligations for amounts paid under
this Section 6B until such time as the Loans, Holder Advances, accrued but
unpaid interest, accrued but unpaid Holder Yield and all other amounts owing
under the Operative Agreements have been paid in full. Without limiting the
generality of the waiver provisions of this Section 6B, each Guarantor hereby
waives any rights to require the Financing Parties to proceed against the
Construction Agent, the Lessee or any co-guarantor or to require Lessor to
pursue any other remedy or enforce any other right, including without
limitation, any and all rights under N.C. Gen. Stat. ss.ss. 26-7 through 26-9.
Each Guarantor further agrees that nothing contained herein shall prevent the
Financing Parties from suing on any Operative Agreement or foreclosing any
security interest in or Lien on any collateral, if any, securing the Company
Obligations or from exercising any other rights available to it under any
Operative Agreement, or any other instrument of security, if any, and the
exercise of any of the
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aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of any Guarantor's obligations hereunder; it being the
purpose and intent of each Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances;
provided that any amounts due under this Section 6B which are paid to or for the
benefit of any Financing Party shall reduce the Company Obligations by a
corresponding amount (unless required to be rescinded at a later date). Neither
any Guarantor's obligations under this Section 6B nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Construction Agent or the Lessee or by reason of the
bankruptcy or insolvency of the Construction Agent or the Lessee. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Company Obligations and notice of or proof of reliance by any Financing
Party upon this Section 6B or acceptance of this Section 6B. The Company
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this Section
6B. All dealings between the Construction Agent, the Lessee and any of the
Guarantors, on the one hand, and the Financing Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Section 6B.
6B.3. MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Construction Agent, the Lessee and any other party liable for
payment under the Operative Agreements may be granted indulgences generally; (e)
any of the provisions of the Notes, the Certificates or any of the other
Operative Agreements may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Construction Agent, the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
6B.4. WAIVER OF RIGHTS.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company
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Obligations or with respect to any security therefor; (d) notice of any
Financing Party obtaining, amending, substituting for, releasing, waiving or
modifying any security interest, lien or encumbrance, if any, hereafter securing
the Company Obligations, or any Financing Party's subordinating, compromising,
discharging or releasing such security interests, liens or encumbrances, if any;
and (e) all other notices to which such Guarantor might otherwise be entitled.
Notwithstanding anything to the contrary herein, (i) each Guarantor's payments
hereunder shall be due five (5) Business Days after written demand by the Agent
for such payment (unless the Company Obligations are automatically accelerated
pursuant to the applicable provisions of the Operative Agreements in which case
the Guarantors' payments shall be automatically due) and (ii) any modification
of the Operative Agreements which has the effect of increasing the Company
Obligations shall not be enforceable against a Guarantor unless such Guarantor
executes the document evidencing such modification or otherwise reaffirms its
guaranty in writing in connection with such modification.
6B.5. REINSTATEMENT.
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Company Obligations is rescinded or
must be otherwise restored by any holder of any of the Company Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify each Financing Party
on demand for all reasonable costs and expenses (including, without limitation,
reasonable fees of counsel) incurred by any Financing Party in connection with
such rescission or restoration, including without limitation any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand,
and each Financing Party, on the other hand, the Company Obligations may be
declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Company Obligations from becoming automatically
due and payable) as against any other Person and that, in the event of such
declaration (or such Company Obligations being deemed to have become
automatically due and payable), such Company Obligations (whether or not due and
payable by any other Person) shall forthwith become due and payable by the
Guarantors in accordance with the applicable provisions of the Operative
Agreements.
6B.7. LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Operative Agreements, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable
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state or federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and including
without limitation the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company
Obligations in full, regardless of the source of payment, the Guarantors'
obligations hereunder shall be deemed satisfied, discharged and terminated other
than indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
Each Financing Party hereby instructs each Guarantor, and each
Guarantor hereby acknowledges and agrees, that until such time as the Loans and
the Holder Advances are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.
6B.9. RELEASE OF GUARANTORS.
Each Financing Party hereby agrees that (a) the Agent shall be
permitted to release any Guarantor from its guaranty obligations under this
Section 6B without the consent of any other Financing Party if the release is
granted in connection with a disposition by the applicable Credit Party of all
the shares of stock or partnership or other equity interest in such Guarantor
and such disposition is permitted pursuant to the applicable provisions of the
Operative Agreements and the Lessee Credit Agreement and (b) the Agent shall be
permitted to release any Guarantor from its guaranty obligations under this
Section 6B.9 without the consent of any other Financing Party if the release is
requested by the Construction Agent or the Lessee in connection with a
dissolution of the Guarantor, subject to the Construction Agent or the Lessee
providing to the Agent written representations to the effect that such Guarantor
has no business operations and no assets.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
(a) The Lessor agrees on the Initial Closing Date, to pay, or
cause to be paid, all Transaction Expenses arising from the Initial
Closing Date, including without limitation all reasonable fees,
expenses and disbursements of the various legal counsels for the Lessor
and the Agent in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with such Initial
Closing Date, the initial fees and expenses of the Owner Trustee due
and payable on such Initial Closing
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Date, all fees, taxes and expenses for the recording, registration and
filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with such Initial Closing Date;
provided, however, the Lessor shall pay such amounts described in this
Section 7.1(a) only if (i) such amounts are properly described in a
Requisition delivered on or before the Initial Closing Date, and (ii)
funds are made available by the Lenders and the Holders in connection
with such Requisition in an amount sufficient to allow such payment. On
the Initial Closing Date after delivery and receipt of the Requisition
referenced in Section 4.2(a) hereof and satisfaction of the other
conditions precedent for such date, the Holders shall make Holder
Advances and the Lenders shall make Loans to the Lessor to pay for the
Transaction Expenses, fees, expenses and other disbursements referenced
in this Section 7.1(a). The Lessee agrees to timely pay all amounts
referred to in this Section 7.1(a) to the extent not paid by the
Lessor.
(b) Assuming no Default or Event of Default shall have
occurred and be continuing and only for the period prior to the Rent
Commencement Date, the Lessor agrees on each Property Closing Date, on
the date of any Construction Advance and on the Completion Date to pay,
or cause to be paid, all Transaction Expenses including without
limitation all reasonable fees, expenses and disbursements of the
various legal counsels for the Lessor and the Agent in connection with
the transactions contemplated by the Operative Agreements and billed in
connection with such Advance or such Completion Date, all amounts
described in Section 7.1(a) of this Agreement which have not been
previously paid, the annual fees and reasonable out-of-pocket expenses
of the Owner Trustee, all fees, expenses and disbursements incurred
with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title
insurance policies and charges for any updates to such policies) and
all other reasonable fees, expenses and disbursements in connection
with such Advance or such Completion Date including without limitation
all expenses relating to and all fees, taxes and expenses for the
recording, registration and filing of documents and during the
Commitment Period, all fees, expenses and costs referenced in Sections
7.3(a), 7.3(b), 7.3(d) and 7.4; provided, however, the Lessor shall pay
such amounts described in this Section 7.1(b) only if (i) such amounts
are properly described in a Requisition delivered on the applicable
date and (ii) funds are made available by the Lenders and the Holders
in connection with such Requisition in an amount sufficient to allow
such payment. On each Property Closing Date, on the date of any
Construction Advance or any Completion Date, after delivery of the
applicable Requisition and satisfaction of the other conditions
precedent for such date, the Holders shall make a Holder Advance and
the Lenders shall make Loans to the Lessor to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in this
Section 7.1(b). The Lessee agrees to timely pay all amounts referred to
in this Section 7.1(b) to the extent not paid by the Lessor.
7.2. [INTENTIONALLY OMITTED]
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7.3. CERTAIN FEES AND EXPENSES.
The Lessee agrees to pay or cause to be paid (a) the initial and annual
Owner Trustee's fee and all reasonable expenses of the Owner Trustee and any
co-trustees (including without limitation reasonable counsel fees and expenses)
or any successor owner trustee and/or co-trustee, for acting as the owner
trustee under the Trust Agreement, (b) all reasonable costs and expenses
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in entering into any Lease Supplement and any future amendments,
modifications, supplements, restatements and/or replacements with respect to any
of the Operative Agreements, whether or not such Lease Supplement, amendments,
modifications, supplements, restatements and/or replacements are ultimately
entered into, or giving or withholding of waivers of consents hereto or thereto,
which have been requested by the Credit Parties, the Agent, the Lenders, the
Holders or the Lessor, (c) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in connection
with any exercise of remedies under any Operative Agreement or any purchase of
any Property by any Credit Party or any third party and (d) all reasonable costs
and expenses incurred by the Credit Parties, the Agent, the Lenders, the Holders
or the Lessor in connection with any transfer or conveyance of any Property,
whether or not such transfer or conveyance is ultimately accomplished.
7.4. FACILITY FEE.
During the Commitment Period, the Lessee agrees to pay or to cause to
be paid to the Agent for the account of (a) the Lenders, respectively, a
facility fee (the "Lender Facility Fee") equal to the product of the average
daily Available Commitment multiplied by a rate equal to the Applicable
Percentage for the Lender Facility Fee and (b) the Holders, respectively, a
facility fee (the "Holder Facility Fee") equal to the product of the average
daily Available Holder Commitments multiplied by a rate equal to the Applicable
Percentage for the Holder Facility Fee. Such Facility Fees shall be calculated
on the basis of a year of three hundred sixty (360) days for the actual days
elapsed and shall be payable quarterly in arrears on each Facility Fee Payment
Date. If all or a portion of any such Facility Fee shall not be paid when due,
such overdue amount shall bear interest, payable by the Lessee on demand, at a
rate per annum equal to the ABR plus two percent (2%) from the date of such
non-payment until such amount is paid in full (as well as before judgment).
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee
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satisfying its covenant obligations contained in the Operative Agreements
including without limitation at any time and from time to time, promptly and
duly executing and delivering any and all such further instruments, documents
and financing statements (and continuation statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or in its
individual capacity) nor any Holder will create or permit to exist at
any time, and each of them will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge, or to cause to
be discharged, all Lessor Liens on the Properties attributable to it;
provided, however, that the Owner Trustee and the Holders shall not be
required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently
prosecuted so long as such proceedings shall not materially and
adversely affect the rights of the Lessee under the Lease and the other
Operative Agreements or involve any material danger of impairment of
the Liens of the Security Documents or of the sale, forfeiture or loss
of, and shall not interfere with the use or disposition of, any
Property or title thereto or any interest therein or the payment of
Rent;
(b) Without prejudice to any right under the Trust Agreement
of the Owner Trustee to resign (subject to requirement set forth in the
Trust Agreement that such resignation shall not be effective until a
successor shall have agreed to accept such appointment), or the
Holders' rights under the Trust Agreement to remove the institution
acting as the Owner Trustee (after consent to such removal by the Agent
as provided in the Trust Agreement), each of the Owner Trustee and the
Holders hereby agrees with the Lessee and the Agent (i) not to
terminate or revoke the trust created by the Trust Agreement except as
permitted by Article VIII of the Trust Agreement, (ii) not to amend,
supplement, terminate or revoke or otherwise modify any provision of
the Trust Agreement in such a manner as to adversely affect the rights
of any such party without the prior written consent of such party and
(iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect such party;
(c) The Owner Trustee or any successor may resign or be
removed by the Holders as the Owner Trustee, a successor Owner Trustee
may be appointed and a corporation may become the Owner Trustee under
the Trust Agreement, only in accordance with the provisions of Article
IX of the Trust Agreement and, with respect to such appointment, with
the consent of the Lessee, which consent shall not be unreasonably
withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee
under the Trust Agreement, and not in its individual capacity, shall
not contract for, create, incur or
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assume any Indebtedness, or enter into any business or other activity
or enter into any contracts or agreements, other than pursuant to or
under the Operative Agreements;
(e) The Holders will not instruct the Owner Trustee to take
any action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i)
commence any case, proceeding or other action with respect to the Owner
Trustee under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization,
arrangement, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official with respect to
the Owner Trustee or for all or any substantial benefit of the
creditors of the Owner Trustee; and neither any Holder nor the Owner
Trustee shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee,
the Holders and the Agent if the Owner Trustee's principal place of
business or chief executive office, or the office where the records
concerning the accounts or contract rights relating to any Property are
kept, shall cease to be located at 79 South Main Street, Salt Lake
City, Utah 84111, or if it shall change its name; and
(h) The Owner Trustee shall take or refrain from taking such
actions and grant or refrain from granting such approvals with respect
to the Operative Agreements and/or relating to any Property in each
case as directed in writing by the Agent (until such time as the Loans
are paid in full, and then by the Majority Holders) or, in connection
with Sections 8.5 and 9.2 hereof, the Lessee; provided, however, that
notwithstanding the foregoing provisions of this subparagraph (h) the
Owner Trustee, the Agent, the Lenders and the Holders each acknowledge,
covenant and agree that neither the Owner Trustee nor the Agent shall
act or refrain from acting, regarding each Unanimous Vote Matter until
such party has received the approval of each Lender and each Holder.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
(a) Each Credit Party acknowledges and agrees that the Owner
Trustee, pursuant to the terms and conditions of the Security Agreement
and the Mortgage Instruments, shall create Liens in favor of the Agent
respecting the various personal property, fixtures and real property
described therein to secure the Owner Trustee's obligations under this
Agreement and under the other Operative Agreements. Each Credit Party
hereby irrevocably consents to the creation, perfection and maintenance
of such Liens. Each Credit Party shall, to the extent reasonably
requested by any of the other parties hereto, cooperate with the other
parties in connection with their covenants herein or in the other
Operative Agreements and shall from time to time duly execute and
deliver any and all such future instruments, documents and financing
statements (and continuation statements related thereto) as any other
party hereto may reasonably request.
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(b) The Lessor hereby instructs each Credit Party, and each
Credit Party hereby acknowledges and agrees, that until such time as
the Loans and the Holder Advances are paid in full and the Liens
evidenced by the Security Agreement and the Mortgage Instruments have
been released (i) any and all Rent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) and any
and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person shall instead be paid
directly to the Agent (excluding Excepted Payments which shall be
payable to each Holder or other Person as appropriate) or as the Agent
may direct from time to time for allocation and distribution in
accordance with the procedures set forth in Section 8.7 hereof, (ii)
all rights of the Lessor under the Lease shall be exercised by the
Agent and (iii) each Credit Party shall cause all notices,
certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to
the Lessor, to also to be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.5 of this
Agreement.
(d) The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the
Agent and from an appraiser selected by the Agent) to be issued
respecting any Property as requested by the Agent (i) at each and every
time as such shall be required to satisfy any regulatory requirements
imposed on the Agent, the Lessor, the Trust Company, any Lender and/or
any Holder and (ii) after the occurrence of an Event of Default.
(e) Each Credit Party hereby covenants and agrees that, except
for amounts payable as Basic Rent, any and all payment obligations
owing from time to time under the Operative Agreements by any Person to
the Agent, any Lender, any Holder or any other Person shall (without
further action) be deemed to be Supplemental Rent obligations payable
by the Lessee and guaranteed by the other Credit Parties. Without
limitation, such obligations of the Lessee shall include without
limitation arrangement fees, administrative fees, facility fees,
breakage costs, indemnities, trustee fees and transaction expenses
incurred by the parties hereto in connection with the transactions
contemplated by the Operative Agreements.
(f) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component
thereof, each of the Construction Agent and the Lessee hereby covenants
and agrees, at its own cost and expense, to assemble and make the same
available to the Agent (on behalf of the Lessor).
(g) The Lessee hereby covenants and agrees that Equipment
respecting any individual Property (exclusive of fixtures which are
integral and necessary for the structure and/or mechanical operation of
such Property) shall at no time constitute in
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excess of fifteen percent (15%) of the aggregate Advances respecting
such Property funded at such time under the Operative Agreements.
(h) The Lessee hereby covenants and agrees that (i) as of
Completion (A) the Property Cost for each individual parcel of the
Property shall be no less than $750,000 and (B) each parcel of the
Property shall be a Permitted Facility and (ii) the aggregate Property
Cost for all Properties at any time shall not exceed $35,000,000.
(i) The Lessee hereby covenants and agrees that it shall give
prompt notice to the Agent if the Lessee's principal place of business
or chief executive office, or the office where the records concerning
the accounts or contract rights relating to any Property are kept,
shall cease to be located at 105 Westwood Place, Suite 400, Brentwood,
Williamson County, Tennessee or if it shall change its name.
(j) The Lessee hereby covenants and agrees that the aggregate
Property Cost of Properties purchased for any reason by the Lessee
pursuant to the Purchase Option of Lessee and/or sold for any reason to
any Person pursuant to the Sale Option of Lessee prior to the
Expiration Date shall not exceed the lesser of (i) thirty-three percent
(33%) of the aggregate Property Cost (up to and including the date any
such Election Date is specified by Lessee) for all Properties then
subject to the Lease and all other properties which were previously
Properties subject to the Lease and (ii) Twelve Million Dollars
($12,000,000). To the extent any such purchase pursuant to the Purchase
Option and/or sale pursuant to the Sale Option shall occur prior to the
Construction Period Termination Date, then the aggregate amount paid to
the Agent (for the benefit of the Financing Parties with respect to any
such Purchase Option and/or Sale Option) shall remain available for
future Advances until the Construction Period Termination Date;
provided in no event shall any Lender be obligated to lend more than
its Lender Commitment and in no event shall any Holder be obligated to
advance more than its Holder Commitment.
(k) The Lessee shall furnish to the Agent at such times as
required under the Lessee Credit Agreement the financial statements and
other information required to be delivered pursuant to Section 5.1 and
Section 5.2 of the Lessee Credit Agreement.
(l) The Lessee hereby covenants and agrees that the rights of
the Lessee under this Agreement and the Lease shall not impair or in
any way diminish the obligations of the Construction Agent and/or the
rights of the Lessor under the Agency Agreement.
(m) The Lessee shall, on or before the first day of each
fiscal quarter of the Lessee, furnish to the Agent a written notice
setting forth the Lessee's calculation, in reasonable detail, of the
ratio of Consolidated Adjusted Rate to Annualized Consolidated EBITDAR
for the immediately preceding fiscal quarter of the Lessee.
(n) Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party gaining
knowledge of the occurrence of any Default or Event of Default which is
continuing at such time. In any event, such notice
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shall be provided to the Agent within ten (10) days of when such Credit
Party gains such knowledge.
(o) Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in
full and the Commitments and the Holder Commitments terminated unless
consent has been obtained from the Majority Secured Parties, each
Credit Party will:
(i) except as permitted by the express provisions of
the Lessee Credit Agreement, preserve and maintain its
separate legal existence and all rights, franchises, licenses
and privileges necessary to the conduct of its business, and
qualify and remain qualified as a foreign corporation (or
partnership, limited liability company or other such similar
entity, as the case may be) and authorized to do business in
each jurisdiction in which the failure to do so qualify would
have a Material Adverse Effect;
(ii) pay and perform all obligations of the Credit
Parties under the Operative Agreements and pay and perform (A)
all taxes, assessments and other governmental charges that may
be levied or assessed upon it or any of its property, and (B)
all other indebtedness, obligations and liabilities in
accordance with customary trade practices, which if not paid
would have a Material Adverse Effect; provided that any Credit
Party may in each case contest any item described in this
Section 8.3(n)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a
Material Adverse Effect, (A) observe and remain in compliance
with all applicable Laws and maintain in full force and effect
all Governmental Actions, in each case applicable to the
conduct of its business; (B) keep in full force and effect all
licenses, certifications or accreditations necessary for any
Facility to carry on its business; and (C) not permit the
termination of any insurance reimbursement program available
to any Facility; and
(iv) provided that the Agent, the Lenders and the
Holders use reasonable efforts to minimize disruption to the
business of Credit Parties, permit representatives of the
Agent or any Lender or Holder, from time to time, to visit and
inspect its properties; inspect, audit and make extracts from
its books, records and files, including without limitation
management letters prepared by independent accountants; and
discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects.
(p) Lessee shall take all action necessary to assure that
Lessee's computer based systems are able to operate and effectively
process data including dates on and after
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January 1, 2000. At the request of the Agent, Lessee shall provide
Agent assurance acceptable to Agent of Lessee's Year 2000
compatibility.
(q) Lessee shall perform any and all obligations of Lessor
under, and cause Lessee to otherwise remain in full compliance with,
the terms and provisions of each Ground Lease, if any.
(r) Each Credit Party hereby covenants and agrees to cause
each of its Wholly-Owned Entities formed after the Initial Closing Date
to execute a Joinder Agreement and to observe the terms of Section 5.9
of this Agreement, all within thirty (30) days of the formation or
acquisition of each such Wholly-Owned Entity.
(s) Concurrently with the delivery of the financial statements
required pursuant to Section 28.1 of the Lease, the Lessee shall
deliver a Compliance Certificate with respect to the period covered by
the financial statements then being delivered, together with an
Interest Rate Calculation Worksheet (in the form attached to the
Compliance Certificate) and a Covenant Compliance Worksheet (in the
form attached to the Compliance Certificate) reflecting the computation
of the financial covenants incorporated pursuant to Section 28.1 of the
Lease as of the last day of the period covered by such financial
statements.
8.4. SHARING OF CERTAIN PAYMENTS.
Except for Excepted Payments, the parties hereto acknowledge and agree
that all payments due and owing by any Credit Party to the Lessor under the
Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3 hereof.
The Lessor, the Holders, the Agent, the Lenders and the Credit Parties
acknowledge the terms of Section 8.7 of this Agreement regarding the allocation
of payments and other amounts made or received from time to time under the
Operative Agreements and agree, that all such payments and amounts are to be
allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee shall,
from time to time at the request of the Lessee (and with the prior consent of
the Agent), in connection with the transactions contemplated by the Agency
Agreement, the Lease or the other Operative Agreements, (i) grant easements and
other rights in the nature of easements with respect to any Property, (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property, (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases, and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or operation
of any Property, including without limitation reciprocal easement agreements,
construction contracts, operating agreements, development agreements, plats,
replats or subdivision
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documents; provided, that each of the agreements referred to in this Section 8.5
shall be of the type normally executed by the Lessee in the ordinary course of
the Lessee's business and shall be on commercially reasonable terms so as not to
diminish the value of any Property in any material respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE
OWNER TRUSTEE.
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount. The Lenders and the Holders acknowledge and agree and direct
that the rights and remedies of the beneficiaries of the Lien of the Security
Documents shall be exercised by the Agent on behalf of the Lenders and the
Holders as directed from time to time by the Majority Secured Parties or,
pursuant to Sections 8.2(h) and 12.5, all of the Lenders and the Holders, as the
case may be; provided, in all cases, the Agent shall allocate payments and other
amounts received in accordance with Section 8.7 of this Agreement. The Agent is
further appointed to provide notices under the Operative Agreements on behalf of
the Owner Trustee (as determined by the Agent, in its reasonable discretion), to
receive notices under the Operative Agreements on behalf of the Owner Trustee
and (subject to Sections 8.5 and 9.2) to take such other action under the
Operative Agreements on behalf of the Owner Trustee as the Agent shall determine
in its reasonable discretion from time to time. The Agent hereby accepts such
appointments. For purposes hereof, the provisions of Section 7 of the Credit
Agreement, together with such other terms and provisions of the Credit Agreement
and the other Operative Agreements as required for the full interpretation and
operation of Section 7 of the Credit Agreement are hereby incorporated by
reference as if restated herein for the mutual benefit of the Agent and each
Holder as if each Holder were a Lender thereunder. Outstanding Holder Advances
and outstanding Loans shall each be taken into account for purposes of
determining Majority Secured Parties. Further, the Agent shall be entitled to
take such action on behalf of the Owner Trustee as is delegated to the Agent
under any Operative Agreement (whether express or implied) as may be reasonably
incidental thereto. The parties hereto hereby agree to the provisions contained
in this Section 8.6. Any appointment of a successor agent under Section 7.9 of
the Credit Agreement shall also be effective as an appointment of a successor
agent for purposes of this Section 8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
(a) Each Credit Party has agreed pursuant to the terms of this
Agreement to pay to (i) the Agent any and all Rent (excluding Excepted
Payments) and any and all other amounts of any kind or type under any
of the Operative Agreements due and owing or payable to any Person and
(ii) each Person as appropriate the Excepted Payments. Promptly after
receipt, the Agent shall apply and allocate, in accordance with the
terms of this Section 8.7, such amounts received from any Credit Party
and all other payments, receipts and other consideration of any kind
whatsoever received by the Agent pursuant to the Security Agreement or
otherwise received by the Agent, the Holders or any of the Lenders in
connection with the Collateral, the Security Documents or any of the
other Operative Agreements. Ratable distributions among the Lenders and
the Holders under this Section 8.7 shall be made based on (in the case
of the Lenders) the ratio of the
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outstanding Loans to the aggregate Property Cost and (in the case of
the Holders) the ratio of the outstanding Holder Advances to the
aggregate Property Cost. Ratable distributions among the Tranche A
Lenders under this Section 8.7 shall be made based on the ratio of the
individual Tranche A Lender's Commitment for Tranche A Loans to the
aggregate of all the Tranche A Lenders' Commitments for Tranche A
Loans. Ratable distributions among the Tranche B Lenders under this
Section 8.7 shall be made based on the ratio of the individual Tranche
B Lender's Commitment for Tranche B Loans to the aggregate of all the
Tranche B Lenders' Commitments for Tranche B Loans. Ratable
distributions among the Lenders (in situations where the Tranche A
Lenders are not differentiated from the Tranche B Lenders) shall be
made based on the ratio of the individual Lender's Commitment to the
aggregate of all the Lenders' Commitments. Ratable distributions among
the Holders under this Section 8.7 shall be based on the ratio of the
individual Holder's Holder Commitment to the aggregate of all the
Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from time
to time in accordance with the terms of subparagraph (a) shall be
applied and allocated as follows:
(i) Any such payment or amount identified as or
deemed to be Basic Rent shall be applied and allocated by the
Agent first, ratably to the Lenders and the Holders for
application and allocation to the payment of interest on the
Loans and thereafter the principal of the Loans which is due
and payable on such date and to the payment of accrued Holder
Yield with respect to the Holder Advances and thereafter the
portion of the Holder Advances which is due on such date; and
second, if no Default or Event of Default is in effect, any
excess shall be paid to such Person or Persons as the Lessee
may designate; provided, that if a Default or Event of Default
is in effect, such excess (if any) shall instead be held by
the Agent until the earlier of (I) the first date thereafter
on which no Default or Event of Default shall be in effect (in
which case such payments or returns shall then be made to such
other Person or Persons as the Lessee may designate) and (II)
the Maturity Date or the Expiration Date, as the case may be
(or, if earlier, the date of any Acceleration), in which case
such amounts shall be applied and allocated in the manner
contemplated by Section 8.7(b)(iv).
(ii) If on any date the Agent or the Lessor shall
receive an amount (if any) in respect of (A) any Casualty or
Condemnation pursuant to Sections 15.1(a) or 15.1(g) of the
Lease (excluding any payments in respect thereof which are
payable to the Lessee in accordance with the Lease), or (B)
the Termination Value in connection with the delivery of a
Termination Notice pursuant to Article XVI of the Lease, or
(C) the Termination Value in connection with the exercise of
the Purchase Option under Section 20.1 of the Lease or the
exercise of the option of the Lessor to transfer the
Properties to the Lessee pursuant to Section 20.3 of the
Lease, or (D) any payment required to be made or elected to be
made by the Construction Agent to the Lessor pursuant to the
terms of the Agency Agreement, then in each case, the Lessor
shall be required to pay such amount received (1) if
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no Acceleration has occurred, to prepay the principal balance
of the Loans and the Holder Advances, on a pro rata basis, a
portion of such amount to be distributed to the Lenders and
the Holders or (2) if an Acceleration has occurred, to apply
and allocate the proceeds respecting Sections 8.7(b)(ii)(A)
through 8.7(b)(ii)(D) in accordance with Section 8.7(b)(iii)
hereof.
(iii) Subject to Section 8.7(c), an amount equal to
any payment identified as proceeds of the sale or other
disposition (or lease upon the exercise of remedies) of the
Properties or any portion thereof, whether pursuant to Article
XXII of the Lease or the exercise of remedies under the
Security Documents or otherwise, the execution of remedies set
forth in the Lease and any payment in respect of excess wear
and tear pursuant to Section 22.3 of the Lease (whether such
payment relates to a period before or after the Construction
Period Termination Date) shall be applied and allocated by the
Agent first, ratably to the payment of the principal and
interest of the Tranche B Loans then outstanding, second,
ratably to the payment to the Holders of the outstanding
principal balance of all Holder Advances plus all outstanding
Holder Yield with respect to such outstanding Holder Advances,
third, to the extent such amount exceeds the maximum amount to
be returned pursuant to the foregoing provisions of this
paragraph (iii), ratably to the payment of the principal and
interest of the Tranche A Loans then outstanding, fourth, to
any and all other amounts owing under the Operative Agreements
to the Lenders under the Tranche B Loans, fifth, to any and
all other amounts owing under the Operative Agreements to the
Holders, sixth, to any and all other amounts owing under the
Operative Agreements to the Lenders under the Tranche A Loans,
and seventh, to the extent moneys remain after application and
allocation pursuant to clauses first through sixth above, to
the Owner Trustee for application and allocation to any and
all other amounts owing to the Holders or the Owner Trustee
and as the Holders shall determine; provided, where no Event
of Default shall exist and be continuing and a prepayment is
made for any reason with respect to less than the full amount
of the outstanding principal amount of the Loans and the
outstanding Holder Advances, the proceeds shall be applied and
allocated ratably to the Lenders and to the Holders.
(iv) Subject to Section 8.7(c), an amount equal to
(A) any such payment identified as a payment pursuant to
Section 22.1(b) of the Lease (or otherwise) of the Maximum
Residual Guarantee Amount (and any such lesser amount as may
be required by Section 22.1(b) of the Lease) in respect of the
Properties, (B) any other amount payable upon any exercise of
remedies after the occurrence of an Event of Default not
covered by Sections 8.7(b)(i) or 8.7(b)(iii) above (including
without limitation any amount received in connection with an
Acceleration which does not represent proceeds from the sale
or liquidation of the Properties) and (C) any other amount
payable by any Guarantor pursuant to Section 6B (including
without limitation from collateral securing obligations of one
or more of the Credit Parties under the Operative Agreements
and the obligations of one or more of the Credit Parties under
the Lessee Credit
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Agreement and the transactions related thereto) shall be
applied and allocated by the Agent first, ratably, to the
payment of the principal and interest balance of Tranche A
Loans then outstanding, second, ratably to the payment of the
principal and interest balance of the Tranche B Loans then
outstanding, third, ratably to the payment of the principal
balance of all Holder Advances plus all outstanding Holder
Yield with respect to such outstanding Holder Advances,
fourth, to the payment of any other amounts owing to the
Lenders hereunder or under any of the other Operative
Agreement, and fifth, to the extent moneys remain after
application and allocation pursuant to clauses first through
fourth above, to the Owner Trustee for application and
allocation to Holder Advances and Holder Yield and any other
amounts owing to the Holders or the Owner Trustee as the
Holders shall determine.
(v) An amount equal to any such payment identified as
Supplemental Rent shall be applied and allocated by the Agent
to the payment of any amounts then owing to the Agent, the
Lenders, the Holders and the other parties to the Operative
Agreements (or any of them) (other than any such amounts
payable pursuant to the preceding provisions of this Section
8.7(b)) as shall be determined by the Agent in its reasonable
discretion; provided, however, that Supplemental Rent received
upon the exercise of remedies after the occurrence and
continuance of an Event of Default in lieu of or in
substitution of the Maximum Residual Guarantee Amount or as a
partial payment thereon shall be applied and allocated as set
forth in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall
identify the nature of each payment or amount received by the
Agent and apply and allocate each such amount in the manner
specified above.
(c) Upon the termination of the Commitments and the payment in
full of the Loans and all other amounts owing by the Owner Trustee
hereunder or under any Credit Document and the payment in full of all
amounts owing to the Holders and the Owner Trustee under the Trust
Agreement, any moneys remaining with the Agent shall be returned to the
Owner Trustee or such other Person or Persons as the Holders may
designate for application and allocation to any and all other amounts
owing to the Holders or the Owner Trustee and as the Holders shall
determine. In the event of an Acceleration it is agreed that, prior to
the application and allocation of amounts received by the Agent in the
order described in Section 8.7(b) above, any such amounts shall first
be applied and allocated to the payment of (i) any and all sums
advanced by the Agent in order to preserve the Collateral or to
preserve its Lien thereon, (ii) the expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or
realizing on the Collateral, or of any exercise by the Agent of its
rights under the Security Documents, together with reasonable
attorneys' fees and expenses and court costs and (iii) any and all
other amounts reasonably owed to the Agent under or in connection with
the transactions contemplated by the Operative Agreements (including
without limitation any accrued and unpaid administration fees).
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8.8. RELEASE OF PROPERTIES, ETC.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, Holder Advances and all other amounts owing to
the Lenders and the Holders under the Operative Agreements, the Agent is hereby
authorized and directed to release such Properties from the Liens created by the
Security Documents to the extent of its interest therein. In addition, upon the
termination of the Commitments and the Holder Commitments and the payment in
full of the Loans, the Holder Advances and all other amounts owing by the Owner
Trustee hereunder or under any other Operative Agreement the Agent is hereby
authorized and directed to release all of the Properties from the Liens created
by the Security Documents to the extent of its interest therein. Upon request of
the Owner Trustee following any such release, the Agent shall, at the sole cost
and expense of the Lessee, execute and deliver to the Owner Trustee and the
Lessee such documents as the Owner Trustee or the Lessee shall reasonably
request to evidence such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT RIGHTS.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Credit Parties and the Owner
Trustee hereby agree that, prior to the occurrence and continuation of any
Default or Event of Default, the Construction Agent or the Lessee, as the case
may be, shall have the following rights:
(a) the right to designate an account to which amounts funded
under the Operative Agreements shall be credited pursuant to Section
2.3(a) of the Credit Agreement;
(b) the right to terminate or reduce the Commitments pursuant
to Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation
options pursuant to Section 2.7 of the Credit Agreement;
(d) the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement;
(e) the right to consent to any assignment by a Lender to
which the Lessor has the right to consent pursuant to Section 9.8 of
the Credit Agreement; and
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(f) without limiting the foregoing clauses (a) through (e),
and in addition thereto, provided, that no Event of Default then
exists, the Construction Agent or the Lessee, as the case may be, shall
have the right to exercise any other right of the Owner Trustee under
the Credit Agreement upon not less than five (5) Business Days' prior
written notice from the Construction Agent or the Lessee, as the case
may be, to the Owner Trustee and the Agent.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT
RIGHTS.
Notwithstanding anything to the contrary contained in the Trust
Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Default or Event of
Default, the Construction Agent or the Lessee, as the case may be, shall have
the following rights:
(a) the right to exercise the conversion and continuation
options pursuant to Section 3.8 of the Trust Agreement and the right to
terminate or reduce the Holder Commitments pursuant to Section 3.9 of
the Trust Agreement;
(b) no removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement
shall be made without the prior written consent (not to be unreasonably
withheld or delayed) of the Lessee; and
(c) the Holders and the Owner Trustee shall not amend,
supplement or otherwise modify any provision of the Trust Agreement in
such a manner as to adversely affect the rights of the Construction
Agent or the Lessee, as the case may be, without the prior written
consent (not to be unreasonably withheld or delayed) of the
Construction Agent or the Lessee, as the case may be.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
Each Lender may participate, assign or transfer all or a portion of its
interest hereunder and under the other Operative Agreements in accordance with
Sections 9.7 and 9.8 of the Credit Agreement; provided, each participant,
assignee or transferee must obtain the same ratable interest in Tranche A Loans,
Tranche B Loans and the Lessee Credit Agreement. The Holders may, directly or
indirectly, assign, convey or otherwise transfer any of their right, title or
interest in or to the Trust Estate or the Trust Agreement with the prior written
consent of the Agent and the Lessee (which consent shall not be unreasonably
withheld or delayed) and in accordance with the terms of Section 11.8(b) of the
Trust Agreement. The Owner Trustee may, subject to the rights of the Lessee
under the Lease and the other Operative Agreements and to the Lien of the
applicable Security Documents but only with the prior written consent of the
Agent (which consent may be withheld by the Agent in its sole discretion) and
(provided, no Default or Event of Default has occurred and is continuing) with
the consent of the Lessee, directly or indirectly,
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assign, convey, appoint an agent with respect to enforcement of, or otherwise
transfer any of its right, title or interest in or to any Property, the Lease,
the Trust Agreement and the other Operative Agreements (including without
limitation any right to indemnification thereunder), or any other document
relating to a Property or any interest in a Property as provided in the Trust
Agreement and the Lease. The provisions of the immediately preceding sentence
shall not apply to the obligations of the Owner Trustee to transfer Property to
the Lessee or a third party purchaser pursuant to Article XXII of the Lease upon
payment for such Property in accordance with the terms and conditions of the
Lease. No Credit Party may assign any of the Operative Agreements or any of
their respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written consent of
the Agent, the Lenders, the Holders and the Lessor.
10.2. EFFECT OF TRANSFER.
From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein to
the transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 10, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction or pursuant to arbitration as set forth in Section 12.8, as opposed
to gross negligence or willful misconduct imputed to such Indemnified Person
with regard to the acts or omissions of any Person which is not an agent or
employee of such Indemnified Person; provided, no Indemnified Person shall be
responsible for the acts or omissions of the Construction Agent regardless of
any agency status)
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in any way relating to or arising or alleged to arise out of the execution,
delivery, performance or enforcement of this Agreement, the Lease or any other
Operative Agreement or on or with respect to any Property or any component
thereof, including without limitation Claims in any way relating to or arising
or alleged to arise out of (a) the financing, refinancing, purchase, acceptance,
rejection, ownership, design, construction, refurbishment, development,
delivery, acceptance, nondelivery, leasing, subleasing, possession, use,
operation, maintenance repair, modification, transportation, condition, sale,
return, repossession (whether by summary proceedings or otherwise), or any other
disposition of any Property or any part thereof, including without limitation
the acquisition, holding or disposition of any interest in the Property, lease
or agreement comprising a portion of any thereof; (b) any latent or other
defects in any Property or any portion thereof whether or not discoverable by an
Indemnified Person or the Indemnity Provider; (c) a violation of Environmental
Laws, Environmental Claims or other loss of or damage to any property or the
environment relating to the Property, the Lease, the Agency Agreement or the
Indemnity Provider; (d) the Operative Agreements, or any transaction
contemplated thereby; (e) any breach by the Indemnity Provider of any of its
representations or warranties under the Operative Agreements to which the
Indemnity Provider is a party or failure by the Indemnity Provider to perform or
observe any covenant or agreement to be performed by it under any of the
Operative Agreements; (f) the transactions contemplated hereby or by any other
Operative Agreement, in respect of the application of Parts 4 and 5 of Subtitle
B of Title I of ERISA; and (g) personal injury, death or property damage,
including without limitation Claims based on strict or absolute liability in
tort. Without limiting the generality of the foregoing, Environmental Claims
shall include without limitation amounts paid in settlement of claims, all
consultant and expert fees and expenses of any Indemnified Person incurred in
connection with any investigation of site conditions, any abatement, cleanup,
remediation, removal or restoration work, or liability for any damages or
injuries of any Person or to land, air, water or other natural resources.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure precludes in
all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person
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shall, at the expense of the Indemnity Provider, in good faith conduct and
control such action (including without limitation by pursuit of appeals)
(provided, however, that (A) if such Claim, in the Indemnity Provider's
reasonable discretion, can be pursued by the Indemnity Provider on behalf of or
in the name of such Indemnified Person, the Indemnified Person, at the Indemnity
Provider's request, shall allow the Indemnity Provider to conduct and control
the response to such Claim and (B) in the case of any Claim (and notwithstanding
the provisions of the foregoing subsection (A)), the Indemnified Person may
request the Indemnity Provider to conduct and control the response to such Claim
(with counsel to be selected by the Indemnity Provider and consented to by such
Indemnified Person, such consent not to be unreasonably withheld; provided,
however, that any Indemnified Person may retain separate counsel at the expense
of the Indemnity Provider in the event of a conflict of interest between such
Indemnified Person and the Indemnity Provider)) by, in the sole discretion of
the Person conducting and controlling the response to such Claim (1) resisting
payment thereof, (2) not paying the same except under protest, if protest is
necessary and proper, (3) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings,
or (4) taking such other action as is reasonably requested by the Indemnity
Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the response to such Claim and may settle
such Claim if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and no Indemnity
Provider shall be permitted to respond to any Claim in its own name or that of
the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder, (B) in the case of a Claim that must be
pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified Person), (C) the Indemnified Person shall
have
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reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such Claim shall involve the
payment of any amount prior to the resolution of such Claim, the Indemnity
Provider shall provide to the Indemnified Person an interest-free advance in an
amount equal to the amount that the Indemnified Person is required to pay (with
no additional net after-tax cost to such Indemnified Person) prior to the date
such payment is due, (E) in the case of a Claim that must be pursued in the name
of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall
have provided to such Indemnified Person an opinion of independent counsel
selected by the Indemnified Person and reasonably satisfactory to the Indemnity
Provider stating that a reasonable basis exists to contest such Claim (or, in
the case of an appeal of an adverse determination, an opinion of such counsel to
the effect that the position asserted in such appeal will more likely than not
prevail) and (F) no Event of Default shall have occurred and be continuing. In
no event shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any Claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnified Person and reasonably
acceptable to the Indemnity Provider stating that as a result of such change in
law (or interpretation thereof), it is more likely than not that the Indemnified
Person will prevail in such contest. In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, any performance by or adverse admission by or with
respect to the Indemnified Person.
11.2. GENERAL TAX INDEMNITY.
(a) The Indemnity Provider shall pay and assume liability for,
and does hereby agree to indemnify, protect and defend each Property
and all Indemnified Persons, and hold them harmless against, all
Impositions on an After Tax Basis, and all payments pursuant to the
Operative Agreements shall be made free and clear of and without
deduction for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section
11.2(a) hereof, the following shall be excluded from the indemnity
required by Section 11.2(a):
(i) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Indemnified Person
(other than the Lessor, the Owner Trustee and/or the Trust) by
the United States federal government that are based on or
measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person;
provided, that this clause (i) shall not be interpreted to
prevent a
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payment from being made on an After Tax Basis if such payment
is otherwise required to be so made;
(ii) Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on any Indemnified Person
(other than the Lessor) by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and
that are based upon or measured by the net income (including
without limitation taxes based on capital gains and minimum
taxes) of such Person; provided that such Taxes shall not be
excluded under this subparagraph (ii) to the extent the
location, possession or use of any Property in, the location
or the operation of the Lessee in, or the Lessee's making
payments under the Operative Agreements from, the jurisdiction
imposing such Taxes been the sole connection between such
Indemnified Person and the jurisdiction imposing such Taxes;
provided, further, that this clause (ii) shall not be
interpreted to prevent a payment from being made on an After
Tax Basis if such payment is otherwise required to be so made;
(iii) any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the
Lease and redelivery or sale of the property in accordance
with the terms of the Lease (but not any Tax that relates to
such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by
a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Indemnified
Person with regard to the acts or omissions of any Person
which is not an agent or employee of such Indemnified Person;
provided, no Indemnified Person shall be responsible for the
acts or omissions of the Construction Agent regardless of any
agency status), but not Taxes imposed as a result of ordinary
negligence of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(e), the
Indemnity Provider shall pay or cause to be paid all
Impositions directly to the taxing authorities where feasible
and otherwise to the Indemnified Person, as appropriate, and
the Indemnity Provider shall at its own expense, upon such
Indemnified Person's reasonable request, furnish to such
Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest
is conducted pursuant to Section 11.2(e) and which the
Indemnity Provider pays directly to the taxing authorities,
the Indemnity Provider shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which the
Indemnity Provider reimburses an Indemnified Person, the
Indemnity Provider shall do so within thirty (30) days after
receipt by
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the Indemnity Provider of demand by such Indemnified Person
describing in reasonable detail the nature of the Imposition
and the basis for the demand (including without limitation the
computation of the amount payable), accompanied by receipts or
other reasonable evidence of such demand. In the case of
Impositions for which a contest is conducted pursuant to
Section 11.2(e), the Indemnity Provider shall pay such
Impositions or reimburse such Indemnified Person for such
Impositions, to the extent not previously paid or reimbursed
pursuant to subsection (a), prior to the latest time permitted
by the relevant taxing authority for timely payment after
conclusion of all contests under Section 11.2(e).
(iii) At the Indemnity Provider's request, the amount
of any indemnification payment by the Indemnity Provider
pursuant to subsection (a) shall be verified and certified by
an independent public accounting firm mutually acceptable to
the Indemnity Provider and the Indemnified Person. The fees
and expenses of such independent public accounting firm shall
be paid by the Indemnity Provider unless such verification
shall result in an adjustment in the Indemnity Provider's
favor of fifteen percent (15%) or more of the payment as
computed by the Indemnified Person, in which case such fee
shall be paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for preparing
and filing any real and personal property or ad valorem tax returns in
respect of each Property and any other tax returns requested by the
Owner Trustee respecting the transactions described in the Operative
Agreements. In case any other report or tax return shall be required to
be made with respect to any obligations of the Indemnity Provider under
or arising out of subsection (a) and of which the Indemnity Provider
has knowledge or should have knowledge, the Indemnity Provider, at its
sole cost and expense, shall notify the relevant Indemnified Person of
such requirement and (except if such Indemnified Person notifies the
Indemnity Provider that such Indemnified Person intends to file such
report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in Indemnity
Provider's name such return, statement or report; and (B) in the case
of any other such return, statement or report required to be made in
the name of such Indemnified Person, advise such Indemnified Person of
such fact and prepare such return, statement or report for filing by
such Indemnified Person or, where such return, statement or report
shall be required to reflect items in addition to any obligations of
the Indemnity Provider under or arising out of subsection (a), provide
such Indemnified Person at the Indemnity Provider's expense with
information sufficient to permit such return, statement or report to be
properly made with respect to any obligations of the Indemnity Provider
under or arising out of subsection (a). Such Indemnified Person shall,
upon the Indemnity Provider's request and at the Indemnity Provider's
expense, provide any data maintained by such Indemnified Person (and
not otherwise available to or within the control of the Indemnity
Provider) with respect to each Property which the Indemnity Provider
may reasonably require to prepare any required tax returns or reports.
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(e) If a written Claim is made against any Indemnified Person
or if any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for
any Impositions, the provisions in Section 11.1 relating to
notification and rights to contest shall apply; provided, however, if
such contest involves a Tax other than a Tax on net income and can be
pursued independently from any other proceeding involving a tax
liability of such Indemnified Person, the Indemnified Person, at the
Indemnity Provider's request, shall allow the Indemnity Provider (and
the Indemnity Provider shall be obligated) to conduct and control such
contest.
11.3 INCREASED COSTS, ILLEGALITY, ETC.
Without limiting the rights of the Lessee under Section 11.6 of the
Participation Agreement:
(a) If, due to either (i) the introduction of or any change in
or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request hereafter adopted, promulgated
or made by any central bank or other governmental authority (whether or
not having the force of law), there shall be any increase in the cost
to any Financing Party of agreeing to make or making, funding or
maintaining Advances, then the Lessee shall from time to time, upon
demand by such Financing Party (with a copy of such demand to the Agent
but subject to the terms of Section 11.6 of the Participation
Agreement, as the case may be), pay to the Agent for the account of
such Financing Party additional amounts sufficient to compensate such
Financing Party for such increased cost. A certificate as to the amount
of such increased cost, submitted to the Lessee and the Agent by such
Financing Party, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Financing Party determines that compliance with any
law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law,
but in each case promulgated or made after the date hereof) affects or
would affect the amount of capital required or expected to be
maintained by such Financing Party or any corporation controlling such
Financing Party and that the amount of such capital is increased by or
based upon the existence of such Financing Party's commitment to make
Advances and other commitments of this type or upon the Advances, then,
upon demand by such Financing Party (with a copy of such demand to the
Agent but subject to the terms Section 11.6 of the Participation
Agreement), the Lessee shall pay to the Agent for the account of such
Financing Party, from time to time as specified by such Financing
Party, additional amounts sufficient to compensate such Financing Party
or such corporation in the light of such circumstances, to the extent
that such Financing Party reasonably determines such increase in
capital to be allocable to the existence of such Financing Party's
commitment to make such Advances. A certificate as to such amounts
submitted to the Lessee and the Agent by such Financing Party shall be
conclusive and binding for all purposes, absent manifest error.
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(c) Without limiting the effect of the foregoing, the Lessee
shall pay to each Financing Party on the last day of the Interest
Period therefor so long as such Financing Party is maintaining reserves
against "Eurocurrency liabilities" under Regulation D an additional
amount (determined by such Financing Party and notified to the Lessee
through the Agent) equal to the product of the following for each
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, outstanding on
such day; and
(ii) the remainder of (x) a fraction the numerator
of which is the rate (expressed as a decimal) at which
interest accrues on such Eurodollar Loan or Eurodollar Holder
Advance, as the case may be, for such Interest Period as
provided in the Credit Agreement or the Trust Agreement, as
the case may be (less the Applicable Percentage), and the
denominator of which is one (1) minus the effective rate
(expressed as a decimal) at which such reserve requirements
are imposed on such Financing Party on such day minus (y) such
numerator; and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.3(a),
11.3(b) or 11.3(c) or any other provision of any Operative Agreement,
each Financing Party agrees that if there is any increase in any cost
to or reduction in any amount receivable by such Financing Party with
respect to which the Lessee would be obligated to compensate such
Financing Party pursuant to Sections 11.3(a) or 11.3(b), such Financing
Party shall use reasonable efforts to select an alternative office for
Advances which would not result in any such increase in any cost to or
reduction in any amount receivable by such Financing Party; provided,
however, that no Financing Party shall be obligated to select an
alternative office for Advances if such Financing Party determines that
(i) as a result of such selection such Financing Party would be in
violation of any applicable law, regulation, treaty, or guideline, or
would incur additional costs or expenses or (ii) such selection would
be inadvisable for regulatory reasons or materially inconsistent with
the interests of such Financing Party.
(e) With reference to the obligations of the Lessee set forth
in Sections 11.3(a) through 11.3(d), the Lessee shall not have any
obligation to pay to any Financing Party amounts owing under such
Sections for any period which is more than one (1) year prior to the
date upon which the request for payment therefor is delivered to the
Lessee.
(f) Notwithstanding any other provision of this Agreement, if
any Financing Party shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes
it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for any Financing Party to perform its
obligations hereunder to make or maintain Eurodollar Loans or
Eurodollar Holder
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Advances, as the case may be, then (i) each Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, will automatically, at
the earlier of the end of the Interest Period for such Eurodollar Loan
or Eurodollar Holder Advance, as the case may be, or the date required
by law, convert into an ABR Loan or an ABR Holder Advance, as the case
may be, and (iii) the obligation of the Financing Parties to make,
convert or continue Eurodollar Loans or Eurodollar Holder Advances, as
the case may be, shall be suspended until the Agent shall notify the
Lessee that such Financing Party has determined that the circumstances
causing such suspension no longer exist.
11.4 FUNDING/CONTRIBUTION INDEMNITY.
Subject to the provisions of Section 11.6 of the Participation
Agreement, the Lessee agrees to indemnify each Financing Party and to hold each
Financing Party harmless from any loss or reasonable expense which such
Financing Party may sustain or incur as a consequence of (a) any default in
connection with the drawing of funds for any Advance, (b) any default in making
any prepayment after a notice thereof has been given in accordance with the
provisions of the Operative Agreements or (c) the making of a voluntary or
involuntary prepayment of Eurodollar Loans or Eurodollar Holder Advances, as the
case may be, on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification shall be in an amount equal to the excess,
if any, of (x) the amount of interest or Holder Yield, as the case may be, which
would have accrued on the amount so prepaid, or not so borrowed, accepted,
converted or continued for the period from the date of such prepayment or of
such failure to borrow, accept, convert or continue to the last day of such
Interest Period (or, in the case of a failure to borrow, accept, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable Eurodollar Rate plus the Applicable
Percentage for such Loan or Holder Advance, as the case may be, for such
Interest Period over (y) the amount of interest (as determined by such Financing
Party in its reasonable discretion) which would have accrued to such Financing
Party on such amount by (i) (in the case of the Lenders) re-employing such funds
in loans of the same type and amount during the period from the date of
prepayment or failure to borrow to the last day of the then applicable Interest
Period (or, in the case of a failure to borrow, the Interest Period that would
have commenced on the date of such failure) and (ii) (in the case of the
Holders) placing such amount on deposit for a comparable period with leading
banks in the relevant interest rate market. This covenant shall survive the
termination of the Operative Agreements and the payment of all other amounts
payable hereunder.
11.5 WITHHOLDING TAXES.
(a) So long as the applicable Lender or Holder shall have
complied with the provisions of Section 11.5(c) hereof, any and all
payments under any Note, Certificate or other Operative Agreement shall
be made, in accordance with the terms hereof and thereof, free and
clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (other than taxes imposed on net
income or profits of, or any branch or franchise taxes applicable to,
the Agent, any Lender or any Holder) (y) by the jurisdiction under the
laws of which the Agent, such Lender or such Holder, as the case may
be, is organized or
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any political subdivision thereof and (z) in the case of each Lender
and Holder, by the jurisdiction in which any lending office of such
Lender or any office of such Holder from which Holder Advances are made
is located or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Non-Excluded Taxes"). If
any obligor shall be required by law to deduct any Non-Excluded Taxes
from or in respect of any sum payable under any Operative Agreement or
under any Note or Certificate to the Agent, any Lender or any Holder,
so long as the applicable Lender or Holder shall have complied with the
provisions of Section 11.5(c) hereof, (i) the sum shall be payable by
the Lessee and shall be increased as may be necessary so that after
making all required deductions (including without limitation deductions
applicable to additional sums payable under this Section), the Agent or
such Lender or such Holder, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) the Lessee will make such deductions and (iii) the Lessee
will pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law. If and to the extent
that the Agent or any Lender or any Holder subsequently shall be
refunded or otherwise recover all or any part of such deduction, it
shall refund to the Lessee the amount so recovered.
(b) So long as the applicable Lender or Holder shall have
complied with the provisions of Section 11.5(c), the Lessee will
indemnify the Agent, each Lender and each Holder for the full amount of
Non-Excluded Taxes (including without limitation any Non-Excluded Taxes
imposed by any jurisdiction on amounts payable under this Section) paid
by the Agent or such Lender or such Holder, as the case may be, and any
liability (including without limitation penalties, interest and
expenses) arising therefrom or with respect thereto. This
indemnification shall be made within thirty (30) days from the date the
Agent or any Lender or any Holder, as the case may be, makes written
demand therefor and delivers to the Lessee the original receipt of
Non-Excluded Taxes paid by it or an invoice from the relevant taxing
authority regarding such Non-Excluded Taxes. Within thirty (30) days
after the date of any payment of Non-Excluded Taxes pursuant to this
Section, the Lessee will furnish to the Agent or the relevant Lender or
the relevant Holder, as the case may be, the original or a certified
copy of a receipt or other relevant documentation evidencing payment
thereof; provided, that demand therefor must be made on the Lessee
within one hundred twenty (120) days after the Agent's or relevant
Lender's or relevant Holder's actual knowledge that such Lender or
Holder is entitled to such payment. If and to the extent that any
Lender or Holder subsequently shall be refunded or otherwise recover
all or any part of such payment of taxes, it shall refund to the Lessee
the amount so recovered.
(c) If any Lender or Holder is a "foreign corporation,
partnership or trust" within the meaning of the Code, and such Lender
or Holder is entitled to an exemption (or is exempt) from United States
withholding tax under Section 1441 or 1442 of the Code, such Lender or
Holder will deliver to the Agent and the Lessee:
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(i) if such Lender or Holder is entitled to claim
an exemption from, or a reduction of, withholding tax under a
United States tax treaty, properly completed IRS Forms 1001
and W-8 before the payment of any interest to such Lender or
Holder Yield to such Holder in the first calendar year, and
before the payment of any interest to such Lender or Holder
Yield to such Holder in each third succeeding calendar year,
during which interest may be paid to such Lender or Holder
Yield may be paid to such Holder under any Operative
Agreement;
(ii) if such Lender or Holder is entitled to claim
that interest (in the case of Lenders) or Holder Yield (in the
case of Holders) paid under the Operative Agreements is exempt
from United States withholding tax because it is effectively
connected with a United States trade or business of such
Lender or Holder, two (2) properly completed and executed
copies of IRS Form 4224 before the payment of any interest to
such Lender or Holder Yield to such Holder is due in the first
taxable year of such Lender or Holder, and in each succeeding
taxable year of such Lender or Holder, during which interest
may be paid to such Lender or Holder Yield may be paid to such
Holder under the Operative Agreements, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Each Lender and Holder as of the Initial Closing Date, and
each assignee under any (x) Assignment and Acceptance (as of the date
thereof) or (y) assignment by any Holder of an interest under the Trust
Agreement and any Certificate, that is a "foreign corporation,
partnership or trust" as described herein must be eligible to claim a
complete exemption and must provide applicable forms to the Lessee as
required by this Section 11.5. Each such Lender and Holder will
promptly notify the Agent and the Lessee of any changes in
circumstances that would modify or render invalid any claimed exemption
or reduction.
(d) If any Lender or Holder is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest
payment to such Lender or any payment of Holder Yield to such Holder an
amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required
under subsection (c) above are not executed, completed and/or delivered
to the Agent, then the Agent may withhold from any interest payment to
such Lender or any payment of Holder Yield to such Holder, as the case
may be, not providing such forms or other documentation an amount
equivalent to the applicable withholding tax. For purposes of this
Section, a distribution hereunder by the Agent to or for the account of
any Lender or Holder shall be deemed a payment by the Lessee.
(e) If the Internal Revenue Service or any other Governmental
Authority, domestic or foreign, asserts a claim that the Agent did not
properly withhold tax from
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amounts paid to or for the account of any Lender or Holder (whether
because the appropriate form was not delivered or was not properly
executed, completed and/or delivered, because such Lender or Holder
failed to notify the Agent of a change in circumstances that rendered
the exemption from, or reduction of, withholding tax ineffective, or
for any other reason), such Lender or Holder shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax
or otherwise, including without limitation penalties and interest, and
including without limitation any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this subsection (e), together
with all costs, expenses and reasonably attorneys' fees incurred or
paid in connection therewith.
(f) If at any time the Lessee requests any Lender or Holder to
deliver any forms other than documentation pursuant to subsection (c)
above, then the Lessee shall, upon demand of such Lender or Holder,
reimburse such Lender or Holder for any reasonable costs or expenses
incurred by such Lender or Holder in the preparation or delivery of
such forms or other documentation.
(g) Each Lender and Holder agrees that, if the Lessee is
required to pay additional amounts to or for the account of any Lender
or Holder pursuant to subsections (a) or (b) above, then such Lender or
Holder will, to the extent permitted by law, endeavor in good faith to
designate another lending office for its Eurodollar Loans (in the case
of Lenders) or office for its Eurodollar Holder Advances (in the case
of Holders), but only if such designation would make it lawful for such
Lender or Holder to continue to make or maintain Eurodollar Loans or
Eurodollar Holder Advances hereunder; provided that such designation is
made on such terms that such Lender or Holder, in its good faith
determination, suffers no increased cost or economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of
the event giving rise to the operation of this Section.
11.6 REPLACEMENT OF LENDERS AND HOLDERS.
The Lessee may, at any time and so long as no Default or Event of
Default has then occurred and is continuing, replace any Lender or Holder (a)
that has requested additional amounts from the Lessee under Section 11.3 or 11.5
or (b) the obligation of which to make or maintain Eurodollar Loans or
Eurodollar Holder Advances has been suspended under Section 11.3(f) by written
notice to the Agent and such Lender or such Holder, as the case may be, given
not more than thirty (30) days after any such event. Within sixty (60) days of
such notice, the Lessee shall give written notice to the Agent and such Lender
or such Holder, as the case may be, identifying one or more Persons each of
which qualifies as an Eligible Assignee and shall be reasonably acceptable to
the Agent (each, a "Replacement Financing Party," and collectively, the
"Replacement Financing Parties") to replace such Lender or Holder (the "Replaced
Financing Party"), provided that (i) the second notice from the Lessee to the
Replaced Financing Party and the Agent provided for hereinabove shall specify an
effective date for such replacement (the "Replacement Effective Date"), which
shall be at least five (5) Business Days after such notice is given, (ii) as of
the relevant Replacement Effective Date, each Replacement Financing Party
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shall enter into an Assignment and Acceptance with the Replaced Financing Party
(if such Replaced Financing Party is a Lender) (but shall not be required to pay
the processing fee otherwise payable to the Agent with regard thereto) or shall
enter into an assignment and acceptance with the Replaced Financing Party, in
form and substance satisfactory to the signatories (if such Replaced Financing
Party is a Holder), pursuant to which such Replacement Financing Parties
collectively shall acquire, in such proportion among them as they may agree with
the Lessee and the Agent, all (but not less than all) of the Commitments, Holder
Commitments, outstanding Loans and outstanding Holder Advances of the Replaced
Financing Party, and, in connection therewith, shall pay to the Replaced
Financing Party, as the purchase price in respect thereof, an amount equal to
the sum as of the Replacement Effective Date (without duplication) of (x) the
unpaid principal amount of and all accrued but unpaid interest on all
outstanding Loans of the Replaced Financing Party, (y) the unpaid amount of
Holder Advances and all accrued but unpaid Holder Yield on Holder Advances of
the Replaced Financing Party and (z) the Replaced Financing Party's ratable
share of all accrued but unpaid fees owing to the Replaced Financing Party
hereunder and (iii) all other obligations of the Lessee owing to the Replaced
Financing Party (other than those specifically described in clause (ii) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid), including without limitation amounts payable under Section 11.4 as
a result of the actions required to be taken under this Section, shall be paid
in full by the Lessee to the Replaced Financing Party on or prior to the
Replacement Effective Date.
11.7 EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT
LIABILITY, ETC.
WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION PROVISIONS OF
ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING INDEMNIFICATION
OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER EXPRESSLY
RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS FOR LOSS
OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR OMISSION
ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY, AND
INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE AND HARMLESS FROM
AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES, COSTS,
LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION ATTORNEY'S FEES
AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH BENEFICIARY (IRRESPECTIVE
OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE ACTION FOR WHICH
INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT IS SOUGHT)
ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT
LIABILITY OF ANY SUCH BENEFICIARY.
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SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest of
the Owner Trustee in any Property or any interest of the Holders in the Trust
Estate, the payment of the Notes and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
12.2. NO BROKER, ETC.
Each of the parties hereto represents to the others that it has not
retained or employed any broker, finder or financial adviser to act on its
behalf in connection with this Agreement, nor has it authorized any broker,
finder or financial adviser retained or employed by any other Person so to act.
Any party who is in breach of this representation shall indemnify and hold the
other parties harmless from and against any liability arising out of such breach
of this representation.
12.3. NOTICES.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when presented for delivery notwithstanding such refusal.
Telex or telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery shall be effective when accomplished.
Unless a party changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the following
addresses:
If to the Construction Agent or the Lessee, to such entity at the
following addresses:
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Province Healthcare Company
105 Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: Vice President - Finance
Telephone: (615) 370-1377
Telecopy: (615) 370-1259
with a copy (which shall not constitute notice) to:
Waller Lansden Dortch & Davis PLLC
Nashville City Center
511 Union Street, Suite 2100
Nashville, Tennessee 37219-1760
Attention: Ralph Davis
Telephone: (615) 252-2481
Telecopy: (615) 244-6804
If to any Guarantor, to such entity in care of the Lessee at the
above-referenced address.
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton
Vice President
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
If to the Holders, to each such Holder at the address set forth for
such Holder on Schedule I of the Trust Agreement.
If to the Agent, to it at the following address:
First Union National Bank
c/o First Union Capital Markets Group
DC-6
301 South College Street
Charlotte, North Carolina 28288-0166
Attention: Ms. Jane O. Hurley
Capital Markets Services
Telephone: (704) 383-3812
Telecopy: (704) 383-7989
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with a copy (which shall not constitute notice) to:
First Union National Bank
150 Fourth Avenue North
2nd Floor
Nashville, Tennessee 37219
Attention: Carolyn Hannon
Telephone: (615) 251-9374
Telecopy: (615) 251-9247
with a copy (which shall not constitute notice) to:
First Union National Bank
One First Union Center, 5th Floor
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Valerie Cline
Telephone: (704) 383-6237
Telecopy: (704) 383-9144
If to any Lender, to it at the address set forth for such Lender in
Schedule 1.1 of the Credit Agreement.
From time to time any party may designate additional parties and/or
another address for notice purposes by notice to each of the other parties
hereto. Each notice hereunder shall be effective upon receipt or refusal
thereof.
12.4. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
12.5. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE
MATTERS.
Each Operative Agreement may be terminated, amended, supplemented,
waived or modified only by an instrument in writing signed by, subject to
Article VIII of the Trust Agreement regarding termination of the Trust
Agreement, the Majority Secured Parties and each Credit Party (to the extent
such Credit Party is a party to such Operative Agreement). In addition, (a) the
Unanimous Vote Matters shall require the consent of each Lender and each Holder
and (b) any provision of any Operative Agreement incorporated by reference or
otherwise referenced in a second Operative Agreement shall remain, respecting
such second Operative Agreement, in its original form without regard to any such
termination, amendment, supplement, waiver or modification in the first
Operative Agreement except if such has been agreed to by an instrument in
writing signed by, subject to Article VIII of the Trust Agreement regarding
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termination of the Trust Agreement, the Majority Secured Parties and each Credit
Party (to the extent such Credit Party is a party to such Operative Agreement).
Notwithstanding the foregoing, no such termination, amendment,
supplement, waiver or modification shall, without the consent of the Agent and,
to the extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security Document,
subordinate any obligation owed to any Lender or Holder, reduce any Lender
Facility Fees or any Holder Facility Fees payable under the Participation
Agreement, extend the scheduled date of payment of any Lender Facility Fees or
any Holder Facility Fees or increase the amount or extend the expiration date of
any Lender's Commitment or the Holder Commitment of any Holder, or (ii)
terminate, amend, supplement, waive or modify any provision of this Section 12.5
or reduce the percentages specified in the definitions of Majority Lenders,
Majority Holders or Majority Secured Parties, or consent to the assignment or
transfer by the Owner Trustee of any of its rights and obligations under any
Credit Document or release a material portion of the Collateral (except in
accordance with Section 8.8) or release any Credit Party from its obligations
under any Operative Agreement or otherwise alter any payment obligations of any
Credit Party to the Lessor or any Financing Party under the Operative
Agreements, or (iii) terminate, amend, supplement, waive or modify any provision
of Section 7 of the Credit Agreement, or (iv) permit Advances for Work in excess
of the Construction Budget, or (v) eliminate the automatic option under Section
5.3(b) of the Agency Agreement requiring that the Construction Agent pay certain
liquidated damages in exchange for the conveyance of a Property to the
Construction Agent. Any such termination, amendment, supplement, waiver or
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to this Agreement. In the case of any
waiver, each party to this Agreement shall be restored to its former position
and rights under the Operative Agreements, 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.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall continue,
the Defaulting Lender shall (unless the Lessee and the Majority Lenders,
determined as if the Defaulting Lender were not a "Lender", shall otherwise
consent in writing) be deemed for all purposes relating to terminations,
amendments, supplements, waivers or modifications under the Operative Agreements
to have no Loans, shall not be treated as a "Lender" when performing the
computation of Majority Lenders or Majority Secured Parties, and shall have no
rights under this Section 12.5; provided that any action taken pursuant to the
second paragraph of this Section 12.5 shall not be effective as against the
Defaulting Lender.
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If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority Secured
Parties, and shall have no rights under this Section 12.5; provided that any
action taken pursuant to the second paragraph of this Section 12.5 shall not be
effective as against the Defaulting Holder.
12.6. HEADINGS, ETC.
The Table of Contents and headings of the various Articles and Sections
of this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.7. PARTIES IN INTEREST.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; VENUE; ARBITRATION.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
Any legal action or proceeding with respect to this Agreement or any
other Operative Agreement may be brought in the courts of the State of
North Carolina in Mecklenburg County or of the United States for the
Western District of North Carolina and, by execution and delivery of
this Agreement, each of the parties to this Agreement hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such
courts. Each of the parties to this Agreement further irrevocably
consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at the
address set out for notices pursuant to Section 12.3, such service to
become effective three (3) days after such mailing. Nothing herein
shall affect the right of any party to serve process in any other
manner permitted by Law or to commence legal proceedings or to
otherwise proceed against any party in any other jurisdiction.
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(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW,
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
(c) Each of the parties to this Agreement hereby irrevocably
waives any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings arising out of
or in connection with this Agreement or any other Operative Agreement
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(d) Notwithstanding the provisions of Section 12.8(a) or of
any other Operative Agreement to the contrary, upon demand of any party
to this Agreement and/or any other Operative Agreement, whether made
before or within three (3) months after institution of any judicial
proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement and/or any other Operative Agreement
between or among parties to this Agreement and/or any other Operative
Agreement ("Disputes") shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does
not waive the right of that party to demand arbitration hereunder.
Disputes may include without limitation tort claims, counterclaims,
disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from agreements executed in
the future, or claims arising out of or connected with the transaction
reflected by this Agreement and/or any other Operative Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title 9
of the United States Code. All arbitration hearings shall be conducted
in Charlotte, North Carolina. A hearing shall begin within ninety (90)
days of demand for arbitration and all hearings shall be concluded
within one hundred twenty (120) days of demand for arbitration. These
time limitations may not be extended unless a party shows cause for
extension and then no more than a total extension of sixty (60) days.
The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys selected from the Commercial
Financial Disputes Arbitration Panel of the AAA. The single arbitrator
selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted or if such person is not available
to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements.
Notwithstanding the immediately preceding binding arbitration
provisions, the parties to this Agreement and/or any other Operative
Agreement agree to preserve,
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without diminution, certain remedies that the Agent on behalf of the
Lenders and the Holders may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration
action is brought. The Agent on behalf of the Lenders and the Holders
shall have the right to proceed in any court of proper jurisdiction or
by self-help to exercise or prosecute the following remedies, as
applicable (i) all rights to foreclose against any real or personal
property or other security by exercising a power of sale granted under
any Operative Agreement or under applicable Law or by judicial
foreclosure and sale, including without limitation a proceeding to
confirm the sale; (ii) all rights of self-help including without
limitation peaceful occupation of real property and collection of
rents, set-off and peaceful possession of personal property; (iii)
obtaining provisional or ancillary remedies including without
limitation injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of
judgment. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party
in a Dispute.
The parties to this Agreement and/or any other Operative
Agreement agree that they shall not have a remedy of special, punitive
or exemplary damages against any other party in any Dispute and hereby
waive any right or claim to special, punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
By execution and delivery of this Agreement and/or any other
Operative Agreement, each of the parties hereto and/or thereto accepts,
for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any
arbitration proceedings conducted under the Arbitration Rules in
Charlotte, North Carolina and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement
and/or any other Operative Agreement from which no appeal has been
taken or is available.
12.9. 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 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.
12.10. LIABILITY LIMITED.
(a) The Lenders, the Agent, the Credit Parties, the Owner
Trustee and the Holders each acknowledge and agree that the Owner
Trustee is (except as otherwise expressly provided herein or therein)
entering into this Agreement and the other Operative Agreements to
which it is a party (other than the Trust Agreement and to the
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extent otherwise provided in Section 6.2 of this Agreement), solely in
its capacity as trustee under the Trust Agreement and not in its
individual capacity and that the Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual
capacity for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of the Owner
Trustee, except for its own gross negligence or willful misconduct and
as otherwise expressly provided herein or in the other Operative
Agreements.
(b) Anything to the contrary contained in this Agreement, the
Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any
respect for any liability or obligation arising hereunder or in any
other Operative Agreement including without limitation the payment of
the principal of, or interest on, the Notes, or for monetary damages
for the breach of performance of any of the covenants contained in the
Credit Agreement, the Notes, this Agreement, the Security Agreement or
any of the other Operative Agreements. The Lenders, the Holders and the
Agent agree that, in the event any remedies under any Operative
Agreement are pursued, neither the Lenders, the Holders nor the Agent
shall have any recourse against any Exculpated Person, for any
deficiency, loss or Claim for monetary damages or otherwise resulting
therefrom and recourse shall be had solely and exclusively against the
Trust Estate (excluding Excepted Payments) and the Credit Parties (with
respect to the Credit Parties' obligations under the Operative
Agreements); but nothing contained herein shall be taken to prevent
recourse against or the enforcement of remedies against the Trust
Estate (excluding Excepted Payments) in respect of any and all
liabilities, obligations and undertakings contained herein and/or in
any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in any Operative Agreement shall: (i) constitute a
waiver, release or discharge of any indebtedness or obligation
evidenced by the Notes and/or the Certificates arising under any
Operative Agreement or secured by any Operative Agreement, but the same
shall continue until paid or discharged; (ii) relieve any Exculpated
Person from liability and responsibility for (but only to the extent of
the damages arising by reason of): active waste knowingly committed by
any Exculpated Person with respect to any Property, any fraud, gross
negligence or willful misconduct on the part of any Exculpated Person;
(iii) relieve any Exculpated Person from liability and responsibility
for (but only to the extent of the moneys misappropriated, misapplied
or not turned over) (A) except for Excepted Payments, misappropriation
or misapplication by the Lessor (i.e., application in a manner contrary
to any of the Operative Agreements) of any insurance proceeds or
condemnation award paid or delivered to the Lessor by any Person other
than the Agent, (B) except for Excepted Payments, any deposits or any
escrows or amounts owed by the Construction Agent under the Agency
Agreement held by the Lessor or (C) except for Excepted Payments, any
rent or other income received by the Lessor from any Credit Party that
is not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect
to the Rents and rights and powers of the Agent under the Operative
Agreements or to obtain a judgment against the Lessee's interest in the
Properties or the Agent's rights and powers to obtain a judgment
against the Lessor or any Credit Party (provided, that no deficiency
judgment or other
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money judgment shall be enforced against any Exculpated Person except
to the extent of the Lessor's interest in the Trust Estate (excluding
Excepted Payments) or to the extent the Lessor may be liable as
otherwise contemplated in clauses (ii) and (iii) of this Section
12.10(b)).
12.11. RIGHTS OF THE CREDIT PARTIES.
If at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents and the other Operative Agreements and
(ii) of the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and the guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee (or its designee) all of its right, title and interest free and clear
of the Lien of the Lease, the Lien of the Security Documents and all Lessor
Liens in and to any Properties then subject to the Lease and any amounts or
proceeds referred to in the foregoing clause (b) shall be paid over to the
Lessee.
12.12. FURTHER ASSURANCES.
The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement.
12.13. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error.
12.14. CONFIDENTIALITY.
Each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to any Credit Party or any of
its Subsidiaries which is provided to it by any Credit Party or any of its
Subsidiaries and which an officer of any Credit
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Party or any of its Subsidiaries has requested in writing be kept confidential,
and shall not intentionally disclose such information to any Person except:
(a) to the extent such information is public when received by
such Person or becomes public thereafter due to the act or omission of
any party other than such Person;
(b) to the extent such information is independently obtained
from a source other than any Credit Party or any of its Subsidiaries
and such information from such source is not, to such Person's
knowledge, subject to an obligation of confidentiality or, if such
information is subject to an obligation of confidentiality, that
disclosure of such information is permitted;
(c) to counsel, auditors or accountants retained by any such
Person or any Affiliates of any such Person (if such Affiliates are
permitted to receive such information pursuant to clause (f) or (g)
below), provided they agree to keep such information confidential as if
such Person or Affiliate were party to this Agreement and to financial
institution regulators, including examiners of any Financing Party or
any Affiliate thereof in the course of examinations of such Persons;
(d) in connection with any litigation or the enforcement or
preservation of the rights of any Financing Party under the Operative
Agreements;
(e) to the extent required by any applicable statute, rule or
regulation or court order (including without limitation, by way of
subpoena) or pursuant to the request of any regulatory or Governmental
Authority having jurisdiction over any such Person; provided, however,
that such Person shall endeavor (if not otherwise prohibited by Law) to
notify the Lessee prior to any disclosure made pursuant to this clause
(e), except that no such Person shall be subject to any liability
whatsoever for any failure to so notify the Lessee;
(f) any Financing Party may disclose such information to
another Financing Party or to any Affiliate of a Financing Party that
is a direct or indirect owner of any Financing Party;
(g) any Financing Party may disclose such information to an
Affiliate of any Financing Party to the extent required in connection
with the transactions contemplated hereby or to the extent such
Affiliate is involved in, or provides advice or assistance to such
Person with respect to, such transactions (provided, in each case that
such Affiliate has agreed in writing to maintain confidentiality as if
it were such Financing Party (as the case may be)); or
(h) to the extent disclosure to any other financial
institution or other Person is appropriate in connection with any
proposed or actual (i) assignment or grant of a participation by any of
the Lenders of interests in the Credit Agreement or any Note to such
other financial institution (who will in turn be required by the Agent
to agree in
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writing to maintain confidentiality as if it were a Lender originally
party to this Agreement) or (ii) assignment by any Holder of interests
in the Trust Agreement to another Person (who will in turn be required
by the transferring Holder to agree in writing to maintain
confidentiality as if it were a Holder originally party to this
Agreement).
Subject to the terms of Sections 12.14(a), (b), (d) and (e) under the
terms of any one or more of which circumstances disclosure shall be permitted,
each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to the financing structure
described in the unrecorded Operative Agreements.
12.15. FINANCIAL REPORTING/TAX CHARACTERIZATION.
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
12.16. SET-OFF.
In addition to any rights now or hereafter granted under applicable Law
and not by way of limitation of any such rights, upon and after the occurrence
of any Event of Default and during the continuance thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the Operative
Agreements are hereby authorized by the Credit Parties at any time or from time
to time, without notice to the Credit Parties or to any other Person, any such
notice being hereby expressly waived, to set-off and to appropriate and to apply
any and all deposits (general or special, time or demand, including without
limitation indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
the Holders, their respective Affiliates or any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the Operative
Agreements to or for the credit or the account of any Credit Party against and
on account of the obligations of any Credit Party under the Operative Agreements
irrespective of whether or not (a) the Lenders or the Holders shall have made
any demand under any Operative Agreement or (b) the Agent shall have declared
any or all of the obligations of any Credit Party under the Operative Agreements
to be due and payable and although such obligations shall be contingent or
unmatured. NOTWITHSTANDING THE FOREGOING, NEITHER THE AGENT NOR ANY OTHER
FINANCING PARTY SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SETOFF,
BANKER'S LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY
CREDIT PARTY HELD BY THE AGENT OR ANY OTHER FINANCING PARTY, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE MAJORITY SECURED PARTIES, AND ANY FINANCING PARTY
VIOLATING THIS PROVISION SHALL INDEMNIFY THE AGENT AND THE OTHER FINANCING
PARTIES FROM ANY AND ALL COSTS, EXPENSES, LIABILITIES AND DAMAGES RESULTING
THEREFROM. The contractual restriction on the exercise of setoff rights provided
in the
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foregoing sentence is solely for the benefit of the Agent and the
Financing Parties and may not be enforced by any Credit Party.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
PROVINCE HEALTHCARE COMPANY, as the
Construction Agent and as the Lessee
By: /s/ CHRISTOPHER T. HANNON
---------------------------------------
Name: Christopher T. Hannon
-------------------------------------
Title: Vice President - Finance
------------------------------------
BLYTHE-PROVINCE, INC.,
a Tennessee corporation, as a Guarantor
BRIM EQUIPMENT SERVICES, INC.,
an Oregon corporation, as a Guarantor
BRIM FIFTH AVENUE, INC.,
an Oregon corporation, as a Guarantor
BRIM HEALTHCARE, INC.,
an Oregon corporation, as a Guarantor
BRIM HOSPITALS, INC.,
an Oregon corporation, as a Guarantor
BRIM OUTPATIENT SERVICES, INC.
an Oregon corporation, as a Guarantor
BRIM PAVILION, INC.,
an Oregon corporation, as a Guarantor
BRIM SERVICES GROUP, INC.,
an Oregon corporation, as a Guarantor
CARE HEALTH COMPANY, INC.,
a Washington corporation, as a Guarantor
MEXIA-PRINCIPAL, INC.,
a Texas corporation, as a Guarantor
PALESTINE-PRINCIPAL G.P., INC.,
a Texas corporation, as a Guarantor
PALESTINE-PRINCIPAL, INC.,
a Tennessee corporation, as a Guarantor
PHC-EUNICE, INC.,
a Louisiana corporation, as a Guarantor
PHC-LAKE HAVASU, INC.,
an Arizona corporation, as a Guarantor
[Signature pages continued]
<PAGE> 71
PHC OF DELAWARE, INC.,
a Delaware corporation, as a Guarantor
PRINCIPAL HOSPITAL COMPANY OF NEVADA, INC.,
a Nevada corporation, as a Guarantor
PRINCIPAL KNOX COMPANY,
a Delaware corporation, as a Guarantor
PRINCIPAL-NEEDLES, INC.,
a Tennessee corporation, as a Guarantor
By: /s/ CHRISTOPHER T. HANNON
---------------------------------------
Name: Christopher T. Hannon
---------------------------------------
Title: Assistant Treasurer of each of the
foregoing Guarantors
MEXIA PRINCIPAL HEALTHCARE LIMITED
PARTNERSHIP, a Texas limited partnership, as
a Guarantor
By: Mexia-Principal, Inc., a Texas
corporation, its General Partner
By: /s/ CHRISTOPHER T. HANNON
----------------------------------------
Name: Christopher T. Hannon
---------------------------------------
Title: Assistant Treasurer
-------------------------------------
PALESTINE PRINCIPAL HEALTHCARE LIMITED
PARTNERSHIP, a Texas limited partnership, as
a Guarantor
By: Palestine-Principal G.P., Inc., a
Texas corporation, its General
Partner
By: /s/ CHRISTOPHER T. HANNON
----------------------------------------
Name: Christopher T. Hannon
---------------------------------------
Title: Assistant Treasurer
-------------------------------------
[Signature pages continued]
<PAGE> 72
INTEGRATED HEALTH MANAGEMENT, LLC, a
California limited liability company, as a
Guarantor
By: Brim Healthcare, Inc., as Member
By: /s/ CHRISTOPHER T. HANNON
----------------------------------------
Name: Christopher T. Hannon
---------------------------------------
Title: Assistant Treasurer
-------------------------------------
[Signature pages continued]
<PAGE> 73
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly stated
herein, but solely as the Owner Trustee
under the PHC Real Estate Trust 1998-1, as
the Owner Trustee and as the Lessor
By: /s/ C. SCOTT NIELSON
----------------------------------------
Name: C. Scott Nielson
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 74
FIRST UNION NATIONAL BANK, as a Holder, as a
Lender and as the Agent
By: /s/ JOSEPH H. TOWELL
----------------------------------------
Name: Joseph H. Towell
---------------------------------------
Title: Senior Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 75
NATIONSBANK OF TENNESSEE, N.A., as a Holder
and as a Lender
By: /s/ ELIZABETH L. KNOX
----------------------------------------
Name: Elizabeth L. Knox
---------------------------------------
Title: Senior Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 76
KEY CORPORATE CAPITAL, INC., as a Lender
By: /s/ CHARLIE SHOOP
----------------------------------------
Name: Charlie Shoop
---------------------------------------
Title: AVP
-------------------------------------
[Signature pages continued]
<PAGE> 77
CORESTATES BANK, N.A., as a Lender
By: /s/ ELIZABETH D. MORRIS
----------------------------------------
Name: Elizabeth D. Morris
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 78
BANQUE PARIBAS, as a Holder and as a Lender
By: /s/ ROGER MAY
----------------------------------------
Name: Roger May
---------------------------------------
Title: AVP
-------------------------------------
By: /s/ LARRY ROBINSON
----------------------------------------
Name: Larry Robinson
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 79
MELLON BANK, N.A., as a Lender
By: /s/ MARSHA WICKER
----------------------------------------
Name: Marsha Wicker
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 80
NATIONAL CITY BANK OF KENTUCKY, as a Lender
By: /s/ RODERIC M. BROWN
----------------------------------------
Name: Roderic M. Brown
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 81
AMSOUTH BANK, as a Lender
By: /s/ CATHY M. WIND
----------------------------------------
Name: Cathy M. Wind
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 82
FIRST AMERICAN NATIONAL BANK, as a Lender
By: /s/ SANDY HAMRICK
----------------------------------------
Name: Sandy Hamrick
---------------------------------------
Title: Senior Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 83
FLEET NATIONAL BANK, as a Lender
By: /s/ MARYANN S. SMITH
----------------------------------------
Name: MaryAnn S. Smith
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 84
LEHMAN COMMERCIAL PAPER INC., as a Lender
By: /s/ MICHELE SWANSON
----------------------------------------
Name: Michele Swanson
---------------------------------------
Title: Authorized Signatory
-------------------------------------
[Signature pages continued]
<PAGE> 85
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By: /s/ JOHN OBERLE
----------------------------------------
Name: John Oberle
---------------------------------------
Title: Vice President
-------------------------------------
[Signature pages continued]
<PAGE> 86
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: /s/ ALBERT W. KELLEY
----------------------------------------
Name: Albert W. Kelley
---------------------------------------
Title: Vice President
-------------------------------------
<PAGE> 87
EXHIBIT A
REQUISITION FORM
(Pursuant to Sections 4.2, 5.2, 5.3 and 5.4 of the Participation Agreement)
Province Healthcare Company, a Delaware corporation (the "Company")
hereby certifies as true and correct and delivers the following Requisition to
First Union National Bank, as the agent for the Lenders (hereinafter defined)
and respecting the Security Documents, as the agent for the Lenders and the
Holders (hereinafter defined), to the extent of their interests (the "Agent"):
Reference is made herein to that certain Participation Agreement dated
as of March 30, 1998 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement") among the
Company, in its capacity as the Lessee and as the Construction Agent, First
Security Bank, National Association, as the Owner Trustee, the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders"), and the
Agent. Capitalized terms used herein but not otherwise defined herein shall have
the meanings set forth therefor in the Participation Agreement.
Check one:
____ INITIAL CLOSING DATE: _________________
(three (3) Business Days prior notice required for Advance)
____ PROPERTY CLOSING DATE:_________________
(three (3) Business Days prior notice required for Advance)
____ CONSTRUCTION ADVANCE DATE:_____________
(three (3) Business Days prior notice required for Advance)
1. Transaction Expenses and other fees, expenses and disbursements under
Sections 7.1(a) or 7.1(b) of the Participation Agreement and any and
all other amounts contemplated to be financed under the Participation
Agreement including without limitation any Work, broker's fees, taxes,
recording fees and the like (with supporting invoices or closing
statement attached):
A-1
<PAGE> 88
<TABLE>
<CAPTION>
Party to Whom Amount Owed
Amount is Owed (in U.S. Dollars)
<S> <C>
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
2. Description of Land (which shall be a legal description of the Land in
connection with an Advance to pay Property Acquisition Costs): See
attached Schedule 1
3. Description of Improvements: See attached Schedule 2
4. Description of Equipment: See attached Schedule 3
5. Description of Work: See attached Schedule 4
6. Aggregate Loans and Holder Advances requested since the Initial Closing
Date with respect to each Property for which Advances are requested
under this Requisition (listed on a Property by Property basis),
including without limitation all amounts requested under this
Requisition: [IDENTIFY ON A PROPERTY BY PROPERTY BASIS]
$______________ [Property]
In connection with this Requisition, the Company hereby requests that
the Lenders make Loans to the Lessor in the amount of $______________ and that
the Holders make Holder Advances to the Lessor in the amount of
$________________. The Company hereby certifies (i) that the foregoing amounts
requested do not exceed the total aggregate of the Available Commitments plus
the Available Holder Commitments and (ii) each of the provisions of the
Participation Agreement applicable to the Loans and Holder Advances requested
hereunder have been complied with as of the date of this Requisition.
The Company has caused this Requisition to the executed by its duly
authorized officer as of this _____ day of __________, ______.
PROVINCE HEALTHCARE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
------------------------------------
A-2
<PAGE> 89
Schedule 1
Description of Land
(Legal Description and Street Address)
A-3
<PAGE> 90
Schedule 2
Description of Improvements
A-4
<PAGE> 91
Schedule 3
Description of Equipment
<TABLE>
<CAPTION>
======================================= ====================== ======================== ==========================
General Description Make Model Serial Number
<S> <C> <C> <C>
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
- --------------------------------------- ---------------------- ------------------------ --------------------------
</TABLE>
A-5
<PAGE> 92
Schedule 4
Work
Work Performed for which the Advance is requested:
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
A-6
<PAGE> 93
EXHIBIT B
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)
____________, ______
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Province Healthcare
Company
Dear Sirs:
We have acted as special counsel to Province Healthcare Company, a Delaware
corporation (the "Lessee"), and the various parties to the Participation
Agreement (hereinafter defined) from time to time, as guarantors (individually,
a "Guarantor" and collectively, the "Guarantors"; individually, Lessee and each
Guarantor may be referred to herein as a "Credit Party" or collectively, as the
"Credit Parties") in connection with certain transactions contemplated by the
Participation Agreement dated as of March 30, 1998 (the "Participation
Agreement"), among the Lessee, First Security Bank, National Association, as the
Owner Trustee (the "Owner Trustee"), First Union National Bank, as a holder
(together with the other holders, the "Holders"), First Union National Bank, as
a lender (together with the other lenders, the "Lenders") and First Union
National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(j) of
the Participation Agreement. All capitalized terms used herein, and not
otherwise defined herein, shall have the meanings assigned thereto in Appendix A
to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of [IDENTIFY THE APPLICABLE OPERATIVE AGREEMENTS,
INCLUDING EACH MORTGAGE INSTRUMENT, RELATED UCC FIXTURE FILINGS, ADDITIONAL UCCS
(HEREINAFTER DEFINED), DEEDS AND MEMORANDA OF LEASE] and such other corporate
documents and records of each Credit Party, certificates of public officials and
representatives of each Credit Party as to certain factual matters, and such
other instruments and documents which we have deemed necessary or advisable to
examine for the purpose of this opinion. With respect to such examination, we
have assumed (i) the statements of fact made in all such certificates, documents
and instruments are true, accurate and complete; (ii) except as to each Credit
Party, the due authorization, execution and delivery of the Operative Agreements
by the parties thereto; (iii) the genuineness of all signatures (except as to
each Credit Party), the authenticity and completeness of all documents,
certificates, instruments, records and corporate records submitted to us as
originals and the conformity to the original instruments of all documents
submitted to us as copies, and the
B-1
<PAGE> 94
authenticity and completeness of the originals of such copies; (iv) except as to
each Credit Party, that all parties have all requisite corporate power and
authority to execute, deliver and perform the Operative Agreements; and (v)
except as to the Lessee, the enforceability of the Operative Agreements against
all parties thereto.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) Each Mortgage Instrument and each Memorandum of Lease are
enforceable in accordance with their respective terms, except as limited by laws
generally affecting the enforcement of creditors' rights, which laws will not
materially prevent the realization of the benefits intended by such documents.
(b) Each form of Mortgage Instrument and UCC fixture filing relating
thereto, attached hereto as Schedules 1 and 2, respectively, is in proper form
for filing and recording with the offices of [IDENTIFY THE RECORDING OFFICES OF
THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED]. Upon
filing of each Mortgage Instrument and UCC fixture filing in [IDENTIFY THE
RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE
LOCATED], the Agent will have a valid, perfected lien and security interest in
that portion of the Collateral described in such Mortgage Instrument or UCC
fixture filing to the extent such Collateral is comprised of real property
and/or fixtures.
(c) The forms of UCC financing statements relating to the Security
Documents, attached hereto as Schedule 3 (the "Additional UCCs"), are in proper
form for filing and recording with the offices of [IDENTIFY (I) THE RECORDING
OFFICES OF THE RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED
AND (II) THE SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED]. Upon
filing of the Additional UCCs in [IDENTIFY (I) THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS WHERE THE PROPERTIES ARE TO BE LOCATED AND (II) THE
SECRETARY OF STATE WHERE THE PROPERTIES ARE TO BE LOCATED], the Agent will have
a valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by filing UCC-1 financing statements under Article 9 of
the UCC.
(d) Each form of Deed and Memorandum of Lease is in appropriate form
for filing and recording with the [IDENTIFY THE RECORDING OFFICES OF THE
RESPECTIVE COUNTY CLERKS FOR THE COUNTIES WHERE THE PROPERTIES ARE TO BE
LOCATED].
(e) Each Memorandum of Lease, when filed and recorded with the
[IDENTIFY THE RECORDING OFFICES OF THE RESPECTIVE COUNTY CLERKS FOR THE COUNTIES
WHERE THE PROPERTIES ARE TO BE LOCATED], will have been filed and recorded in
all public offices in the State of __________ in which filing or recording is
necessary to provide constructive notice of the Lease to third Persons and to
establish of record the interest of the Lessor thereunder as to the Properties
described in each such Memorandum of Lease.
B-2
<PAGE> 95
(f) Title to the Properties located in the State of ___________ may be
held in the name of the Owner Trustee as follows: First Security Bank, National
Association, not individually, but solely as the Owner Trustee under the PHC
Real Estate Trust 1998-1.
(g) The execution and delivery by First Security Bank, National
Association, individually or as the Owner Trustee, as the case may be, of the
Operative Agreements to which it is a party and compliance by First Security
Bank, National Association, individually or as the Owner Trustee, with all of
the provisions thereof do not and will not contravene any law, rule or
regulation of [IDENTIFY THE STATE].
(h) By reason of their participation in the transaction contemplated
under the Operative Agreements, none of the Agent, the Lenders, the Holders or
the Owner Trustee has to (a) qualify as a foreign corporation in [IDENTIFY THE
STATE], (b) file any application or any designation for service of process in
[IDENTIFY THE STATE] or (c) pay any franchise, income, sales, excise, stamp or
other taxes of any kind to [IDENTIFY THE STATE].
(i) The provisions in the Operative Agreements concerning Rent,
interest, fees, prepayment premiums and other similar charges do not violate the
usury laws or other similar laws regulating the use or forbearance of money of
[IDENTIFY THE STATE].
(j) If the transactions contemplated by the Operative Agreements are
characterized as a lease transaction by a court of competent jurisdiction, the
Lease and the applicable Lease Supplement shall demise to the Lessee a valid
leasehold interest in the Properties described in such Lease Supplement.
(k) If the transactions contemplated by the Operative Agreements are
characterized as a loan transaction by a court of competent jurisdiction, the
combination of the Mortgage Instruments, the Deeds, the Lease and the applicable
Lease Supplements (and the other Operative Agreements incorporated therein by
reference) are sufficient to create a valid, perfected lien or security interest
in the Properties therein described, enforceable as a mortgage in [IDENTIFY THE
STATE].
(l) Except for the payment of a privilege tax in the amount of $______
pursuant to Tennessee Code Annotated ss.67-4-409 (b), no transfer, mortgage,
intangible, documentary stamp or similar taxes are presently payable to the
State of Tennessee or any political subdivision thereof on account of (i) the
execution and delivery of the Operative Agreements or (ii) the creation of the
indebtedness and the obligations evidenced thereby under the Operative
Agreements.
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the State of ___________ and the federal laws of
the United States of America. Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.
B-3
<PAGE> 96
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantors, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions expressed herein are as
of the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
B-4
<PAGE> 97
Distribution List
First Union National Bank, as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Province Healthcare Company, as the Construction Agent and the Lessee
The various parties to the Participation Agreement from time to time, as the
Guarantors
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the PHC Real Estate Trust 1998-1
B-5
<PAGE> 98
Schedule 1
Form of Mortgage Instrument
B-6
<PAGE> 99
Schedule 2
Forms of UCC Fixture Filings
B-7
<PAGE> 100
Schedule 3
Forms of UCC Financing Statements
B-8
<PAGE> 101
EXHIBIT C
[Intentionally Omitted]
C-1
<PAGE> 102
EXHIBIT D
PROVINCE HEALTHCARE COMPANY
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)
Province Healthcare Company, a Delaware corporation (the "Company"), DOES
HEREBY CERTIFY as follows:
1. Each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true
and correct on and as of the date hereof.
2. No Default or Event of Default has occurred and is continuing under
any Operative Agreement.
3. Each Operative Agreement to which any Credit Party is a party is in
full force and effect with respect to it.
4. Each Credit Party has duly performed and complied with all covenants,
agreements and conditions contained in the Participation Agreement
(hereinafter defined) or in any Operative Agreement required to be
performed or complied with by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of March 30, 1998 among the Company, as the Lessee and as the
Construction Agent, the various parties thereto from time to time, as guarantors
(the "Guarantors"), First Security Bank, National Association, as the Owner
Trustee, the various banks and other lending institutions which are parties
thereto from time to time, as holders (the "Holders"), the various banks and
other lending institutions which are parties thereto from time to time, as
lenders (the "Lenders"), and First Union National Bank, as the agent for the
Lenders and respecting the Security Documents, as the agent for the Lenders and
the Holders, to the extent of their interests (the "Agent").
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of __________, 1998.
PROVINCE HEALTHCARE COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
D-1
<PAGE> 103
EXHIBIT E
[NAME OF CREDIT PARTY]
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(bb) of the Participation Agreement)
[NAME OF CREDIT PARTY], a Delaware corporation (the "Company") DOES HEREBY
CERTIFY as follows:
1. Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted
by the Board of Directors of the Company on __________. Such
resolutions have not been amended, modified or rescinded since their
date of adoption and remain in full force and effect as of the date
hereof.
2. Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of
the Secretary of State of __________. Such Articles of Incorporation
have not been amended, modified or rescinded since their date of
adoption and remain in full force and effect as of the date hereof.
3. Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company. Such Bylaws have not been amended, modified
or rescinded since their date of adoption and remain in full force and
effect as of the date hereof.
4. The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their
true and correct signatures.
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
------------------- ----------------------- -------------------------
------------------- ----------------------- -------------------------
</TABLE>
E-1
<PAGE> 104
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this _____ day of ___________, 1998.
[NAME OF CREDIT PARTY]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
E-2
<PAGE> 105
Schedule 1
BOARD RESOLUTIONS
E-3
<PAGE> 106
Schedule 2
ARTICLES OF INCORPORATION
E-4
<PAGE> 107
Schedule 3
BYLAWS
E-5
<PAGE> 108
EXHIBIT F
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(dd) of the Participation Agreement)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (except with respect to paragraph 1 below, to the
extent any such representations and warranties are made in its individual
capacity) but solely as the owner trustee under the PHC Real Estate Trust 1998-1
(the "Owner Trustee"), DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Owner
Trustee contained in the Operative Agreements to which it is a
party is true and correct on and as of the date hereof.
2. Each Operative Agreement to which the Owner Trustee is a party
is in full force and effect with respect to it.
3. The Owner Trustee has duly performed and complied with all
covenants, agreements and conditions contained in the
Participation Agreement (hereinafter defined) or in any
Operative Agreement required to be performed or complied with
by it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of March 30, 1998 among Province Healthcare Company as the
Lessee and as the Construction Agent, the various parties thereto from time to
time as guarantors (the "Guarantors"), the Owner Trustee, the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as Lenders (the "Lenders"), and First
Union National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent").
F-1
<PAGE> 109
IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this _____ day of __________, 1998.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner
Trustee under the PHC Real Estate Trust
1998-1
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
F-2
<PAGE> 110
EXHIBIT G
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(ee) of the Participation Agreement)
CERTIFICATE OF ASSISTANT SECRETARY
I, ______________________, duly elected and qualified Assistant
Secretary of the Board of Directors of First Security Bank, National Association
(the "Association"), hereby certify as follows:
1. The Association is a National Banking Association duly organized,
validly existing and in good standing under the laws of the United States. With
respect thereto the following is noted:
A. Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C.
1, et seq., the Comptroller of the Currency charters and exercises
regulatory and supervisory authority over all National Banking
Associations;
B. On December 9, 1881, the First National Bank of Ogden, Utah was
chartered as a National Banking Association under the laws of the
United States and under Charter No. 2597;
C. On October 2, 1922, in connection with a consolidation of The First
National Bank of Ogden, Ogden, Utah, and The Utah National Bank of
Ogden, Ogden, Utah, the title was changed to "The First & Utah
National Bank of Ogden"; on January 18, 1923, The First & Utah
National Bank of Ogden changed its title to "First Utah National
Bank of Ogden"; on January 19, 1926, the title was changed to "First
National Bank of Ogden"; on February 24, 1934, the title was changed
to "First Security Bank of Utah, National Association"; on June 21,
1996, the title was changed to "First Security Bank, National
Association"; and
D. First Security Bank, National Association, Ogden, Utah, continues to
hold a valid certificate to do business as a National Banking
Association.
2. The Association's Articles of Association, as amended, are in full
force and effect, and a true, correct and complete copy is attached hereto as
EXHIBIT A and incorporated herein by reference. Said Articles were last amended
October 20, 1975, as required by law on notice at a duly called special meeting
of the shareholders of the Association.
G-1
<PAGE> 111
3. The Association's By-Laws, as amended, are in full force and effect;
and a true, correct and complete copy is attached hereto as EXHIBIT B and
incorporated herein by reference. Said By-Laws, still in full force and effect,
were adopted September 17, 1942, by resolution, after proper notice of
consideration and adoption of By-Laws was given to each and every shareholder,
at a regularly called meeting of the Board of Directors with a quorum present.
4. Pursuant to the authority vested in it by an Act of Congress
approved December 23, 1913 and known as the Federal Reserve Act, as amended, the
Federal Reserve Board (now the Board of Governors of the Federal Reserve System)
has granted to the Association now known as "First Security Bank, National
Association" of Ogden, Utah, the right to act, when not in contravention of
State or local law, as trustee, executor, administrator, registrar of stocks and
bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State banks, trust
companies or other corporations which come into competition with National Banks
are permitted to act under the laws of the State of Utah; and under the
provisions of applicable law, the authority so granted remains in full force and
effect.
5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a and
12 U.S.C. 481, as amended) the Comptroller of the Currency has issued Regulation
9, as amended, dealing, in part, with the Fiduciary Powers of National Banks,
said regulation providing in subparagraph 9.7 (a) (1-2):
(1) The board of directors is responsible for the proper exercise of
fiduciary powers by the Bank. All matters pertinent thereto,
including the determination of policies, the investment and
disposition of property held in fiduciary capacity, and the
direction and review of the actions of all officers, employees, and
committees utilized by the Bank in the exercise of its fiduciary
powers, are the responsibility of the board. In discharging this
responsibility, the board of directors may assign, by action duly
entered in the minutes, the administration of such of the Bank's
fiduciary powers as it may consider proper to assign to such
director(s), officer(s), employee(s) or committee(s) as it may
designate.
(2) No fiduciary account shall be accepted without the prior approval
of the board, or of the director(s), officer(s), or committee(s) to
whom the board may have designated the performance of that
responsibility. . . .
6. A Resolution relating to Exercise of Fiduciary Powers was adopted by
the Board of Directors at a meeting held July 26, 1994 at which time there was a
quorum present; said resolution is still in full force and effect and has not
been rescinded. Said resolution is attached hereto as EXHIBIT C and incorporated
herein by reference.
G-2
<PAGE> 112
7. A Resolution relating to the Designation of Officers and Employees
to Exercise Fiduciary Powers was adopted by the Trust Policy Committee at a
meeting held February 7, 1996 at which time a quorum was present; said
resolution is still in full force and effect and has not been rescinded. Said
resolution is attached hereto as EXHIBIT D and is incorporated herein by
reference.
8. Attached hereto as EXHIBIT E and incorporated herein by reference,
is a listing of facsimile signatures of persons authorized (herein "Authorized
Signatory or Signatories") on behalf of the Association and its Trust Group to
act in exercise of its fiduciary powers subject to the resolutions in Paragraphs
6 and 7, above.
9. The principal office of the First Security Bank, National
Association, Trust Group and of its departments, except for the St. George,
Utah, Ogden, Utah, and Provo, Utah, branch offices, is located at 79 South Main
Street, Salt Lake City, Utah 84111 and all records relating to fiduciary
accounts are located at such principal office of the Trust Group or in storage
facilities within Salt Lake County, Utah, except for those of the Ogden, Utah,
St. George, Utah, and Provo, Utah, branch offices, which are located at said
office.
10. Each Authorized Signatory (i) is a duly elected or appointed, duly
qualified officer or employee of the Association; (ii) holds the office or job
title set forth below his or her name on the date hereof; (iii) and the
facsimile signature appearing opposite the name of each such officer or employee
is a true replica of his or her signature.
G-3
<PAGE> 113
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Association this __________ day of _________________, 1998.
(SEAL)
---------------------------
R. James Steenblik
Senior Vice President
Assistant Secretary
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EXHIBIT A
ARTICLES OF ASSOCIATION
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EXHIBIT B
BY-LAWS
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EXHIBIT C
RESOLUTION RELATING TO
EXERCISE OF FIDUCIARY POWERS
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EXHIBIT D
RESOLUTION RELATING TO THE
DESIGNATION OF OFFICERS AND EMPLOYEES
TO EXERCISE FIDUCIARY POWERS
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EXHIBIT E
AUTHORIZED SIGNATORY OR SIGNATORIES
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EXHIBIT H
[The Owner Trustee's Outside Counsel Opinion]
(Pursuant to Section 5.3(ff) of the
Participation Agreement)
___________, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Trust Agreement dated as of March 30, 1998
Dear Sirs:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("FSB")
and in its capacity as trustee (the "Owner Trustee") under the Trust Agreement
dated as of March 30, 1998 (the "Trust Agreement") by and among it and the
various banks and other lending institutions which are parties thereto from time
to time, as holders (the "Holders"), in connection with the execution and
delivery by the Owner Trustee of the Operative Agreements to which it is a
party. Except as otherwise defined herein, the terms used herein shall have the
meanings set forth in Appendix A to the Participation Agreement dated as of
March 30, 1998 (the "Participation Agreement") by and among Province Healthcare
Company (the "Lessee"), the various parties thereto from time to time, as
guarantors (the "Guarantors"), First Security Bank, National Association, as the
Owner Trustee, the Holders, the various banks and other lending institutions
which are parties thereto from time to time, as lenders (the "Lenders") and
First Union National Bank, as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders, to the extent
of their interests (the "Agent").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records and other instruments
as we have deemed necessary or advisable for the purpose of rendering this
opinion.
Based upon the foregoing, we are of the opinion that:
1. FSB is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America and
each of FSB and the Owner Trustee has under the laws of the State of Utah and
federal banking law the power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative Agreement to
which it is a party.
2. The Owner Trustee is the duly appointed trustee under the Trust
Agreement.
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3. The Trust Agreement has been duly authorized, executed and delivered
by one (1) of the officers of FSB and, assuming due authorization, execution and
delivery by the Holders, is a legal, valid and binding obligation of the Owner
Trustee (and to the extent set forth therein, against FSB), enforceable against
the Owner Trustee (and to the extent set forth therein, against FSB) in
accordance with its terms, and the Trust Agreement creates under the laws of the
State of Utah for the Holders the beneficial interest in the Trust Estate it
purports to create and is a valid trust under the laws of the State of Utah.
4. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by FSB, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding obligations of FSB, enforceable against FSB in accordance with their
respective terms.
5. The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
valid and binding obligations of the Owner Trustee, enforceable against the
Owner Trustee in accordance with their respective terms. The Notes and
Certificates have been duly issued, executed and delivered by the Owner Trustee,
pursuant to authorization contained in the Trust Agreement, and the Certificates
are entitled to the benefits and security afforded by the Trust Agreement in
accordance with its terms and the terms of the Trust Agreement.
6. The execution and delivery by each of FSB and the Owner Trustee of
the Trust Agreement and the Operative Agreements to which it is a party, and
compliance by FSB or the Owner Trustee, as the case may be, with all of the
provisions thereof do not and will not contravene any Laws applicable to or
binding on FSB, or as the Owner Trustee, or contravene the provisions of, or
constitute a default under, its charter documents or by-laws or, to our
knowledge after due inquiry, any indenture, mortgage contract or other agreement
or instrument to which FSB or Owner Trustee is a party or by which it or any of
its property may be bound or affected.
7. The execution and delivery of the Operative Agreements by each of
FSB and the Owner Trustee and the performance by each of FSB and the Owner
Trustee of their respective obligations thereunder does not require on or prior
to the date hereof the consent or approval of, the giving of notice to, the
registration or filing with, or the taking of any action in respect of any
Governmental Authority or any court.
8. Assuming that the trust created by the Trust Agreement is treated as
a grantor trust for federal income tax purposes within the contemplation of
Section 671 through 678 of the Internal Revenue Code of 1986, there are no fees,
taxes, or other charges (except taxes imposed on fees payable to the Owner
Trustee) payable to the State of Utah or any political subdivision thereof in
connection with the execution, delivery or performance by the Owner Trustee, the
Agent, the Lenders, the Lessee or the Holders, as the case may be, of the
Operative Agreements or in connection with the acquisition of any Property by
the Owner Trustee or in connection with the making by any Holder of its
investment in the Trust or its acquisition of the beneficial
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interest in the Trust Estate or in connection with the issuance and acquisition
of the Certificates, or the Notes, and neither the Owner Trustee, the Trust
Estate nor the trust created by the Trust Agreement will be subject to any fee,
tax or other governmental charge (except taxes on fees payable to the Owner
Trustee) under the laws of the State of Utah or any political subdivision
thereof on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Estate by reason of the creation or continued
existence of the trust under the terms of the Trust Agreement pursuant to the
laws of the State of Utah or the Owner Trustee's performance of its duties under
the Trust Agreement.
9. There is no fee, tax or other governmental charge under the laws of
the State of Utah or any political subdivision thereof in existence on the date
hereof on, based on or measured by any payments under the Certificates, Notes or
the beneficial interest in the Trust Estate, by reason of the creation of the
trust under the Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement within the
State of Utah.
10. Upon the filing of the financing statement on form UCC-1 in the
form attached hereto as Schedule 1 with the Utah Division of Corporation and
Commercial Code, the Agent's security interest in the Trust Estate, for the
benefit of the Lenders and the Holders, will be perfected, to the extent that
such perfection is governed by Article 9 of the Uniform Commercial Code as in
effect in the State of Utah (the "Utah UCC").
Your attention is directed to the Utah UCC, which provides, in part,
that a filed financing statement which does not state a maturity date or which
states a maturity date of more than five (5) years is effective only for a
period of five (5) years from the date of filing, unless within six (6) months
prior to the expiration of said period a continuation statement is filed in the
same office or offices in which the original statement was filed. The
continuation statement must be signed by the secured party, identify the
original statement by file number and state that the original statement is still
effective. Upon the timely filing of a continuation statement, the effectiveness
of the original financing statement is continued for five (5) years after the
last date to which the original statement was effective. Succeeding continuation
statements may be filed in the same manner to continue the effectiveness of the
original statement.
The foregoing opinions are subject to the following assumptions, exceptions and
qualifications:
A. We are attorneys admitted to practice in the State of Utah and in
rendering the foregoing opinions we have not passed upon, or purported to pass
upon, the laws of any jurisdictions other than the State of Utah and the federal
banking law governing the banking and trust powers of FSB. In addition, without
limiting the foregoing we express no opinion with respect to (i) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, (iii) the
Federal Communications Act of 1934, as amended, or (iv) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the legality, validity,
binding effect and enforceability of the documents involved in these
transactions, which by their terms are governed by the laws of a state other
than Utah, we have
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assumed that the laws of such state (as to which we express no opinion), are in
all material aspects identical to the laws of the State of Utah.
B. The opinions set forth in paragraphs 3, 4, and 5 above are subject
to the qualification that enforceability of the Trust Agreement and the other
Operative Agreements to which FSB and the Owner Trustee are parties, in
accordance with their respective terms, may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, receivership or similar laws affecting
enforcement of creditors' rights generally, and (ii) general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
C. As to the documents involved in these transactions, we have assumed
that each is a legal, valid and binding obligation of each party thereto, other
than FSB or the Owner Trustee, and is enforceable against each such party in
accordance with their respective terms.
D. We have assumed that all signatures, other than those of the Owner
Trustee or FSB, on documents and instruments involved in these transactions are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment or property involved in these transactions.
F. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment or property
involved in these transactions or the priority of any mortgage or security
interest.
G. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. In addition to any other limitation by operation of law upon the
scope, meaning, or purpose of this opinion, the opinions expressed herein speak
only as of the date hereof. We have no obligation to advise the recipients of
this opinion (or any third party) and make no undertaking to amend or supplement
such opinions if facts come to our attention or changes in the current law of
the jurisdictions mentioned herein occur which could affect such opinions the
legal analysis, a legal conclusion or any information confirmation herein.
I. This opinion is for the sole benefit of the Lessee, the Construction
Agent, the Guarantors, the Owner Trustee, the Holders, the Lenders, the Agent
and their respective successors and assigns in matters directly related to the
Participation Agreement or the transaction contemplated thereunder and may not
be relied upon by any other person other than such parties and their respective
successors and assigns without the express written consent of
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the undersigned. The opinions expressed in this letter are limited to the
matter set forth in this letter, and no other opinions should be inferred beyond
the matters expressly stated.
Very truly yours,
RAY, QUINNEY & NEBEKER
M. John Ashton
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Distribution List
First Union National Bank, as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Province Healthcare Company, as the Construction Agent and the Lessee
The various parties to the Participation Agreement from time to time, as the
Guarantors
First Security Bank, National Association, not individually, but solely as the
owner Trustee under the PHC Real Estate Trust 1998-1
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EXHIBIT I
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(gg) of the Participation Agreement)
_____________, 1998
TO THOSE ON THE ATTACHED DISTRIBUTION LIST
Re: Synthetic Lease Financing Provided in favor of Province
Healthcare Company
Dear Sirs:
We have acted as special counsel to Province Healthcare Company, a Delaware
corporation (the "Lessee"), and the various parties to the Participation
Agreement (hereinafter defined) from time to time as guarantors (the
"Guarantors") in connection with certain transactions contemplated by the
Participation Agreement dated as of March 30, 1998 (the "Participation
Agreement"), among the Lessee, the Guarantors, First Security Bank, National
Association (the "Owner Trustee"), First Union National Bank as a holder
(together with the other holders, the "Holders"), First Union National Bank, as
a lender (together with the other lenders, the "Lenders"), and First Union
National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent"). This opinion is delivered pursuant to Section 5.3(gg)
of the Participation Agreement. All capitalized terms used herein, and not
otherwise defined herein, shall have the meanings assigned thereto in Appendix A
to the Participation Agreement.
In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of the Operative Agreements, and such other
corporate documents and records of the Credit Parties, certificates of public
officials and representatives of the Credit Parties as to certain factual
matters, and such other instruments and documents which we have deemed necessary
or advisable to examine for the purpose of this opinion. With respect to such
examination, we have assumed (i) the statements of fact made in all such
certificates, documents and instruments are true, accurate and complete; (ii)
the due authorization, execution and delivery of the Operative Agreements by the
parties thereto other than the Credit Parties; (iii) the genuineness of all
signatures (other than the signatures of persons signing on behalf of the Credit
Parties), the authenticity and completeness of all documents, certificates,
instruments, records and corporate records submitted to us as originals and the
conformity to the original instruments of all documents submitted to us as
copies, and the authenticity and completeness of the originals of such copies;
(iv) that all parties other than the Credit Parties have all requisite corporate
power and authority to execute, deliver and perform the Operative Agreements;
and (v) the enforceability of the Operative Agreements against all parties
thereto other than the Credit Parties and respecting the opinion set forth below
in section (i), First Security Bank, National Association, individually or as
the Owner Trustee, as the case may be. We have further assumed
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that the laws of the States of [STATE OF LAWYER'S ADMISSION] and [GOVERNING LAW
OF PARTICIPATION AGREEMENT] are substantially identical.
Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:
(a) Each Credit Party is a corporation duly incorporated, a limited
partnership duly formed [or a ________ duly formed], validly existing and in
good standing under the laws of the state of its formation and has the power and
authority to conduct its business as presently conducted and to execute, deliver
and perform its obligations under the Operative Agreements to which it is a
party. Each Credit Party is duly qualified to do business in all jurisdictions
in which its failure to so qualify would materially impair its ability to
perform its obligations under the Operative Agreements to which it is a party or
its financial position or its business as now and now proposed to be conducted.
(b) The execution, delivery and performance by each Credit Party of the
Operative Agreements to which it is a party have been duly authorized by all
necessary action on the part of each Credit Party and the Operative Agreements
to which each Credit Party is a party have been duly executed and delivered by
each Credit Party.
(c) The Operative Agreements to which each Credit Party is a party
constitute valid and binding obligations of each Credit Party enforceable
against each Credit Party in accordance with the terms thereof, subject to
bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
(d) The execution and delivery by each Credit Party of the Operative
Agreements to which it is a party and compliance by each Credit Party with all
of the provisions thereof do not and will not (i) contravene the provisions of,
or result in any breach of or constitute any default under, or result in the
creation of any Lien (other than Permitted Liens) upon any of its property
under, its respective Articles of Incorporation, By-Laws or other formation
documents or any indenture, mortgage, chattel mortgage, deed of trust, lease,
conditional sales contract, bank loan or credit agreement or other agreement or
instrument to which any Credit Party is a party or by which it or any of its
property may be bound or affected, or (ii) contravene any Laws or any order of
any Governmental Authority applicable to or binding on any Credit Party.
(e) No Governmental Action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery or
performance by any Credit Party of any of the Operative Agreements to which it
is a party or for the acquisition, ownership, construction and completion of the
Properties, except for those which have been obtained.
(f) Except as set forth on Schedule 1 hereto, there are no actions,
suits or proceedings pending or to our knowledge, threatened against any Credit
Party in any court or before any
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Governmental Authority, that concern the Properties or any Credit Party's
interest therein or that question the validity or enforceability of any
Operative Agreement to which any Credit Party is a party or the overall
transaction described in the Operative Agreements to which any Credit Party is a
party.
(g) Neither the nature of the Properties, nor any relationship between
any Credit Party and any other Person, nor any circumstance in connection with
the execution, delivery and performance of the Operative Agreements to which any
Credit Party is a party is such as to require any approval of stockholders of,
or approval or consent of any trustee or holders of indebtedness of, any Credit
Party, except for such approvals and consents which have been duly obtained and
are in full force and effect.
(h) The Security Documents which have been executed and delivered as of
the date of this opinion create, for the benefit of the Agent, the security
interests in the Collateral described therein which by their terms such Security
Documents purport to create. Upon filing of the UCC-1 financing statements
(attached hereto as Schedule 2) relating to the Security Documents in the
recording offices of (A) the respective county clerk where the principal place
of business of any Credit Party is located and (B) the Secretary of State where
the principal place of business of any Credit Party is located, the Agent will
have a valid, perfected lien and security interest in that portion of the
Collateral which can be perfected by the filing of UCC-1 financing statement
under Article 9 of the UCC in [IDENTIFY THE STATE].
(i) The Operative Agreements to which First Security Bank, National
Association, individually or as to the Owner Trustee, is a party constitute
valid and binding obligations of such party and are enforceable against First
Security Bank, National Association, individually or as the Owner Trustee, as
the case may be, in accordance with the terms thereof, subject to bankruptcy,
insolvency, liquidation, reorganization, fraudulent conveyance, and similar laws
affecting creditors, rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(j) The issuance, sale and delivery of the Notes and the issuance and
delivery of the Certificates under the circumstances contemplated by the
Participation Agreement do not, under existing law, require registration of the
Notes or the Certificates being issued on the date hereof under the Securities
Act of 1933, as amended, or the qualification of the Loan Agreement under the
Trust Indenture Act of 1939, as amended.
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein. This opinion is based on
and is limited to the laws of the States of __________________________________,
and the federal laws of the United States of America. Insofar as the foregoing
opinion relates to matters of law other than the foregoing, no opinion is hereby
given.
This opinion is for the sole benefit of the Lessee, the Construction Agent, the
Guarantors, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns and may not be relied upon by any other person
other than such parties and their respective successors and assigns without the
express written consent of the undersigned. The opinions
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expressed herein are as of the date hereof and we make no undertaking to amend
or supplement such opinions if facts come to our attention or changes in the
current law of the jurisdictions mentioned herein occur which could affect such
opinions.
Very truly yours,
[LESSEE'S OUTSIDE COUNSEL]
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Distribution List
First Union National Bank, as the Agent, a Holder and a Lender
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Province Healthcare Company, as the Construction Agent and the Lessee
The various parties to the Participation Agreement from time to time, as the
Guarantors
First Security Bank, National Association, not individually, but solely as the
Owner Trustee under the PHC Real Estate Trust 1998-1
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Schedule 1
(Litigation)
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Schedule 2
(UCC-1 Financing Statements)
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EXHIBIT J
PROVINCE HEALTHCARE COMPANY
OFFICER'S CERTIFICATE
(Pursuant to Section 5.5 of the Participation Agreement)
PROVINCE HEALTHCARE COMPANY, a Delaware corporation (the "Company") DOES HEREBY
CERTIFY as follows:
1. The address for the subject Property is ______________________________
_____________________.
2. The Completion Date for the construction of Improvements at the
Property occurred on ______________.
3. The aggregate Property Cost for the Property was $___________.
4. Attached hereto as Schedule 1 is the detailed, itemized documentation
supporting the asserted Property Cost figures.
5. All representations and warranties of the Company in each Operative
Agreement and in each certificate delivered pursuant thereto (including
without limitation the Incorporated Representations and Warranties) are
true and correct as of the Completion Date.
Capitalized terms used in this Officer's Certificate and not otherwise defined
have the respective meanings ascribed thereto in the Participation Agreement
dated as of March 30, 1998 among the Company, as the Lessee and as the
Construction Agent, the parties thereto from time to time, as guarantors (the
"Guarantors"), First Security Bank, National Association, as the Owner Trustee,
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders"), and First Union National Bank, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Lenders and the Holders,
to the extent of their interests.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this ____ day of ______________, ______.
PROVINCE HEALTHCARE COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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Schedule I
(Itemized Documentation in Support of Asserted Property Cost)
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EXHIBIT K
[Description of Material Litigation]
(Pursuant to Section 6.3(d) of the Participation Agreement)
1. Eastern Plumas Hospital District v. Brim Healthcare, Inc., United
States District Court for the Eastern District of California. Eastern Plumas
Hospital District ("EPHD"), a debtor in bankruptcy, brought an adversary
proceeding against Brim Healthcare, Inc. ("Brim Healthcare") seeking a
declaratory judgment and damages in the amount of $12MM for breach of contract,
breach of fiduciary duty, fraud and negligence. By motion, the case was
withdrawn from the Bankruptcy Court and transferred to the United States
District Court. The dispute arises out of Brim Healthcare's performance of a
management agreement with EPHD, which agreement was terminated on November 22,
1994, by a written Termination Agreement. The Termination Agreement contains a
mutual release which, if effective, will act to bar all of EPHD's claims. The
Lessee believes that it has meritorious factual and legal defenses and has filed
a motion for summary judgment seeking a dismissal of the action based upon the
mutual release.
2. Robert Bloodwell, M.D. v. Brim Healthcare, Inc., et al., Civil
District Court for Jackson Parish, Louisiana. Plaintiff, a physician formerly
employed directly by Jackson Parish Hospital, has sued the Lessee, two of its
employees, and other unrelated entities claiming breach of his employment
contract and seeking compensatory damages as well as earned but unpaid
compensation. The Lessee was, during the relevant time frame, the manager of the
hospital pursuant to a written agreement which contains an indemnity provision.
Because Plaintiff was terminated by the action of the hospital's board, the
Lessee has invoked its rights under the indemnity provision. The hospital has
acknowledged its indemnity obligation.
3. Roderick Connor. Notice, pursuant to Article 4590i of the Texas
Civil Statutes, has been received by the Lessee's Memorial Mother Frances
Hospital ("Mother Frances"), informing the Lessee of the intent to initiate an
action for medical malpractice against Mother Frances and others. The notice
asserts that Roderick Connor, a minor, died following an appendectomy procedure
due to the negligence of his treating physician and nurses. The Lessee's
professional liability insurer has been placed on notice of this claim.
4. Robert Panfil v. Ojai Valley Hospital, et al. Mr. Panfil has
commenced a medical malpractice action against Ojai Valley Hospital, which the
Lessee manages, the Lessee and various individuals because of a post-operative
infection which he claims to have received as a result of negligence on the part
of hospital personnel. This matter has been reported to the Lessee's
professional liability insurance carrier which has assumed the defense.
5. John Dissiere, M.D. v. General Hospital, et al. The Lessee is one
defendant among others in this action alleging wrongful denial of medical staff
privileges. The Lessee's interests are being defended pursuant to an indemnity
agreement with General Hospital.
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6. Candyce Oliver v. Brim Healthcare Inc., et al., Case No. INC003693,
Superior Court for Riverside County, California. Plaintiff, a former employee of
San Gorgonio Memorial Hospital, a facility managed by the Lessee, has sued San
Gorgonio Memorial Hospital, a physician practice group, one of the physicians
who is a principal in the practice group, the Lessee and an employee of the
Lessee. Plaintiff claims that she was wrongfully fired from her job in
retaliation for her expressed intention to report what she claimed to be
substandard medical care delivered by the physicians who were practicing in the
San Gorgonio Memorial Hospital's emergency department. This case is still in the
early stages of discovery, however, preliminary investigation suggests to the
Lessee that it has numerous meritorious factual and legal defenses. The
hospital's insurance carrier has agreed to defend and indemnify Lessee's
employer in her capacity as CEO of the hospital. Lessee's request to the
hospital that it acknowledge contractual obligations to indemnfy Lessee is
pending before the hospital board.
7. Leon Berger, et ux. v. Brim Hospital, Inc., et al., United States
District Court for the Central District of California, Case No. 98-0623.
Plaintiff, a former employee of the Needles Desert Community Hospital, now known
as Colorado River Medical Center, has sued the Lessee and two of its agents
claiming that the defendants tortiously interfered with his contractual
relationship with Needles Desert Community Hospital resulting in his losing his
job. He has claimed an unspecified amount of damages for loss of employment,
loss of economic advantage and other theories. The defendants removed the case
from the state court, where plaintiff originally filed it, to the United States
District Court. This case is in its very earliest states and no discovery has
taken place. The Lessee believes that it has valid factual and legal defenses.
The Lessee's Directors' and Officers' liability insurer has acknowledged
coverage of certain claims.
8. Dr. Stephen Womack has asserted a claim against the Lessee claiming
that the Lessee breached an agreement whereby Womack was to practice medicine at
Memorial Mother Francis Hospital, in Palestine, Texas. He claims that he has
suffered damages in the total amount of $538,630. Womack has not initiated any
litigation on this claim but has threatened to do so. The Lessee believes that
it has valid factual and legal defenses to any claim which Womack might
subsequently file.
9. RRAC Contractors, Inc. v. Jackson Parish Hospital, et al., Second
Judicial District Court, Jackson Parish, Louisiana, Case No. 26,309. Plaintiff,
a heating and air conditioning contractor, has sued the Lessee's Brim
Healthcare, together with a publicly owned hospital and the governmental entity
which owns the hospital, to recover $55,431, which Plaintiff contends remains to
be paid on a contract for the installation of an HVAC system in the hospital.
Pursuant to a management agreement between the hospital and Brim Healthcare, the
hospital is obligated to indemnify Brim Healthcare for this claim. Brim
Healthcare invoked its right to indemnification; however, the hospital refused
to acknowledge its obligation. The Lessee has retained trial defense counsel and
intends to assert a cross-claim against the hospital for indemnification.
10. Monica Miller, et al. v. Powell Hospital, et al., District Court,
Park County, Wyoming, Civil Action No. 20289. Plaintiff has filed a medical
malpractice claim against the
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Lessee, a hospital managed by the Lessee, and various individuals claiming that
she suffered damages resulting from a medication error which occurred when she
was a patient in the hospital emergency room. The claim has been reported to the
Lessee's malpractice insurance carrier which has acknowledged coverage.
11. De Ann Jones v. Memorial Mother France Hospital. Ms. Jones has
served the hospital (operated by the Lessee) with notice, under Article 4590i of
the Texas Civil Code, of her intent to initiate a medical malpractice claim. She
claims to have been a patient at the hospital on January 6, 1997 for delivery of
a baby under the care of Dr. Robert Blackwell and his professional practice
group. She asserts that negligent medical care caused her child to be
still-born. This claim has been reported to the Lessee's professional liability
insurance carrier.
12. Suzann MacLeod v. Daniel Farnum, Superior Court of California for
Humbolt County, Case No. DR 9700421. Ms. McLeod has sued the Lessee's Brim
Hospitals, Inc. subsidiary, her treating physician and General Hospital of
Eureka, California alleging otherwise unspecified acts of medical negligence and
seeking an unspecified amount of unliquidated damages. This case has been
reported to the Lessee's medical malpractice insurance carrier.
13. Dustin Kennedy, a minor v. Needles Desert Community Hospital,
Superior Court of California for San Bernadino, Case No. BCV-3306. Through his
legal guardian plaintiff, a minor, has sued his treating physician, Matthew
Kidd, M.D. and the Needles Desert Community Hospital, now known as Colorado
River Medical Center, which the Lessee operates pursuant to a lease agreement
with the City of Needles, California. The lawsuit alleges that the plaintiff was
injured by otherwise unspecified medical negligence on the part of the
defendants.
14. U.S. Department of Justice Overbilling Claims. The United States
has asserted three claims against Lessee hospitals concerning overbilling:
(a) Parkview Regional Hospital. United States asserts that a
total of $22,561.85 was overbilled for a period of time from January
1992 through December 1996 in connection with the hospital's blood
chemistry CPT codes. The Government has proposed a settlement of three
times that amount, plus an additional $1,403.52, for a total of
$69,089.04. Officials of the Lessee are working cooperatively with both
the Government as well as the prior owner to resolve this dispute. It
is expected that the dispute will be resolved for significantly less
than the amount demanded.
(b) Memorial Mother Frances Hospital. This claim is in the
process of being resolved. No money was paid by the Lessee, however, a
corporate compliance agreement for future billing activity with the
Government is required to be entered. The compliance agreement is
currently being negotiated.
(c) Colorado Plains Medical Center, Inc. On February 2, 1998,
the United States asserted a claim against this facility for duplicate
billing allegedly occurring between December 1, 1987 and December 31,
1991 totaling $2,052.44 for 23 claims. All amounts have been uncovered
by HCGA administratively. The Government now seeks
K-3
<PAGE> 138
penalties ($5,000 - $10,000 per claim) and treble damages under the
False Claims Act. The Government claims the Lessee's maximum exposure
for damages and penalties is thus $235,065.51. The Government will
require a corporate compliance agreement to be entered into and has
offered to settle the damage claim for $3,976.70.
15. Dr. David M. Salter. Lessee has received correspondence from John
Harris, Esq., an attorney practicing in Stockton, California, threatening to
file a lawsuit against Lessee's hospital in Eureka, California and against North
Coast Family Practice Clinic, an entity unrelated to Lessee. Dr. Salter claims
that the hospital and North Coast have breached an oral agreement to purchase
his medical practice. Lessee denies that it ever entered into such an agreement
and believes that it would have valid legal and factual defense to any such
claim.
16. Various Medical Malpractice Claims. The Lessee has been named
defendant in various medical malpractice claims that are pending. All defense
counsel retained by the Lessee have reported that they reasonably anticipated
that any settlement or adverse verdict would be within the limits of available
insurance.
The Lessee, in its good faith judgment, believes that, as of the date
hereof, based on the Lessee's current knowledge, none of the above-referenced
litigation would result in a Material Adverse Effect.
For purposes of this Schedule 4.14, the term "Lessee" shall be deemed
to include Province Healthcare Company and its consolidated subsidiaries.
K-4
<PAGE> 139
EXHIBIT L
FORM OF
COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to Section 8.3(s) of the Participation
Agreement dated as of March 30, 1998 among Province Healthcare Company (the
"Company"), the various parties thereto from time to time, as the guarantors,
the various banks and other lending institutions parties thereto from time to
time, as the lenders, the various banks and other lending institutions parties
thereto from time to time, as the holders, First Security Bank, National
Association, as Owner Trustee under the PHC Real Estate Trust 1998-1 and First
Union National Bank, as the Agent (as amended, modified, supplemented, restated
and/or replaced from time to time, the "Participation Agreement"). Capitalized
terms used herein but not defined herein shall have the meanings provided in the
Participation Agreement.
The undersigned hereby certifies that:
1. I am the duly elected [Chief Executive Officer] [Chief Financial Officer]
[Vice President-Finance] [Vice President-Controller] of the Company and am
making this certification in my official capacity as such.
2. Enclosed with this Certificate are copies of the financial statements of the
Company and its Subsidiaries as of _____________, and for the [________-month
period] [year] then ended, required to be delivered under Section [5.1(a)]
[5.1(b)] of the Lessee Credit Agreement. Such financial statements are true and
accurate in all material respects and fairly present in all material respects
the financial condition of the Company and its Subsidiaries on a consolidated
basis as of the date indicated and the results of operations of the Company and
its Subsidiaries on a consolidated basis for the period covered thereby
(subject, in the case of interim statements, to the absence of footnote
disclosures and normal and reasonable year-end adjustments).
3. The undersigned has reviewed the terms of the Lessee Credit Agreement and has
made, or caused to be made under the supervision of the undersigned, a review in
reasonable detail of the transactions and condition of the Company and its
Subsidiaries during the accounting period covered by such financial statements.
4. The examination described in Paragraph 3 above did not disclose, and the
undersigned has no knowledge of the existence of, any Default or Event of
Default as of the date of this Certificate. [, except as set forth below.
Describe here or in a separate attachment any exceptions to Paragraph 4 above by
listing, in reasonable detail, the nature of the Default or Event of Default,
the period during which it existed and the action that the Company has taken or
proposes to take with respect thereto.]
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5. Attached to this Certificate as Attachments A and B, respectively, are a
Covenant Compliance Worksheet and an Interest Rate Calculation Worksheet
reflecting the computation of the financial covenants set forth in Article VI of
the Lessee Credit Agreement as of the last day of the period covered by the
financial statements enclosed herewith.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate
as of the _______ day of ___________, ____.
PROVINCE HEALTHCARE COMPANY
[signature of CEO, CFO, V.P. Finance,
or V.P.-Controller of Company]
Name:
--------------------------------
Title:
-------------------------------
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ATTACHMENT A
Covenant Compliance Worksheet
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF CONSOLIDATED ADJUSTED DEBT TO ANNUALIZED NOT GREATER THAN OR EQUAL TO:
CONSOLIDATED EBITDAR (SECTION 6.9 OF THE 4.5 TO 1.0 THROUGH 12/31/98
CREDIT AGREEMENT): 5.0 TO 1.0 THEREAFTER(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Consolidated Adjusted Debt as of the measurement date
(a) Consolidated Debt as of the measurement date $__________
(b) Facility Rent Expense for two immediately $__________
preceding fiscal quarters then ending
(c) Multiply line 1(b) by two $__________
(d) Multiply line 1(c) by eight $__________
(e) Consolidated Adjusted Debt: $__________
Add lines (1)(a) and (1)(d)
(2) Annualized Consolidated EBITDAR for two immediately
preceding fiscal quarters then ending
(a) Consolidated Net Income for two immediately $__________
preceding fiscal quarters then ending
(b) The sum of the following for such period:
Interest Expense $__________
Taxes $__________
Depreciation $__________
Amortization $__________
Facility Rent Expense $__________
Minority Interests(2) $__________
$__________
</TABLE>
- --------------------------
(1) The ratio shall be not greater than or equal to 5.0 to 1.0 for all
periods after the completion by the Company of a subordinated debt offering of
at least $75,000,000 prior to December 31, 1998.
(2) To extent issuer of minority interest is obligated to pay debt
service on loans from Affiliates before making distributions.
L-3
<PAGE> 142
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF CONSOLIDATED ADJUSTED DEBT TO ANNUALIZED NOT GREATER THAN OR EQUAL TO:
CONSOLIDATED EBITDAR (SECTION 6.9 OF THE 4.5 TO 1.0 THROUGH 12/31/98
CREDIT AGREEMENT): 5.0 TO 1.0 THEREAFTER(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(c) Add lines (2)(a) and (2)(b) $__________
(d) Annualized Consolidated EBITDAR: $__________
Multiply line 2(c) by two(3)
(3) Ratio of Consolidated Adjusted Debt to Annualized _________
Consolidated EBITDAR:
Divide line (1)(e) by line (2)(d)
</TABLE>
(3) Do not multiply losses of an extraordinary nature, included in
Consolidated Net Income in line 2(a) above, by two.
L-4
<PAGE> 143
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF CONSOLIDATED ADJUSTED SENIOR DEBT TO
ANNUALIZED CONSOLIDATED EBITDAR
(SECTION 6.10 OF THE CREDIT AGREEMENT): NOT GREATER THAN OR EQUAL TO:
4.5 TO 1.0 THROUGH 12/31/98
4.0 TO 1.0 THROUGH 3/31/00
3.50 TO 1.0 THEREAFTER(4)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Consolidated Adjusted Senior Debt $__________
(a) Consolidated Adjusted Debt (from prior page) $__________
(b) Subordinated Debt $__________
(c) Consolidated Adjusted Senior Debt: $__________
Subtract line (1)(b) from line (1)(a)
(2) Annualized Consolidated EBITDAR (from prior page) $__________
(3) Ratio of Consolidated Adjusted Senior Debt to
Annualized Consolidated EBITDAR:
Divide Line (1)(c) by Line (2) __________
</TABLE>
- -----------------
(4) The ratio shall be not greater than or equal to 4.0 to 1.0 for all
periods after the completion by the Company of a subordinated debt offering of
at least $75,000,000 prior to December 31, 1998 through the period ending March
31, 2000.
L-5
<PAGE> 144
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUALIZED JOINT VENTURE EBITDAR (SECTION 6.11
OF THE CREDIT AGREEMENT):
NOT GREATER THAN:
TWENTY PERCENT (20%) OF
ANNUALIZED CONSOLIDATED EBITDAR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Annualized Joint Venture EBITDAR for two immediately
preceding fiscal quarters then ending(5)
(a) Consolidated Net Income for Non-Wholly Owned $__________
Consolidated Subsidiaries for two immediately
preceding fiscal quarters then ending
(b) The sum of the following for Non-Wholly Owned Consolidated
Subsidiaries for such period
Interest Expense $__________
Taxes $__________
Depreciation $__________
Amortization $__________
Facility Rent Expense $__________
Minority Interests(6) $__________
$__________
(c) Add lines (1)(a) and (1)(b) $__________
(d) Annualized Joint Venture EBITDAR: $__________
Multiply line (1)(c) by two(7)
(2) Annualized Consolidated EBITDAR (from calculations for $__________
Section 6.9)
(3) Maximum Permitted Annualized Joint Venture EBITDAR: $__________
Multiply line (2) by .2
</TABLE>
- ---------------------
(5) Exclude from line (1) calculations, EBITDAR related to the
Palestine Limited Partnership.
(6) To extent issuer of minority interest is obligated to pay debt
service on loans from Affiliates before making distributions.
(7) Do not multiply losses of an extraordinary nature, included in
Consolidated Net Income in line 1(a) above, by two.
L-6
<PAGE> 145
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
MINIMUM NET WORTH
(SECTION 6.12) OF THE CREDIT AGREEMENT NOT LESS THAN $84,000,000, PLUS 85%
OF CONSOLIDATED NET INCOME (BUT
EXCLUDING ANY NET LOSS) FROM JANUARY
1, 1998, PLUS 90% OF INCREASES IN THE
STATED CAPITAL AND ADDITIONAL PAID IN
CAPITAL ACCOUNTS OF THE COMPANY
RESULTING FROM THE ISSUANCE OF EQUITY
SECURITIES OR OTHER CAPITAL
INVESTMENTS AFTER THE AMENDMENT
EFFECTIVE DATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) $84,000,000 $84,000,000
(2) Consolidated Net Income (excluding any net loss) for $__________
all periods from and after January 1, 1998
(3) Multiply line (2) by .85 $__________
(4) Increases in the stated capital and additional paid in $__________
capital accounts of Borrower resulting from the issuance
of equity securities or other capital investments after
the Amendment Effective Date
(5) Multiply line (4) by .9 $__________
(6) Required Minimum Net Worth: $__________
Add lines (1), (3) and (5)
(7) Consolidated Net Worth at Measurement date: $__________
</TABLE>
L-7
<PAGE> 146
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FIXED CHARGE COVERAGE RATIO
(SECTION 6.13 OF THE CREDIT AGREEMENT): NOT LESS THAN OR EQUAL TO:
1.2 TO 1.0
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Annualized Consolidated EBITDAR (from calculation for $__________
Section 6.9)
(2) Fixed Charges
(a) Scheduled Principal Payments $__________
(b) The sum of the following for the two fiscal
quarters then ending:
Interest Expense (payable in cash) $__________
Facility Rent Expense $__________
Cash Taxes $__________
(c) Multiply line 2(b) by two $__________
(d) Actual Capital Expenditures for four fiscal $__________
quarters then ending(8)
(e) Fixed Charges: Add lines (2)(a), (2)(c) and 2(d) $__________
(3) Ratio of Annualized Consolidated EBITDAR to Fixed Charges: __________
Divide line 1 by line 2(e)
</TABLE>
- ---------------
(8) Excluding, for measurement dates ending on or prior to
September 30, 1998, aggregate acquisition expenditures and current building
programs incurred on or prior to December 31, 1997 at Parkview Regional
Hospital, Mexia, Texas and Colorado Plains Medical Center, Fort Morgan,
Colorado, not to exceed $3,200,000).
L-8
<PAGE> 147
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES (SECTION 6.14 OF THE CREDIT AGREEMENT)
NOT GREATER THAN 5% OF CONSOLIDATED NET
REVENUES FOR THE FOUR FISCAL QUARTERS THEN
ENDING (EXCLUDING THROUGH SEPTEMBER 30, 1998
ACQUISITION EXPENDITURES AND CURRENT BUILDING
PROGRAMS AT PARKVIEW REGIONAL HOSPITAL, MEXIA,
TEXAS AND COLORADO PLAINS MEDICAL CENTER,
FORT MORGAN, COLORADO NOT
TO EXCEED $3,200,000)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Capital Expenditures for four fiscal quarters then __________
ending(9)
(2) Consolidated Net Revenues for such period $__________
(3) Maximum Permitted Capital Expenditures:
Multiply line (2) by 0.05 __________
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
(9) Excluding, for measurement dates on or prior to September 30,
1998, aggregate acquisition expenditures and current building programs at
Parkview Regional Hospital, Mexia, Texas and Colorado Plains Medical Center,
Fort Morgan, Colorado not to exceed $3,200,000.
L-9
<PAGE> 148
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUALIZED NON-LANDLORD CONSENT EBITDAR (SECTION 6.15 OF THE
CREDIT AGREEMENT):
NOT GREATER THAN:
TEN PERCENT (10%) OF
ANNUALIZED CONSOLIDATED EBITDAR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Annualized Non-Landlord Consent EBITDAR for two
immediately preceding fiscal quarters then ending
(a) Consolidated Net Income, attributable to all $__________
Facility Leased Properties of the Company or
any Subsidiary for which a Landlord Consent has
not been delivered by the Agent, for two
immediately preceding fiscal quarters then
ending
(b) The sum of the following, attributable to all Facility Leased
Properties of the Borrower or any Subsidiary for which a
Landlord Consent has not been delivered by the Agent, for such
period
Interest Expense $__________
Taxes $__________
Depreciation $__________
Amortization $__________
Facility Rent Expense $__________
Minority Interests(10) $__________
(c) Add lines (1)(a) and (1)(b) $__________
(d) Annualized Non-Landlord Consent EBITDAR: $__________
Multiply line (1)(c) by two(1)
</TABLE>
(10) To extent issuer of minority interest is obligated to pay debt
service on loans from Affiliates before making distributions.
(11) Do not multiply losses of an extraordinary nature, included in
Consolidated Net Income in line 1(a) above, by two.
L-10
<PAGE> 149
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUALIZED NON-LANDLORD CONSENT EBITDAR
(SECTION 6.15 OF THE CREDIT AGREEMENT):
NOT GREATER THAN:
TEN PERCENT (10%) OF
ANNUALIZED CONSOLIDATED EBITDAR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(2) Annualized Consolidated EBITDAR (from calculations for $__________
Section 6.9)
(3) Maximum Permitted Annualized Non-Landlord Consent $__________
EBITDAR:
Multiply line (2) by .1
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PARKVIEW REGIONAL HOSPITAL/EBITDAR
TO FACILITY RENT EXPENSE
(SECTION 6.16 OF THE CREDIT AGREEMENT): NOT LESS THAN 1.75 TO 1.0 AT ANY TIME
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) EBITDAR of Parkview Regional Hospital for the period $__________
of determination
(2) Facility Rent Expense of Parkview Regional Hospital __________
for the period of determination
(3) Ration of EBITDAR to Facility Rent Expense for __________
Parkview Regional Hospital:
Divide line 1 by line 2
</TABLE>
L-11
<PAGE> 150
ATTACHMENT B
Interest Rate Calculation Worksheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
RATIO OF CONSOLIDATED ADJUSTED DEBT TO ANNUALIZED CONSOLIDATED
EBITDAR:
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(1) Consolidated Adjusted Debt (from calculation for $__________
Section 6.9)
(2) Annualized Consolidated EBITDAR (From calculation for $__________
Section 6.9)
(3) Ratio of Consolidated Adjusted Debt to Annualized $__________
Consolidated EBITDAR:
Divide Line (1) by Line (2)
(4) Applicable Margin: EURODOLLAR __________%
ABR __________%
</TABLE>
L-12
<PAGE> 151
EXHIBIT M
JOINDER AGREEMENT
(Pursuant to Section 5.9 of the Participation Agreement)
THIS JOINDER AGREEMENT dated as of _____________, ___________ (as
amended, modified, supplemented, restated and/or replaced from time to time, the
"Agreement"), is by and between ___________________, a ___________ (the
"Company"), and FIRST UNION NATIONAL BANK, as the Agent for the Lenders and
respecting the Security Documents, as the Agent for the Lenders and the Holders,
to the extent of their interests (the "Agent"). Capitalized terms not otherwise
defined herein shall have the meanings set forth therefor in the Participation
Agreement dated as of March 30, 1998 (as amended, modified, supplemented,
restated and/or replaced from time to time, the "Participation Agreement") among
Province Healthcare Company, the various parties thereto from time to time, as
the Guarantors, First Security Bank, National Association, as the Owner Trustee
under the PHC Real Estate Trust 1998-1, the various banks and other lending
institutions which are parties thereto from time to time, as the Lenders, the
various banks and other lending institutions which are parties thereto from time
to time, as the Holders, and the Agent.
The Company is a Wholly-Owned Entity, and, consequently, the Credit
Parties are required by Section 8.3(r) of the Participation Agreement to cause
the Company to become a "Guarantor".
Accordingly, the Company hereby agrees as follows with the Agent, for
the benefit of the Financing Parties:
1. The Company hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Company will be deemed to be a party to the
Participation Agreement and a "Guarantor" for all purposes of the Participation
Agreement and all other Operative Agreements, and shall have all of the
obligations of a Guarantor under the Operative Agreements as if the Company had
executed the Participation Agreement. The Company hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms, provisions and
conditions applicable to the Guarantors contained in the Operative Agreements.
Without limiting the generality of the foregoing terms of this paragraph 1, the
Company hereby (i) jointly and severally together with the other Guarantors,
guarantees to each Financing Party, as provided in Sections 6B.1 through 6B.8 of
the Participation Agreement, the prompt payment and performance of the Company
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) strictly in accordance with the terms
thereof.
2. THE COMPANY HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES TO THE
PROVISIONS OF SECTION 12.8 OF THE PARTICIPATION AGREEMENT, INCLUDING WITHOUT
LIMITATION THOSE PROVISIONS REGARDING GOVERNING LAW, SUBMISSION TO JURISDICTION,
WAIVER OF
M-1
<PAGE> 152
JURY TRIAL, VENUE AND ARBITRATION. THIS PROVISION HAS BEEN SPECIFICALLY REVIEWED
BY THE COMPANY.
3. The chief executive office and principal place of business of the
Company are located at the location(s) set forth on Schedule 1 attached hereto.
4. All notices and other communications to be delivered to the Company
shall be directed to Province Healthcare Company at its address set forth in
Section 12.3 of the Participation Agreement or such other address as may be
specified, in accordance with the terms of the Participation Agreement, by
Province Healthcare Company from time to time.
5. The Company hereby waives acceptance by the Financing Parties of the
guaranty by the Company under Sections 6B.1 through 6B.8 of the Participation
Agreement upon the execution of this Agreement by the Company.
6. This Agreement may be executed in multiple counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its authorized officers, and the Agent, for the benefit of the
Financing Parties, has caused the same to be accepted by its authorized officer,
as of the day and year first above written.
[COMPANY]
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Acknowledged and accepted:
FIRST UNION NATIONAL BANK,
as the Agent
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
M-2
<PAGE> 153
EXHIBIT N
<TABLE>
<CAPTION>
[States of Incorporation/Formation and Principal Place of Business of Each Guarantor]
(Pursuant to Section 6.3(i) of the Participation Agreement)
Guarantors State of Incorporation/ State of Principal
Formation Place of Business
<S> <C> <C>
BLYTHE-PROVINCE, INC. Tennessee Tennessee
BRIM EQUIPMENT SERVICES, INC. Oregon Tennessee
BRIM FIFTH AVENUE, INC. Oregon Tennessee
BRIM HEALTHCARE, INC. Oregon Tennessee
BRIM HOSPITALS, INC. Oregon Tennessee
BRIM OUTPATIENT SERVICES, INC. Oregon Tennessee
BRIM PAVILION, INC. Oregon Tennessee
BRIM SERVICES GROUP, INC. Oregon Tennessee
CARE HEALTH COMPANY, INC. Washington Tennessee
MEXIA-PRINCIPAL, INC. Texas Tennessee
PALESTINE-PRINCIPAL G.P., INC. Texas Tennessee
PALESTINE-PRINCIPAL, INC. Tennessee Tennessee
PHC-EUNICE, INC. Louisiana Tennessee
PHC-LAKE HAVASU, INC. Arizona Tennessee
PHC OF DELAWARE, INC. Delaware Tennessee
PRINCIPAL HOSPITAL COMPANY OF NEVADA, INC. Nevada Tennessee
PRINCIPAL KNOX COMPANY Delaware Tennessee
PRINCIPAL-NEEDLES, INC. Tennessee Tennessee
MEXIA PRINCIPAL HEALTHCARE LIMITED PARTNERSHIP Texas Tennessee
PALESTINE PRINCIPAL HEALTHCARE LIMITED PARTNERSHIP Texas Tennessee
INTEGRATED HEALTH MANAGEMENT, LLC California Tennessee
</TABLE>
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<PAGE> 154
Appendix A
Rules of Usage and Definitions
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document
to articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a part
of any such document nor shall they affect the meaning, construction or effect
of any provision thereof.
(d) References to any Person shall include such Person, its successors,
permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable provisions
thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
Appendix A-1
<PAGE> 155
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to exclude salary of the
Agent's regularly employed personnel and overhead.
(j) Each of the parties to the Operative Agreements and their counsel
have reviewed and revised, or requested revisions to, the Operative Agreements,
and the usual rule of construction that any ambiguities are to be resolved
against the drafting party shall be inapplicable in the construing and
interpretation of the Operative Agreements and any amendments or exhibits
thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.
II. Definitions
"AAA" shall have the meaning given to such term in Section 12.8(d) of
the Participation Agreement.
"ABR" shall mean, for any day, a rate per annum equal to the greater of
(a) the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate announced by the Agent
from time to time as its prime lending rate as in effect from time to time. The
Prime Lending Rate is a reference rate and is one of several interest rate bases
used by the Agent and does not necessarily represent the lowest or most
favorable rate offered by the Agent actually charged to any customer. Any Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate. The Prime Lending Rate shall change automatically and
without notice from time to time as and when the prime lending rate of the Agent
changes. "Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members or the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding 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 such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Lending 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 Lending Rate or the Federal Funds Effective Rate,
respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.
Appendix A-2
<PAGE> 156
"ABR Loans" shall mean Loans the rate of interest applicable to which
is based upon the ABR.
"Acceleration" shall have the meaning given to such term in Section 6
of the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in
Section 5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such
term in Section 28.1 of the Lease.
"Advance" shall mean a Construction Advance or an Acquisition Advance.
"Affiliate" shall mean, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or about
the Initial Closing Date between the Construction Agent and the Lessor.
"Agency Agreement Event of Default" shall mean an "Event of Default" as
defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean First Union National Bank, as agent for the Lenders
pursuant to the Credit Agreement, or any successor agent appointed in accordance
with the terms of the Credit Agreement and respecting the Security Documents,
for the Lenders and the Holders, to the extent of their interests.
"Annualized Consolidated EBITDAR" shall mean, as of the last day of any
fiscal quarter, Consolidated EBITDAR for the two (2) consecutive fiscal quarters
ending on such date,
Appendix A-3
<PAGE> 157
multiplied by two (2); provided, that for purposes of this calculation, losses
of an extraordinary nature included in Consolidated Net Income shall not be
multiplied by two.
"Annualized Facility Rent Expense" shall mean, as of the last day of
any fiscal quarter, Facility Rent Expense for the two (2) consecutive fiscal
quarters ending on such date, multiplied by two (2).
"Applicable Percentage" shall mean, at any time with respect to any
Eurodollar Loan and the Lender Facility Fee, the applicable percentage points as
determined under the following matrix with reference to the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR, calculated as
provided below:
<TABLE>
<CAPTION>
Ratio of
Consolidated Applicable Applicable Applicable Applicable
Adjusted Debt to Percentage for Percentage Percentage Percentage
Pricing Annualized Eurodollar for ABR for Lender for Holder
Level Consolidated EBITDAR Loans Loans Facility Fee Facility Fee
- ----- -------------------- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Level I Less than 2.0 to 1.0 0.75% 0.00% 0.250% 0.250%
Level II Less that 2.5 to 1.0 1.00% 0.00% 0.250% 0.250%
but greater than or
equal to 2.0 to 1.0
Level III Less than 3.0 to 1.0 1.25% 0.00% 0.3125% 0.3125%
but greater than or
equal to 2.5 to 1.0
Level IV Less than 3.5 to 1.0 1.50% 0.25% 0.3125% 0.3125%
but greater than or
equal to 3.0 to 1.0
</TABLE>
Appendix A-4
<PAGE> 158
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Level V Less than 4.0 to 1.0 1.75% 0.50% 0.375% 0.375%
but greater than or
equal to 3.5 to 1.0
Level VI Equal to of greater 2.00% 0.75% 0.500% 0.500%
than 4.0 to 1.0
</TABLE>
From the Initial Closing Date until the fifth (5th) Business Day after receipt
by the Agent of the financial statements of Borrower for the fiscal quarter
ended March 31, 1998 (as delivered pursuant to Section 5.1(b) of the Lessee
Credit Agreement), the Applicable Percentages shall be based on Pricing Level
II. The Applicable Percentages shall be reset from time to time in accordance
with the above matrix on the fifth (5th) Business Day after receipt by the Agent
in accordance with Sections 5.1(a) or (b) of the Lessee Credit Agreement of
financial statements, together with a Compliance Certificate attaching an
Interest Rate Calculation worksheet (reflecting the computation of the ratio of
Consolidated Adjusted Debt to Annualized Consolidated EBITDAR as of the last day
of the preceding fiscal quarter or fiscal year, as appropriate) that provides
for different Applicable Percentages than those then in effect.
"Appraisal" shall mean, with respect to any Property, an appraisal to
be delivered in connection with the Participation Agreement or in accordance
with the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean any of the forty-eight states in the
continental United States.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights
of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time belonging or
pertaining to the Land underlying the Improvements or the Improvements,
including without limitation the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and (b)
all permits, licenses and rights, appurtenant to such Land or the Improvements,
in each case which is of record or is known to the Lessee.
"Arbitration Rules" shall have the meaning given to such term in
Section 12.8(d) of the Participation Agreement.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in
the form attached to the Credit Agreement as EXHIBIT B.
Appendix A-5
<PAGE> 159
"Available Commitment" shall mean, as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate principal amount of all Loans made by such
Lender as of such date after giving effect to Section 5.2(d) of the
Participation Agreement (but without giving effect to any other repayments or
prepayments of any Loans hereunder).
"Available Holder Commitments" shall mean an amount equal to the
excess, if any, of (a) the aggregate amount of the Holder Commitments over (b)
the aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Base Amount" shall have the meaning specified in Section 10.1(e) of
the Lease.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Benefited Lender" shall have the meaning specified in Section 9.10(a)
of the Credit Agreement.
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in form
and substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual capacity
but as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of determination
with respect to any Construction Period Property, an amount equal to the
aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or any other states
from which the Agent, any Lender or any Holder funds or engages in
administrative activities with respect to the
Appendix A-6
<PAGE> 160
transactions under the Operative Agreements are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Asset" shall mean any asset that would, in accordance with
GAAP, be required to be classified and accounted for as a capital asset.
"Capital Lease" shall mean any lease of any property that would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on the balance sheet of the lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with GAAP, appear on a balance sheet as a liability of such lessee in
respect of such Capital Lease.
"Capital Stock" shall mean any nonredeemable capital stock of any
Credit Party or any of its Subsidiaries, whether common or preferred.
"Casualty" shall mean any damage or destruction of all or any portion
of the Property as a result of a fire or other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder
regarding the Holder Commitment of such Holder issued pursuant to the terms and
conditions of the Trust Agreement in favor of each Holder.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Section 13(d)(3) under the Exchange Act), shall, directly or
indirectly, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become, after the Initial
Closing Date, the "beneficial owner" (within the meanings of Rules 13d-3 and
13d-5 under the Exchange Act) of securities of the Lessee representing 30% or
more of the combined voting power of the then outstanding securities of the
Lessee ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, assuming the conversion,
exchange or exercise into or for voting stock of all outstanding shares so
convertible (other than GTCR Fund IV, Bruce V. Rauner or Joseph P. Nolan , which
currently are the beneficial owners of 36.6% of the voting securities of the
Lessee and may increase such holdings without causing a Change of Control), or
(ii) the members of the Board of Directors of the Lessee shall cease to consist
of a majority of the individuals (y) who constituted the Board of Directors as
of the Initial Closing Date or (z) who shall have become members thereof
subsequent to the Initial Closing Date after having been nominated, or otherwise
approved in writing, by at least a majority of individuals who constituted the
Board of Directors of the Lessee
Appendix A-7
<PAGE> 161
as of the Initial Closing Date. For purposes of this definition, "voting power"
shall be determined with reference to the then outstanding securities of the
Lessee ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, assuming the conversion,
exchange or exercise into or for voting stock of all outstanding securities of
the Lessee other than voting stock.
"Chattel Paper" shall have the meaning given to such term in Section 1
of the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including
without limitation reasonable attorney's fees and expenses) of any nature
whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with rules
and regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction
Agent and the Lessee, now owned or hereafter acquired, upon which a Lien is
purported to be created by one or more of the Security Documents.
"Commencement Date" shall have the meaning specified in Section 2.2 of
the Lease.
"Commitment" shall mean, as to any Lender, the obligation of such
Lender to make the portion of the Loans to the Lessor in an aggregate principal
amount at any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 1.1 of the Credit Agreement, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
"Commitment Period" shall mean the period from and including the
Initial Closing Date to and including the Construction Period Termination Date,
or such earlier date as the Commitments shall terminate as provided in the
Credit Agreement or the Holder Commitment shall terminate as provided in the
Trust Agreement.
"Company Obligations" shall mean the obligations of Province Healthcare
Company, in any and all capacities under and with respect to the Operative
Agreements and each Property.
Appendix A-8
<PAGE> 162
"Completion" shall mean, with respect to a Property, such time as the
acquisition, installation, testing and final completion of the Improvements on
such Property has been achieved in accordance with the Plans and Specifications,
the Agency Agreement and/or the Lease, and in compliance with all Legal
Requirements (except if non-compliance, individually or in the aggregate, shall
not have and could not reasonably be expected to have a Material Adverse Effect)
and Insurance Requirements and a certificate of occupancy has been issued with
respect to such Property by the appropriate governmental entity. If the Lessor
purchases a Property that includes existing Improvements that are to be
immediately occupied by the Lessee, the date of Completion for such Property
shall be the Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the earlier
of (a) the date on which Completion for such Property has occurred or (b) the
Construction Period Termination Date.
"Compliance Certificate" shall mean a fully completed certificate in
the form of EXHIBIT L.
"Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part thereof, wholly
or partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including without limitation an action by a
Governmental Authority to change the grade of, or widen the streets adjacent to,
any Property or alter the pedestrian or vehicular traffic flow to any Property
so as to result in a change in access to such Property, or by or on account of
an eviction by paramount title or any transfer made in lieu of any such
proceeding or action.
"Consolidated Adjusted Debt" shall mean the sum of (a) Consolidated
Debt, and (b) the product of (i) Annualized Facility Rent Expense, multiplied by
(ii) eight (8).
"Consolidated Debt" shall mean, at any date, the aggregate (without
duplication) of all Debt of the Lessee and its Subsidiaries as of such date,
determined on a consolidated basis.
"Consolidated EBITDAR" shall mean, with respect to the Lessee and its
Subsidiaries on a consolidated basis as of the last day of any period, EBITDAR
for the period ending on such date determined in accordance with GAAP.
Consolidated EBITDAR shall be deemed to include without duplication, historical
Consolidated EBITDAR, of any business acquired and operated by the Lessee or any
Subsidiary after the commencement of the relevant measurement period, as if such
business had been acquired by the Lessee or such Subsidiary as of the first day
of such measurement period, subject to pro forma expense adjustments as set
forth below; provided that such Consolidated EBITDAR is supported by financial
statements, tax returns or other financial data acceptable to the Agent in its
sole discretion. Calculations of Consolidated EBITDAR shall exclude the results
of operations of any entity disposed of by the Lessee or any Subsidiary at any
time after the first day of the relevant measurement period. Consolidated
EBITDAR shall be adjusted for pro forma expense adjustments in connection with
newly acquired entities, if and only to the extent approved in writing by the
Majority Secured Parties.
Appendix A-9
<PAGE> 163
"Consolidated Net Income" shall mean, for any fiscal quarter, the net
income (or loss) of the Lessee and its Subsidiaries, on a consolidated basis and
excluding intercompany items, for such quarter, determined in accordance with
GAAP, but excluding the effect of: (a) gains on the sale, conversion or other
disposition of Capital Assets, (b) gains on the acquisition, retirement, sale or
other disposition of stock of the Lessee or any of its Subsidiaries, (c) gains
on the collection of life insurance proceeds, (d) any write-up of any asset, (e)
any other gain or credit of an extraordinary nature, and (f) noncash losses
approved in writing by the Agent.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary
of such Person which under the rules of GAAP consistently applied should have
its financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Construction Advance" shall mean an advance of funds to pay Property
Costs pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Province Healthcare Company, a Delaware
corporation, as the construction agent under the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition, installation,
testing, constructing and developing any Property as determined by the
Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to
Improvements, the date on which construction of such Improvements commences
pursuant to the Agency Agreement.
"Construction Contract" shall mean any contract entered into between
the Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
"Construction Period" shall mean, with respect to a Property, the
period commencing on the Construction Commencement Date for such Property and
ending on the Completion Date for such Property.
Appendix A-10
<PAGE> 164
"Construction Period Property" means, at any date of determination, any
Property as to which the Rent Commencement Date has not occurred on or prior to
such date.
"Construction Period Termination Date" shall mean (a) the earlier of
(i) the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as shall
be agreed to by the Majority Secured Parties.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Debt, lease,
dividend, guaranty, letter of credit (other than a standby letter of credit with
no reasonable likelihood of draw, in the reasonable opinion of the Agent) or
other obligation (the "primary obligation") of another Person (the "primary
obligor"), whether or not contingent (a) to purchase, repurchase or otherwise
acquire such primary obligations, (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligations (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligator in respect thereof to make
payment of such primary obligation or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss or failure or inability of
the primary obligor to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Contractor" shall mean each entity with whom the Construction Agent or
the Lessee contracts to construct any Improvements or any portion thereof on the
Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Lessee, are treated as a single employer
under Section 414 of the Code.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of
the Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or about
the Initial Closing Date, among the Lessor, the Agent and the Lenders, as
specified therein.
"Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
Appendix A-11
<PAGE> 165
"Credit Documents" shall mean the Participation Agreement, the Credit
Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and each
Guarantor.
"Debt" shall mean, with respect to any Person or group of Persons,
without duplication, (i) all indebtedness of such Person for money borrowed,
(ii) all reimbursement obligations of such Person with respect to surety bonds,
letters of credit and bankers' acceptances (in each case, whether or not
matured), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iv) all obligations of such Person to pay
the deferred purchase price of property or services (including earnouts and
other similar contingent obligations, calculated in accordance with GAAP), other
than trade payables, (v) 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), (vi) all Capital Lease Obligations of such Person,
(vii) all monetary obligations and amounts owing of such Person under the
Operative Agreements or any other synthetic or end loaded lease facility of such
Person, (viii) the net termination obligations of such Person under any Swap
Agreement or other interest rate protection or hedging arrangement, calculated
as of any date as if such agreement or arrangement were terminated as of such
date, (ix) all obligations of such Person to purchase, redeem, retire, defease
or otherwise make any payment in respect of any capital stock or other equity
securities that, by their stated terms (or by the terms of any equity securities
issuable upon conversion thereof or in exchange therefor), or upon the
occurrence of any event, mature or are mandatorily redeemable, or are redeemable
at the option of the holder thereof, in whole or in part, (x) all indebtedness
referred to in clauses (i) through (ix) above secured by any lien on any
property or asset owned or held by such Person regardless of whether the
indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person, and (xi) any Contingent Obligation of
such Person to the extent that such Contingent Obligation in accordance with
GAAP would be set forth in a specific Dollar amount on the liability side of a
balance sheet, and excluding any guaranty of Debt related to an operating lease,
provided that such guaranty will be included as a Contingent Obligation if the
guaranty is called and there is not a corresponding forgiveness of lease
payments in like amounts commencing in the order due, and provided, further,
that Contingent Obligations of such Person under the Operative Agreements shall
constitute "Debt" of such Person.
"Deed" shall mean a warranty deed regarding the Land and/or
Improvements in form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Holder" shall have the meaning given to such term in
Section 12.5 of the Participation Agreement.
Appendix A-12
<PAGE> 166
"Defaulting Lender" shall have the meaning given to such term in
Section 12.5 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of
the Lease Agreement.
"Disputes" shall have the meaning given to such term in Section 12.8(d)
of the Participation Agreement.
"Documents" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Early Termination Conditions" shall mean (a) compliance with Section
8.3(j) of the Participation Agreement and (b) no Default or Event of Default
shall have occurred and be continuing, either at the date any election of the
Sale Option and/or the Purchase Option is elected in accordance with the
applicable provisions of the Lease (other than any such Default or Event of
Default that will be cured by the payment of Termination Value).
"EBITDAR" shall mean, for any Person for any fiscal quarter, (i)
Consolidated Net Income, plus (ii) the sum of Interest Expense, taxes,
depreciation, amortization, and Facility Rent Expense.
"Election Date" shall have the meaning given to such term in Section
20.1 of the Lease.
"Election Notice" shall have the meaning given to such term in Section
20.1 of the Lease.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof and having total assets in
excess of $1,000,000,000, (ii) a commercial bank organized under the laws of any
other country that is a member of the OECD or a political subdivision of any
such country and having total assets in excess of $1,000,000,000, provided, that
such bank is acting through a branch or agency located in the United States, in
the country under the laws of which it is organized or in another country that
is also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual fund, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $250,000,000, (v) any Affiliate of an existing Lender
or (vi) any other Person (other than an Affiliate of any Credit Party) approved
by the Agent and the Lessee, which approval shall not be unreasonably withheld.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including without limitation any
Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the Code
and as interpreted by the Internal Revenue
Appendix A-13
<PAGE> 167
Service and the Department of Labor in rules, regulations, releases or bulletins
in effect on any Closing Date.
"Environmental Claims" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Law, or other order of a Tribunal or (d) from any actual or alleged damage,
injury, threat, or harm to health, safety, natural resources, or the
environment.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (but only if the threat requires
remediation under any Environmental Law and is not remediated during any grace
period allowed under such Environmental Law) to violate or results in or
threatens (but only if the threat requires remediation under any Environmental
Law and is not remediated during any grace period allowed under such
Environmental Law) to result in noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements or other
improvements to real property, including but without limiting the generality of
the foregoing, all of the following to the extent acquired using the proceeds of
the Loans or the Holder Advances and all improvements and modifications thereto
and replacements thereof: all equipment described in the Appraisal including
without limitation all heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilation, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, elevators, loading and
unloading equipment and systems, cleaning systems (including without limitation
window cleaning apparatus), telephones, communication systems (including without
limitation satellite dishes and antennae), televisions, computers, sprinkler
systems and other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks, conduits,
appliances, fittings and fixtures of every kind and description.
Appendix A-14
<PAGE> 168
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to
the applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean each entity required to be aggregated with
the Lessee pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) 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 on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a
Holder Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), a per annum interest rate equal to the per annum rate determined by
the Agent on the basis of the offered rates for deposits in dollars for a period
of time corresponding to such Interest Period (and commencing on the first day
of such Interest Period), reported on Telerate page 3750 as of 11:00 a.m.
(London time) two (2) Business Days before the first day of such Interest
Period. In the event no such offered rates appear on Telerate page 3750,
"Eurodollar Rate" shall mean for the Interest Period for each Eurodollar Loan or
Eurodollar Holder Advance comprising part of the same borrowing or advance
(including without limitation conversions, extensions and renewals), a per annum
interest rate equal to the per annum rate determined by the Agent on the basis
of the offered rates for deposits in dollars for a period of time corresponding
to such Interest Period (and commencing on the first day of such Interest
Period), which appear on the Reuters Screen LIBO Page as of 11:00 a.m. (London
time) two (2) Business Days before the first day of such Interest Period
(provided that if at least two (2) such offered rates appear on the Reuters
Screen LIBO Page, the rate in respect of such Interest Period will be the
arithmetic mean of such offered rates). As used herein, "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major banks)
("RMMRS"). In the event the RMMRS is not then quoting such offered rates,
"Eurodollar Rate" shall mean for the Interest Period for each Eurodollar Loan or
Eurodollar Holder Advance
Appendix A-15
<PAGE> 169
comprising part of the same borrowing or advance (including without limitation
conversions, extensions and renewals), the average (rounded upward to the
nearest one-sixteenth (1/16) of one percent (1%)) per annum rate of interest
determined by the office of the Agent (each such determination to be conclusive
and binding) as of two (2) Business Days prior to the first day of such Interest
Period, as the effective rate at which deposits in immediately available funds
in U.S. dollars are being, have been, or would be offered or quoted by the Agent
to major banks in the applicable interbank market for Eurodollar deposits at any
time during the Business Day which is the second Business Day immediately
preceding the first day of such Interest Period, for a term comparable to such
Interest Period and in the amount of the requested Eurodollar Loan and/or
Eurodollar Holder Advance. If no such offers or quotes are generally available
for such amount, then the Agent shall be entitled to determine the Eurodollar
Rate from another recognized service or interbank quotation, or by estimating in
its reasonable judgment the per annum rate (as described above) that would be
applicable if such quote or offers were generally available.
"Event of Default" shall mean a Lease Event of Default, an Agency
Agreement Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean: (a) all indemnity payments (including
without limitation indemnity payments made pursuant to Section 11 of the
Participation Agreement), whether made by adjustment to Basic Rent or otherwise,
to which the Owner Trustee, any Holder or any of their respective Affiliates,
agents, officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination Value) payable
under any Operative Agreement to reimburse the Owner Trustee, any Holder or any
of their respective Affiliates (including without limitation the reasonable
expenses of the Owner Trustee, the Trust Company and the Holders incurred in
connection with any such payment) for performing or complying with any of the
obligations of any Credit Party under and as permitted by any Operative
Agreement;
(c) any amount payable to a Holder by any transferee of such interest
of a Holder as the purchase price of such Holder's interest in the Trust Estate
(or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies other than such
proceeds or payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the Owner
Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees, disbursements or
expenses paid or payable to or for the benefit of the Owner Trustee or any
Holder;
Appendix A-16
<PAGE> 170
(g) all right, title and interest of any Holder or the Owner Trustee to
any Property or any portion thereof or any other property to the extent any of
the foregoing has been released from the Liens of the Security Documents and the
Lease pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the terms
thereof, all remaining property covered by the Lease or Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (i) above; and
(k) any rights of either the Owner Trustee or the Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of any of the
foregoing amounts, provided that such rights shall not include the right to
terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.
"Exculpated Persons" shall mean the Borrower, the Holders, the Lessor,
their officers, directors, shareholders and partners.
"Expiration Date" shall have the meaning specified in Section 2.2 of
the Lease.
"Facility Fee" shall mean, collectively, the Holder Facility Fee and
the Lender Facility Fee.
"Facility Fee Payment Date" shall mean the last Business Day of each
January, April, July and October and the last Business Day of the Commitment
Period, or such earlier date as the Commitments shall terminate as provided in
the Credit Agreement or the Holder Commitment shall terminate as provided in the
Trust Agreement.
"Facility Rent Expense" shall mean, for any fiscal quarter, all amounts
paid, payable or accrued during such fiscal quarter by the Lessee and its
Subsidiaries on a consolidated basis with respect to all operating leases of
hospitals and the operating lease of any other facility with a Lease Expense in
excess of $200,000 annually; provided that Facility Rent Expense shall exclude
any amounts that constitute Debt pursuant to clause (vii) of the Debt
definition.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of
Appendix A-17
<PAGE> 171
Section 17 of the Lease, such Property is in the condition and state of repair
required under Section 10.1 of the Lease and each Credit Party is in compliance
with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such
term in the definition of ABR.
"Financing Party" shall mean each of the Lessor, the Owner Trustee, in
its trust capacity, the Agent, the Holders and/or the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements,
including without limitation all components thereof, located in or on the
Improvements, together with all replacements, modifications, alterations and
additions thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes, lockouts, adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials, governmental
activities, civil commotion and enemy action; but excluding any event, cause or
condition that results from the Construction Agent's financial condition.
"Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate
Certificate) of the Department of the Treasury of the United States of America
and such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates.
"Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of Treasury of the United States of America and
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates.
"GAAP" shall mean generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants,
consistently applied and maintained on a consistent basis for the Lessee and its
Subsidiaries on a consolidated basis throughout the period indicated and
consistent with the financial practice of the Lessee and its Subsidiaries after
the date hereof.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, assignments, approvals, waivers, exceptions, variances,
orders, judgments, written interpretations, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required by,
any Governmental Authority, or required by any Legal Requirement, and shall
include, without limitation, all environmental and operating permits and
licenses that are required for the full use, occupancy, zoning and operating of
the Property.
Appendix A-18
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"Governmental Authority" shall mean 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.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property owned by the Lessee (or a
parent corporation or any Subsidiary of the Lessee) and leased to the Lessor
where such lease (a) has at least a ninety-nine (99) year term and payments set
at no more than $1.00 per year, or (b) is subject to such other terms and
conditions as are satisfactory to the Agent.
"GTCR Fund IV" shall mean Golder, Thoma, Cressy, Rauner Fund IV, L.P.
"Guarantors" shall mean the various parties to the Participation
Agreement from time to time, as guarantors of the Construction Agent and the
Lessee with respect to the Operative Agreements and the Properties.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of
Holder Advances made by each Holder to the Trust Estate pursuant to Section 2 of
the Participation Agreement and Section 3.1 of the Trust Agreement less any
payments of any Holder Advances received by the Holders pursuant to Section 3.4
of the Trust Agreement.
"Holder Commitments" shall mean $1,050,000, as such amount may be
increased or decreased from time to time in accordance with the provisions of
the Operative Agreements; provided, if there shall be more than one (1) Holder,
the Holder Commitment of each Holder
Appendix A-19
<PAGE> 173
shall be as set forth in Schedule I to the Trust Agreement as such Schedule I
may be amended and replaced from time to time.
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Facility Fee" shall have the meaning given to such term in
Section 7.4 of the Participation Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the ABR plus two
percent (2%) and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an amount
equal to the outstanding Holder Advances with respect thereto.
"Holder Yield" shall mean with respect to Holder Advances from time to
time either the Eurodollar Rate plus 2.00% or the ABR plus 0.75% as elected by
the Owner Trustee from time to time with respect to such Holder Advances in
accordance with the terms of the Trust Agreement; provided, however, (a) upon
delivery of the notice described in Section 3.7(c) of the Trust Agreement, the
outstanding Holder Advances of each Holder shall bear a yield at the ABR plus
0.75% applicable from time to time from and after the dates and during the
periods specified in Section 3.7(c) of the Trust Agreement, and (b) upon the
delivery by a Holder of the notice described in Section 11.3(f) of the
Participation Agreement, the Holder Advances of such Holder shall bear a yield
at the ABR plus 0.75% applicable from time to time after the dates and during
the periods specified in Section 11.3(f) of the Participation Agreement.
"Holders" shall mean First Union National Bank and each of the other
banks and financial institutions which may be from time to time holders of
Certificates in connection with the PHC Real Estate Trust 1998-1.
"Impositions" shall mean, except to the extent described in the
following sentence, any and all liabilities, losses, expenses, costs, charges
and Liens of any kind whatsoever for fees, taxes, levies, imposts, duties,
charges, assessments or withholdings ("Taxes") including but not limited to (i)
real and personal property taxes, including without limitation personal property
taxes on any property covered by the Lease that is classified by Governmental
Authorities as personal property, and real estate or ad valorem taxes in the
nature of property taxes; (ii) sales taxes, use taxes and other similar taxes
(including rent taxes and intangibles taxes); (iii) excise taxes; (iv) real
estate transfer taxes, conveyance taxes, stamp taxes and documentary recording
taxes and fees; (v) taxes that are or are in the nature of franchise, income,
value added, privilege and doing business taxes, license and registration fees;
(vi) assessments on any Property, including without limitation all assessments
for public Improvements or benefits, whether or not such improvements are
commenced or completed within the Term; and (vii) taxes, Liens, assessments or
charges asserted, imposed or assessed by the PBGC or any governmental authority
succeeding to or performing functions similar to, the PBGC; and in each case all
Appendix A-20
<PAGE> 174
interest, additions to tax and penalties thereon, which at any time prior to,
during or with respect to the Term or in respect of any period for which the
Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or
imposed by any Governmental Authority upon or with respect to (a) any Property
or any part thereof or interest therein; (b) the leasing, financing,
refinancing, demolition, construction, substitution, subleasing, assignment,
control, condition, occupancy, servicing, maintenance, repair, ownership,
possession, activity conducted on, delivery, insuring, use, operation,
improvement, sale, transfer of title, return or other disposition of such
Property or any part thereof or interest therein; (c) the Notes, other
indebtedness with respect to any Property, or the Certificates, or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Notes or the Certificates; (i) the Owner
Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the
transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction,
renovations and/or Modifications on any Land, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time and from
time to time on or under the Land purchased, leased or otherwise acquired using
the proceeds of the Loans or the Holder Advances or is otherwise leased pursuant
to the Lease and in all cases, is encumbered by a first priority, perfected
Mortgage Instrument, together with any and all appurtenances to such buildings,
structures or improvements, including without limitation sidewalks, utility
pipes, conduits and lines, parking areas and roadways, and including without
limitation all Modifications and other additions to or changes in the
Improvements at any time, including without limitation (a) any Improvements
existing as of the Property Closing Date as such Improvements may be referenced
on the applicable Requisition and (b) any Improvements made subsequent to such
Property Closing Date.
"Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.
"Incorporated Representations and Warranties" shall have the meaning
given to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication, such
Person's:
(a) obligations for borrowed money;
(b) obligations representing the deferred purchase price of
Property (whether real, personal, tangible, intangible or mixed) or
services (other than accounts payable arising in the ordinary course of
such Person's business payable on terms customary in the trade);
Appendix A-21
<PAGE> 175
(c) obligations, whether or not assumed, secured by liens or
payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person;
(d) obligations which are evidenced by notes, acceptances or
other instruments;
(e) Capital Lease Obligations;
(f) net liabilities under interest rate swap, exchange or cap
agreements; and
(g) contingent obligations.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent, the
Holders, the Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the Lessee.
"Initial Closing Date" shall mean March 30, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay
for: (a) Property Costs for construction of any Improvements; and (b) the
Property Costs of restoring or repairing any Property which is required to be
restored or repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Expense" shall mean, for any fiscal quarter, total interest
expense of the Lessee and its Subsidiaries on a consolidated basis for such
fiscal quarter (including, without limitation, interest expense attributable to
Capital Lease Obligations), determined in accordance with GAAP and all lease
payments made by the Lessee and its Subsidiaries pursuant to the Operative
Agreements.
"Interest Period" shall mean (a) during the Commitment Period and
thereafter as to any Eurodollar Loan or Eurodollar Holder Advance (i) with
respect to the initial Interest Period, the period beginning on the date of the
first Eurodollar Loan and Eurodollar Holder Advance and
Appendix A-22
<PAGE> 176
ending one (1) month, two (2) months or three (3) months thereafter, as selected
by the Lessor (in the case of a Eurodollar Loan) or the Owner Trustee (in the
case of a Eurodollar Holder Advance) in its applicable notice given with respect
thereto and (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan or Eurodollar
Holder Advance and ending one (1) month, two (2) months or three (3) months
thereafter, as selected by the Lessor by irrevocable notice to the Agent (in the
case of a Eurodollar Loan) or by the Owner Trustee (in the case of a Eurodollar
Holder Advance) in each case not less than three (3) Business Days prior to the
last day of the then current Interest Period with respect thereto; provided,
however, that all of the foregoing provisions relating to Interest Periods are
subject to the following: (A) if any Interest Period would end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (B) no Interest Period shall extend beyond the Maturity Date or the
Expiration Date, as the case may be, (C) where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month, and (D) there shall not be more than four
(4) Interest Periods outstanding at any one (1) time.
"Interest Rate Calculation Worksheet" shall mean a fully completed
worksheet in the form of Attachment B to Exhibit L.
"Interests" shall mean all ownership or profit-sharing interests
(howsoever designated) in any general or limited partnership, limited liability
company or joint venture, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, together with the rules and regulations promulgated thereunder.
"Joinder Agreement" shall mean a joinder agreement, in the form of
EXHIBIT M to the Participation Agreement, executed from time to time between a
Wholly-Owned Entity and the Agent.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule,
directive, order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Initial Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.
Appendix A-23
<PAGE> 177
"Lease Default" shall mean any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.
"Lease Expense" shall mean, for any fiscal quarter, all amounts paid,
payable or accrued during such fiscal quarter by the Borrower and its
Subsidiaries on a consolidated basis with respect to all leases and rental
agreements, including, without limitation, all amounts paid as Facility Rent
Expense, of the Lessee and its Subsidiaries, other than Capital Leases,
determined in accordance with GAAP; provided that Lease Expense shall exclude
any amounts that constitute Debt pursuant to clause (vii) of the Debt
definition.
"Lease Supplement" shall mean each Lease Supplement substantially in
the form of EXHIBIT A to the Lease, together with all attachments and schedules
thereto.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including without limitation all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to any Credit Party
affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $33,950,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
Lender Commitment of each Lender shall be as set forth in Schedule 1.1 to the
Credit Agreement as such Schedule 1.1 may be amended and replaced from time to
time.
"Lender Facility Fee" shall have the meaning given to such term in
Section 7.4 of the Participation Agreement.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
Appendix A-24
<PAGE> 178
"Lenders" shall mean First Union National Bank and each of the other
banks and financial institutions which may be from time to time party to the
Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Amended and Restated
Credit Agreement dated as of March 30, 1998 between the Lessee, First Union
National Bank, as Agent and various financial institutions party thereto, as
such may hereafter be amended, modified, supplemented, restated and/or replaced
from time to time.
"Lessee Credit Agreement Event of Default" shall mean an Event of
Default as defined in Article VII of the Lessee Credit Agreement.
"Lessee's Equipment" shall mean equipment which (a) is personal
property or a fixture but otherwise shall not constitute real property, (b) is
not financed with any Advance, (c) is not a replacement for any Equipment, (d)
is not a Modification required by any Legal Requirement or any Insurance
Requirement, (e) is not necessary or appropriate for the mechanical operation,
utility service, structure or for any other such purpose relating to the
physical plant of any Property and (f) may be removed from any Property without
causing material damage to such Property.
"Lessor" shall mean the Owner Trustee, not in its individual capacity,
but as the Lessor under the Lease.
"Lessor Basic Rent" shall mean the Holder Yield due on the Holder
Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement
(but not including interest on (a) any such scheduled Holder Yield due on the
Holder Advances prior to the Rent Commencement Date with respect to the Property
to which such Holder Advances relate or (b) overdue amounts under the Trust
Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor or
the Trust Company, in its individual capacity, not resulting from the
transactions contemplated by the Operative Agreements, (b) any act or omission
of the Lessor or the Trust Company, in its individual capacity, which is not
required by the Operative Agreements or is in violation of any of the terms of
the Operative Agreements, (c) any claim against the Lessor or the Trust Company,
in its individual capacity, with respect to Taxes or Transaction Expenses
against which the Lessee is not required to indemnify the Lessor or the Trust
Company, in its individual capacity, pursuant to Section 11 of the Participation
Agreement or (d) any claim against the Lessor arising out of any transfer by the
Lessor of all or
Appendix A-25
<PAGE> 179
any portion of the interest of the Lessor in the Properties, the Trust Estate or
the Operative Agreements other than the transfer of title to or possession of
any Properties by the Lessor pursuant to and in accordance with the Lease, the
Credit Agreement, the Security Agreement or the Participation Agreement or
pursuant to the exercise of the remedies set forth in Article XVII of the Lease.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the Properties
on an aggregate basis, an amount equal to the sum of the Termination Values with
respect to all the Properties on an aggregate basis on each Payment Date, less
the Maximum Residual Guarantee Amount as of such date with respect to all the
Properties on an aggregate basis.
"Loan Basic Rent" shall mean the interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such Loan relates or (b) any overdue
amounts under Section 2.8(c) of the Credit Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any
date of determination, an amount equal to (a) the aggregate principal amount all
Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
"Loans" shall mean the loans extended pursuant to the Credit Agreement
and shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders whose Holder
Advances outstanding represent at least fifty-one percent (51%) of (a) the
aggregate Holder Advances outstanding or (b) to the extent there are no Holder
Advances outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans
outstanding represent at least fifty-one percent (51%) of (a) the aggregate
Loans outstanding or (b) to the extent there are no Loans outstanding, the
aggregate Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and Holders
whose Loans and Holder Advances outstanding represent at least fifty-one percent
(51%) of (a) the aggregate Advances outstanding or (b) to the extent there are
no Advances outstanding, the sum of the aggregate Holder Commitments plus the
aggregate Lender Commitments.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on a particular Payment Date or the
Expiration Date, as applicable.
Appendix A-26
<PAGE> 180
"Material Adverse Effect" shall, mean a material adverse effect on (a)
the financial condition, operations, business, properties or prospects of the
Lessee and its Subsidiaries, taken as a whole; (b) the ability of the Lessee or
any of its Subsidiaries to perform its material obligations under any Material
Operative Agreement; (c) the legality, validity or enforceability of any
Material Operative Agreement; (d) the perfection or priority of the liens of the
Agent granted under the Material Operative Agreements or the rights and remedies
of the Agent or the other Financing Parties under the Material Operative
Agreements, or (e) the value, utility or useful life of any Property or the use,
or ability of the Lessee to use, any Property for the purpose for which it was
intended (provided, respecting this subsection (e), no Material Adverse Effect
shall result to the extent the applicable Property is purchased by the Lessee
pursuant to the Purchase Option or is sold to another Person pursuant to the
Sale Option, in each case (i) in accordance with Section 8(j) of the
Participation Agreement and Articles XIX, XX and XXII of the Lease and (ii)
within thirty (30) days of the Lessor having gained knowledge of such material
adverse effect described in this subsection (e)).
"Material Operative Agreements" shall mean the following: the
Participation Agreement, the Agency Agreement, the Trust Agreement, the
Certificates, the Credit Agreement, the Notes, the Lease, the Lease Supplements
(and memoranda of the Lease and each Lease Supplement in a form reasonably
acceptable to the Agent), the Joinder Agreements, the Security Agreement, the
Mortgage Instruments, the other Security Documents, the Ground Leases, the Deeds
and the Bills of Sale.
"Maturity Date" shall mean the Expiration Date.
"Maximum Residual Guarantee Amount" shall mean an amount equal to the
product of the aggregate Property Cost for all of Properties times eighty-five
percent (85%).
"Medicaid Regulations" shall mean, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC
ss.ss. 1396 et seq., or elsewhere) affecting the medical assistance program
established by Title XIX of the Social Security Act, and any statutes succeeding
thereto; (ii) all applicable provisions of all federal rules, regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (i) above; (iii) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (iii) above,
in each case as may be amended, supplemented or otherwise modified from time to
time.
Appendix A-27
<PAGE> 181
"MediCal Regulations" shall mean collectively, all California state
statues (whether set forth in Cal. Welf. & Inst. Code ss.ss. 14000 et seq., or
elsewhere) affecting the health insurance program for the aged and disabled
established in connection with Title XIX of the Social Security Act, and any
statutes succeeding thereto; together with all applicable provisions of all
rules, regulations, manuals and orders and administrative, reimbursement and
other guidelines having the force of law of all Governmental Authorities
(including without limitation, the California Department of Health Services)
promulgated pursuant to or in connection with any of the foregoing having the
force of law, in each case as may be amended, supplemented or otherwise modified
from to time.
"Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC ss.ss.
1396, et seq., or elsewhere) affecting the health insurance program of the aged
and disabled established by Title XVIII of the Social Security Act and any
statutes succeeding thereto; together with all applicable provisions of all
rules, regulations, manuals and orders and administrative, reimbursement and
other guidelines having the force of law of all Governmental Authorities
(including without limitation, Health and Human Services ("HHS"), HCFA, the
Office of the Inspector General for HHS, or any Person succeeding to the
functions of law, in each case as may be amended from time to time.
"Modifications" shall have the meaning specified in Section 11.1(a) of
the Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any
other instrument executed by the Owner Trustee and the Lessee (or regarding any
property subject to a Ground Lease, the applicable Affiliate of the Lessee) in
favor of the Agent (for the benefit of the Lenders and the Holders) and
evidencing a Lien on the Property, in form and substance reasonably acceptable
to the Agent.
"Multiemployer Plan" shall mean any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made or required by
any Credit Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party or
any ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"New Facility" shall have the meaning given to such term in Section
28.1 of the Lease.
"Non-Excluded Taxes" shall have the meaning given to such term in
Section 11.5 of the Participation Agreement.
"Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.
"Obligations" shall have the meaning given to such term in Section 1 of
the Security Agreement.
Appendix A-28
<PAGE> 182
"OECD" shall mean the Organization for Economic Cooperation and
Development.
"Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), the Joinder Agreements, the Security Agreement, the Mortgage
Instruments, the other Security Documents, the Ground Leases, the Deeds, the
Bills of Sale and any and all other agreements, documents and instruments
executed from time to time in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such
term in Section 5 of EXHIBIT A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(c) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and
any other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.8(b) of the Credit
Agreement, (b) with respect to the Lessor Basic Rent, the Holder Yield and any
other amount owed under or with respect to the Trust Agreement, the Holder
Overdue Rate, and (c) with respect to any other amount, the amount referred to
in clause (y) of Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security Bank,
National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the PHC Real
Estate Trust 1998-1 and any successor or replacement and/or additional Owner
Trustee expressly permitted under the Operative Agreements.
"Participation Agreement" shall mean the Participation Agreement dated
on or about the Initial Closing Date, among the Lessee, the Owner Trustee, not
in its individual capacity except as expressly stated therein, the Holders, the
Lenders and the Agent.
"Payment Date" shall mean any Scheduled Interest Payment Date and any
date on which interest or Holder Yield in connection with a prepayment of
principal on the Loans or of the Holder Advances is due under the Credit
Agreement or the Trust Agreement.
Appendix A-29
<PAGE> 183
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean a medical office or acute care facility
of the type and size customarily used and operated by the Lessee in its ordinary
course of business as of the Initial Closing Date or an improvement to any of
the foregoing.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a sublease
or an assignment expressly permitted by the terms of the Lease for no
longer than the duration of the Lease;
(c) Liens for Taxes that either are not yet delinquent or are
being contested in accordance with the provisions of Section 13.1 of
the Lease;
(d) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the construction of the
Improvements or in connection with any Modifications or arising in the
ordinary course of business for amounts that either are not more than
thirty (30) days past due or are being diligently contested in good
faith by appropriate proceedings, so long as such proceedings satisfy
the conditions for the continuation of proceedings to contest Taxes set
forth in Section 13.1 of the Lease;
(e) Liens of any of the types referred to in clause (d) above
that have been bonded for not less than the full amount in dispute (or
as to which other security arrangements satisfactory to the Lessor and
the Agent have been made), which bonding (or arrangements) shall comply
with applicable Legal Requirements, and shall have effectively stayed
any execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to
which appeals or other proceedings for review are being prosecuted in
good faith and for the payment of which adequate reserves have been
provided as required by GAAP or other appropriate provisions have been
made, so long as such proceedings have the effect of staying the
Appendix A-30
<PAGE> 184
execution of such judgments or awards and satisfy the conditions for
the continuation of proceedings to contest Taxes set forth in Section
13.1 of the Lease;
(g) Liens in favor of municipalities to the extent agreed to
by the Lessor;
(h) Liens upon Lessee's Equipment leased under a Capital Lease
(including sale/leaseback transactions permitted by Section 6.17 of the
Lessee Credit Agreement) and placed upon such Lessee's Equipment at the
time of, or within sixty (60) days after, the commencement of the lease
thereof to secure the lease payments under such Capital Lease, provided
that any such lien (i) shall not encumber any Property or any other
property of the Lessee or any of its Subsidiaries and (ii) shall not
exceed the total of such lease payments; and
(i) Purchase money liens incurred or assumed in the purchase
of Lessee's Equipment permitted under Section 6.14 of the Lessee Credit
Agreement, provided that any such lien (i) attaches to such asset
concurrently with or within ten (10) days after the acquisition
thereof, (ii) shall not encumber any Property or any other property of
the Lessee or any of its Subsidiaries and (iii) shall not exceed the
purchase price of such asset.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
governmental authority or any other entity.
"PHC" shall mean Province Healthcare Company, a Delaware corporation,
and its successors and permitted assigns.
"PHC Real Estate Trust 1998-1" shall mean the grantor trust created
pursuant to the terms and conditions of the Trust Agreement.
"Plans and Specifications" shall mean, with respect to Improvements,
the plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that is
(or is to be) acquired, constructed, renovated and/or modified pursuant to the
terms of the Operative Agreements, the Land and each item of Equipment and the
various Improvements, in each case located on such Land, including without
limitation each Construction Period Property, each Property subject to a Ground
Lease and each Property for which the Term has commenced.
Appendix A-31
<PAGE> 185
"Property Acquisition Cost" shall mean the cost to the Lessor to
purchase a Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor
purchases a Property or, with respect to the first Advance, the date on which
the Lessor seeks reimbursement for Property previously purchased by the Lessor.
"Property Cost" shall mean with respect to a Property the aggregate
amount (and/or the various items and occurrences giving rise to such amounts) of
the Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
and 7.1(b) of the Participation Agreement).
"Purchase Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Register" shall have the meaning given to such term in Section 9.7(c)
of the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date.
"Replaced Financing Party" shall have the meaning specified in Section
11.6 of the Participation Agreement.
"Replacement Effective Date" shall have the meaning specified in
Section 11.6 of the Participation Agreement.
"Replacement Financing Party" shall have the meaning specified in
Section 11.6 of the Participation Agreement.
"Reportable Event" shall have the meaning specified in ERISA.
Appendix A-32
<PAGE> 186
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the
Board of Directors, the Chairman or Vice Chairman of the Executive Committee of
the Board of Directors, the President, any Senior Vice President or Executive
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Sale Date" shall have the meaning given to such term in Section
20.3(a) of the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection
with the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1
of the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds
of a sale described in Section 22.1 of the Lease are less than the Limited
Recourse Amount with respect to the Properties if it has been determined that
the Fair Market Sales Value of the Properties at the expiration of the term of
the Lease has been impaired by greater than expected wear and tear during the
Term of the Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar
Loan or Eurodollar Holder Advance, the last day of the Interest Period
applicable to such Eurodollar Loan or Eurodollar Holder Advance, (b) as to any
ABR Loan or any ABR Holder Advance, the fifteenth day of each month and (c) as
to all Loans and Holder Advances, the date of any voluntary or involuntary
payment, prepayment, return or redemption, and the Maturity Date or the
Expiration Date, as the case may be.
"Secured Parties" shall have the meaning given to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or
about the Initial Closing Date between the Lessor and the Agent, for the benefit
of the Secured Parties.
Appendix A-33
<PAGE> 187
"Security Documents" shall mean the collective reference to the
Security Agreement, the Mortgage Instruments, (to the extent the Lease is
construed as a security instrument) the Lease and all other security documents
hereafter delivered to the Agent granting a lien on any asset or assets of any
Person to secure the obligations and liabilities of the Lessor under the Credit
Agreement and/or under any of the other Credit Documents or to secure any
guarantee of any such obligations and liabilities.
"Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the Properties other than Hard Costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, the Lender Facility Fee, the
Holder Facility Fee, fees and expenses of the Owner Trustee payable or
reimbursable under the Operative Agreements and costs and expenses incurred
pursuant to Sections 7.3(a) and 7.3(b) of the Participation Agreement.
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or nonvoting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, or other entity of which more than 50% of
the Interests or voting power, is at the time, directly or indirectly, owned by
any Person or one or more of its Subsidiaries (irrespective of whether, at the
time, the ownership interests or Stock of any other class or classes of such
entity or corporation shall have or might have voting power by reason of the
happening of any contingency). When used without reference to a parent, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Lessee.
"Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Trust Company, the Holders, the Agent, the Lenders or any other Person under
the Lease or under any of the other Operative Agreements including without
limitation payments of the Termination Value and the Maximum Residual Guarantee
Amount and all indemnification amounts, liabilities and obligations.
"Swap Agreement" shall mean any and all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance or other hedging arrangements and all other similar agreements or
arrangements between the Lessee and any Lender designed to protect against
fluctuations in interest rates.
Appendix A-34
<PAGE> 188
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall have the meaning specified in Section 2.2 of the Lease.
"Termination Date" shall have the meaning specified in Section 16.2(a)
of the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan,
the occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan, (c) the distribution of a notice of intent to
terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section 16.1
of the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect
to all Properties, an amount equal to the aggregate outstanding Property Cost
for all the Properties, in each case as of the last occurring Payment Date, or
(ii) with respect to a particular Property, an amount equal to the product of
the Termination Value of all the Properties times a fraction, the numerator of
which is the Property Cost allocable to the particular Property in question and
the denominator of which is the aggregate Property Cost for all the Properties,
in each case as of the last occurring Payment Date, plus (b) respecting the
amounts described in each of the foregoing subclause (i) or (ii), as applicable,
any and all accrued and unpaid interest on the Loans and any and all accrued and
unpaid Holder Yield on the Holder Advances related to the applicable Property
Cost, plus (c) to the extent the same is not duplicative of the amounts payable
under clause (b) above, all other Rent and other amounts then due and payable or
accrued under the Agency Agreement, Lease and/or under any other Operative
Agreement (including without limitation amounts under Sections 11.1 and 11.2 of
the Participation Agreement and all costs and expenses referred to in clause
FIRST of Section 22.2 of the Lease).
"Tranche A Commitments" shall mean the obligation of the Tranche A
Lenders to make the Tranche A Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 1.1 to the
Credit Agreement, as such amount may be reduced from time to time in accordance
with the provisions of the Operative Agreements; provided, no Tranche A Lender
shall be obligated to make Tranche A Loans in excess of such Tranche A Lender's
share of the Tranche A Commitments as set forth adjacent to such Tranche A
Lender's name on Schedule 1.1 to Credit Agreement.
Appendix A-35
<PAGE> 189
"Tranche A Lenders" shall mean First Union National Bank and the
several banks and other financial institutions from time to time party to the
Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B
Lenders to make the Tranche B Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 1.1 to the
Credit Agreement, as such amount may be reduced from time to time in accordance
with the provisions of the Operative Agreements; provided, no Tranche B Lender
shall be obligated to make Tranche B Loans in excess of such Tranche B Lender's
share of the Tranche B Commitments as set forth adjacent to such Tranche B
Lender's name on Schedule 1.1 to Credit Agreement.
"Tranche B Lenders" shall mean First Union National Bank and the
several banks and other financial institutions from time to time party to the
Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs
and expenses incurred in connection with the preparation, execution and delivery
of the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative
Agreements and the other transaction documents, preparing for the
closings under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Agreements;
(b) the reasonable fees, out-of-pocket expenses and
disbursements of accountants for any Credit Party in connection with
the transaction contemplated by the Operative Agreements;
Appendix A-36
<PAGE> 190
(c) any and all other reasonable fees, charges or other
amounts payable to the Lenders, the Agent, the Holders, the Owner
Trustee or any broker which arises under any of the Operative
Agreements;
(d) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any of
the other transaction documents; and
(e) any and all Taxes and fees incurred in recording or filing
any Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing
statement with any public office, registry or governmental agency in
connection with the transactions contemplated by the Operative
Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the PHC Real Estate Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about the
Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National Association,
in its individual capacity, and any successor owner trustee under the Trust
Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of the
Trust Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section
12.5 of the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of
the Agency Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all benefits under such
Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
Appendix A-37
<PAGE> 191
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
Code as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United
States Code.
"Wholly-Owned Entity" shall mean a Person, with respect to which all of
the shares of capital stock or other ownership interest are owned by Province
Healthcare Company and/or one of its wholly-owned Subsidiaries or other
wholly-owned entities; provided, such Person shall have assets with a gross
value (determined in accordance with GAAP) in excess of $100,000.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000" shall mean the calendar year beginning January 1, 2000 and
ending December 31, 2000.
<PAGE> 1
EXHIBIT 10.1
LEASE AGREEMENT
Dated as of March 30, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as the Owner Trustee
under the PHC Real Estate Trust 1998,
as Lessor
and
PROVINCE HEALTHCARE COMPANY,
as Lessee
- --------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of First Union
National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Lenders and the Holders, to the extent of their
interests (the "Agent") under a Security Agreement dated as of March 30, 1998,
between First Security Bank, National Association, not individually, but solely
as the Owner Trustee under the PHC Real Estate Trust 1998-1 and the Agent, as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof. This Lease Agreement
has been executed in several counterparts. To the extent, if any, that this
Lease Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Agreement may be created through the transfer or
possession of any counterpart other than the original counterpart containing the
receipt therefor executed by the Agent on the signature page hereof.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I........................................................................................................ 1
1.1 Definitions......................................................................................... 1
1.2 Interpretation...................................................................................... 2
ARTICLE II....................................................................................................... 2
2.1 Property............................................................................................ 2
2.2 Lease Term.......................................................................................... 2
2.3 Title............................................................................................... 2
2.4 Lease Supplements................................................................................... 2
ARTICLE III...................................................................................................... 3
3.1 Rent................................................................................................ 3
3.2 Payment of Basic Rent............................................................................... 3
3.3 Supplemental Rent................................................................................... 3
3.4 Performance on a Non-Business Day................................................................... 4
3.5 Rent Payment Provisions............................................................................. 4
ARTICLE IV....................................................................................................... 4
4.1 Taxes; Utility Charges.............................................................................. 4
ARTICLE V........................................................................................................ 5
5.1 Quiet Enjoyment..................................................................................... 5
ARTICLE VI....................................................................................................... 5
6.1 Net Lease........................................................................................... 5
6.2 No Termination or Abatement......................................................................... 6
ARTICLE VII...................................................................................................... 6
7.1 Ownership of the Properties......................................................................... 6
ARTICLE VIII..................................................................................................... 7
8.1 Condition of the Properties......................................................................... 7
8.2 Possession and Use of the Properties................................................................ 8
8.3 Integrated Properties............................................................................... 9
8.4 Lessee's Equipment..................................................................................10
ARTICLE IX.......................................................................................................10
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards.......................................................10
ARTICLE X........................................................................................................10
10.1 Maintenance and Repair; Return.....................................................................10
10.2 Environmental Inspection...........................................................................12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE XI.......................................................................................................12
11.1 Modifications......................................................................................12
ARTICLE XII......................................................................................................13
12.1 Warranty of Title..................................................................................13
ARTICLE XIII.....................................................................................................14
13.1 Permitted Contests Other Than in Respect of Indemnities............................................14
ARTICLE XIV......................................................................................................15
14.1 Public Liability and Workers' Compensation Insurance...............................................15
14.2 Permanent Hazard and Other Insurance...............................................................15
14.3 Coverage...........................................................................................16
ARTICLE XV.......................................................................................................17
15.1 Casualty and Condemnation..........................................................................17
15.2 Environmental Matters..............................................................................19
15.3 Notice of Environmental Matters....................................................................20
ARTICLE XVI......................................................................................................20
16.1 Termination Upon Certain Events....................................................................20
16.2 Procedures.........................................................................................20
ARTICLE XVII.....................................................................................................20
17.1 Lease Events of Default............................................................................20
17.2 Surrender of Possession............................................................................24
17.3 Reletting..........................................................................................24
17.4 Damages............................................................................................25
17.5 Power of Sale......................................................................................25
17.6 Final Liquidated Damages...........................................................................26
17.7 Environmental Costs................................................................................26
17.8 Waiver of Certain Rights...........................................................................26
17.9 Assignment of Rights Under Contracts...............................................................27
17.10 Remedies Cumulative...............................................................................27
ARTICLE XVIII....................................................................................................27
18.1 Lessor's Right to Cure Lessee's Lease Defaults.....................................................27
ARTICLE XIX......................................................................................................27
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option....................................27
19.2 No Purchase or Termination With Respect to Less than All of a Property.............................28
ARTICLE XX.......................................................................................................28
20.1 Purchase Option or Sale Option-General Provisions..................................................28
20.2 Lessee Purchase Option.............................................................................29
20.3 Third Party Sale Option............................................................................30
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE XXI......................................................................................................30
21.1 [Intentionally Omitted]............................................................................30
ARTICLE XXII.....................................................................................................30
22.1 Sale Procedure.....................................................................................30
22.2 Application of Proceeds of Sale....................................................................33
22.3 Indemnity for Excessive Wear.......................................................................33
22.4 Appraisal Procedure................................................................................34
22.5 Certain Obligations Continue.......................................................................34
ARTICLE XXIII....................................................................................................35
23.1 Holding Over.......................................................................................35
ARTICLE XXIV.....................................................................................................35
24.1 Risk of Loss.......................................................................................35
ARTICLE XXV......................................................................................................35
25.1 Assignment.........................................................................................35
25.2 Subleases..........................................................................................36
ARTICLE XXVI.....................................................................................................36
26.1 No Waiver..........................................................................................36
ARTICLE XXVII....................................................................................................37
27.1 Acceptance of Surrender............................................................................37
27.2 No Merger of Title.................................................................................37
ARTICLE XXVIII...................................................................................................37
28.1 Incorporation of Covenants.........................................................................37
ARTICLE XXIX.....................................................................................................38
29.1 Notices............................................................................................38
ARTICLE XXX......................................................................................................38
30.1 Miscellaneous......................................................................................38
30.2 Amendments and Modifications.......................................................................39
30.3 Successors and Assigns.............................................................................39
30.4 Headings and Table of Contents.....................................................................39
30.5 Counterparts.......................................................................................39
30.6 GOVERNING LAW......................................................................................39
30.7 Calculation of Rent................................................................................39
30.8 Memoranda of Lease and Lease Supplements...........................................................39
30.9 Allocations between the Lenders and the Holders....................................................40
30.10 Limitations on Recourse...........................................................................40
30.11 WAIVERS OF JURY TRIAL.............................................................................40
30.12 Exercise of Lessor Rights.........................................................................40
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
30.13 SUBMISSION TO JURISDICTION; VENUE; ARBITRATION....................................................40
30.14 USURY SAVINGS PROVISION...........................................................................41
EXHIBITS
EXHIBIT A - Lease Supplement No. ____
EXHIBIT B - Memorandum of Lease and Lease Supplement No. ____
</TABLE>
iv
<PAGE> 6
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of March 30, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
"Lease") is between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, having its principal office at 79 South Main Street, Salt
Lake City, Utah 84111, not individually, but solely as the Owner Trustee under
the PHC Real Estate Trust 1998-1, as lessor (the "Lessor"), and PROVINCE
HEALTHCARE COMPANY, a Delaware corporation, having its principal place of
business at 105 Westwood Place, Suite 400, Brentwood, Tennessee 37027, as lessee
(the "Lessee").
W I T N E S S E T H:
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) purchase or ground lease
various parcels of real property, some of which will (or may) have existing
Improvements thereon, from one (1) or more third parties designated by Lessee
and (ii) fund the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties by the Construction Agent; and
B. WHEREAS, the Term shall commence with respect to each Property upon
the Property Closing Date with respect thereto; provided, Basic Rent with
respect thereto shall not be payable until the applicable Rent Commencement
Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to
lease from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 DEFINITIONS.
For purposes of this Lease, capitalized terms used in this
Lease and not otherwise defined herein shall have the meanings assigned to them
in Appendix A to that certain Participation Agreement dated as of March 30, 1998
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Lessee, Lessor, the various parties thereto
from time to time, as the Guarantors, the various banks and other lending
institutions which are parties thereto from time to time, as the Holders, the
various banks and other lending institutions which are parties thereto from time
to time, as the Lenders, and First Union National
<PAGE> 7
Bank, as agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests. Unless
otherwise indicated, references in this Lease to articles, sections, paragraphs,
clauses, appendices, schedules and exhibits are to the same contained in this
Lease.
1.2 INTERPRETATION.
The rules of usage set forth in Appendix A to the
Participation Agreement shall apply to this Lease.
ARTICLE II
2.1 PROPERTY.
Subject to the terms and conditions hereinafter set forth and
contained in the respective Lease Supplement relating to each Property, Lessor
hereby leases to Lessee and Lessee hereby leases from Lessor, each Property.
2.2 LEASE TERM.
The term of this Lease with respect to each Property (the
"Term") shall begin upon the Property Closing Date for such Property (in each
case the "Commencement Date") and shall end on the fifth annual anniversary of
the Initial Closing Date (the "Expiration Date"), unless the Term is earlier
terminated. Notwithstanding the foregoing, Lessee shall not be obligated to pay
Basic Rent until the Rent Commencement Date with respect to such Property.
2.3 TITLE.
Each Property is leased to Lessee without any representation
or warranty, express or implied, by Lessor other than those set forth in the
Participation Agreement and subject to the rights of parties in possession (if
any), the existing state of title (including without limitation the Permitted
Liens) and all applicable Legal Requirements. Lessee shall in no event have any
recourse against Lessor for any defect in Lessor's title to any Property or any
interest of Lessee therein other than for Lessor Liens.
2.4 LEASE SUPPLEMENTS.
On or prior to each Commencement Date, Lessee and Lessor shall each
execute and deliver a Lease Supplement for the Property to be leased effective
as of such Commencement Date in substantially the form of Exhibit A hereto.
2
<PAGE> 8
ARTICLE III
3.1 RENT.
(a) Lessee shall pay Basic Rent in arrears on each Payment
Date, and on any date on which this Lease shall terminate with respect
to any or all Properties during the Term; provided, however, with
respect to each individual Property Lessee shall have no obligation to
pay Basic Rent with respect to such Property until the Rent
Commencement Date with respect to such Property (notwithstanding that
Basic Rent for such Property shall accrue from and including the
Scheduled Interest Payment Date immediately preceding such Rent
Commencement Date). Basic Rent shall be adjusted with regard to amounts
expended by Lessor for any Modification.
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately
available funds on the due date therefor (or within the applicable
grace period) to such account or accounts at such bank or banks as
Lessor shall from time to time direct.
(c) Lessee's inability or failure to take possession of all or
any portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall
not delay or otherwise affect Lessee's obligation to pay Rent for such
Property in accordance with the terms of this Lease.
(d) Lessee shall make all payments of Rent prior to 12:00
noon, Charlotte, North Carolina time, on the applicable date for
payment of such amount.
3.2 PAYMENT OF BASIC RENT.
Basic Rent shall be paid absolutely net to Lessor or its
designee, so that this Lease shall yield to Lessor the full amount thereof,
without setoff, deduction or reduction.
3.3 SUPPLEMENTAL RENT.
Lessee shall pay to the Person entitled thereto any and all
Supplemental Rent when and as the same shall become due and payable, and if
Lessee fails to pay any Supplemental Rent within three (3) days after the same
is due, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent. All such
payments of Supplemental Rent shall be in the full amount thereof, without
setoff, deduction or reduction. Lessee shall pay to the appropriate Person, as
Supplemental Rent due and owing to such Person, among other things, on demand,
to the extent permitted by applicable Legal Requirements, (a) any and all
payment obligations (except for amounts payable as Basic Rent) owing from time
to time under the Operative Agreements by any Person to the Agent, any Lender,
any Holder or any other Person and (b) interest at the applicable Overdue Rate
on any installment of Basic Rent not paid when due (subject to the applicable
grace period)
3
<PAGE> 9
for the period for which the same shall be overdue and on any payment of
Supplemental Rent not paid when due or demanded by the appropriate Person
(subject to any applicable grace period) for the period from the due date or the
date of any such demand, as the case may be, until the same shall be paid. It
shall be an additional Supplemental Rent obligation of Lessee to pay to the
appropriate Person all rent and other amounts when such become due and owing
from time to time under each Ground Lease and without the necessity of any
notice from Lessor with regard thereto. The expiration or other termination of
Lessee's obligations to pay Basic Rent hereunder shall not limit or modify the
obligations of Lessee with respect to Supplemental Rent. Unless expressly
provided otherwise in this Lease, in the event of any failure on the part of
Lessee to pay and discharge any Supplemental Rent as and when due, Lessee shall
also promptly pay and discharge any fine, penalty, interest or cost which may be
assessed or added for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.
3.4 PERFORMANCE ON A NON-BUSINESS DAY.
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5 RENT PAYMENT PROVISIONS.
Lessee shall make payment of all Basic Rent and Supplemental
Rent when due (subject to the applicable grace periods) regardless of whether
any of the Operative Agreements pursuant to which same is calculated and is
owing shall have been rejected, avoided or disavowed in any bankruptcy or
insolvency proceeding involving any of the parties to any of the Operative
Agreements. Such provisions of such Operative Agreements and their related
definitions are incorporated herein by reference and shall survive any
termination, amendment or rejection of any such Operative Agreements.
ARTICLE IV
4.1 TAXES; UTILITY CHARGES.
Lessee shall pay or cause to be paid all Impositions with
respect to the Properties and/or the use, occupancy, operation, repair, access,
maintenance or operation thereof and all charges for electricity, power, gas,
oil, water, telephone, sanitary sewer service and all other rents, utilities and
operating expenses of any kind or type used in or on any Property and related
real property during the Term except those being contested by appropriate
proceedings pursuant to Section 13.1. Upon Lessor's request, Lessee shall
provide from time to time Lessor with evidence of all such payments referenced
in the foregoing sentence. Lessee shall be entitled to receive any credit or
refund with respect to any Imposition or utility charge paid by Lessee. Unless
an Event of Default shall have occurred and be continuing, the amount of any
credit or refund received by Lessor on account of any Imposition or utility
charge paid by Lessee, net of
4
<PAGE> 10
the costs and expenses incurred by Lessor in obtaining such credit or refund,
shall be promptly paid over to Lessee. All charges for Impositions or utilities
imposed with respect to any Property for a period during which this Lease
expires or terminates shall be adjusted and prorated on a daily basis between
Lessor and Lessee, and each party shall pay or reimburse the other for such
party's pro rata share thereof.
ARTICLE V
5.1 QUIET ENJOYMENT.
Subject to the rights of Lessor contained in Sections 17.2,
17.3 and 20.3 and the other terms of this Lease and the other Operative
Agreements and so long as no Event of Default shall have occurred and be
continuing, Lessee shall peaceably and quietly have, hold and enjoy each
Property for the applicable Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor (other than Lessee) with
respect to any matters arising from and after the applicable Commencement Date.
ARTICLE VI
6.1 NET LEASE.
This Lease shall constitute a net lease, and the obligations
of Lessee hereunder are absolute and unconditional. Lessee shall pay all
operating expenses arising out of the use, operation and/or occupancy of each
Property. Any present or future law to the contrary notwithstanding, this Lease
shall not terminate, nor shall Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of Lessee hereunder be affected (except as expressly
herein permitted and by performance of the obligations in connection therewith)
for any reason whatsoever, including without limitation by reason of: (a) any
damage to or destruction of any Property or any part thereof; (b) any taking of
any Property or any part thereof or interest therein by Condemnation or
otherwise; (c) any prohibition, limitation, restriction or prevention of
Lessee's use, occupancy or enjoyment of any Property or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or for any
other reason; (d) any title defect, Lien or any matter affecting title to any
Property; (e) any eviction by paramount title or otherwise; (f) any default by
Lessor hereunder; (g) any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding relating to or affecting the Agent,
any Lender, Lessor, Lessee, any Holder or any Governmental Authority; (h) the
impossibility or illegality of performance by Lessor, Lessee or both; (i) any
action of any Governmental Authority or any other Person; (j) Lessee's
acquisition of ownership of all or part of any Property; (k) breach of any
warranty or representation with respect to any Property or any Operative
Agreement; (l) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of Lessee
5
<PAGE> 11
hereunder shall be covenants, agreements and obligations that are separate and
independent from any obligations of Lessor hereunder and shall continue
unaffected unless such covenants, agreements and obligations shall have been
modified or terminated in accordance with an express provision of this Lease.
Lessor and Lessee acknowledge and agree that the provisions of this Section 6.1
have been specifically reviewed and subject to negotiation.
6.2 NO TERMINATION OR ABATEMENT.
Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
ARTICLE VII
7.1 OWNERSHIP OF THE PROPERTIES.
(a) Lessor and Lessee intend that (i) for financial accounting
purposes with respect to Lessee (A) this Lease will be treated as an
"operating lease" pursuant to Statement of Financial Accounting
Standards No. 13, as amended, (B) Lessor will be treated as the owner
and lessor of each Property and (C) Lessee will be treated as the
lessee of each Property, but (ii) for federal and all state and local
income tax purposes, bankruptcy purposes, regulatory purposes,
commercial law and real estate purposes and all other purposes (A) this
Lease will be treated as a financing arrangement and (B) Lessee will be
treated as the owner of the Properties and will be entitled to all tax
benefits ordinarily available to owners of property similar to the
Properties for such tax purposes. Notwithstanding the foregoing,
neither party hereto has made, or shall be deemed to have made, any
representation or warranty as to the availability of any of the
foregoing treatments under applicable accounting rules, tax,
bankruptcy, regulatory, commercial or real estate law or under any
other set of rules. Lessee shall claim the cost recovery deductions
associated with each Property, and Lessor shall not, to the extent not
prohibited by Law, take on its tax return a position inconsistent with
Lessee's claim of such deductions.
6
<PAGE> 12
(b) For all purposes other than as set forth in Section
7.1(a)(i), Lessor and Lessee intend this Lease to constitute a finance
lease and not a true lease. In order to secure the obligations of
Lessee now existing or hereafter arising under any and all Operative
Agreements, Lessee hereby conveys, grants, assigns, transfers,
hypothecates, mortgages and sets over to Lessor, for the benefit of all
Financing Parties, a first priority security interest (but subject to
the security interest in the assets granted by Lessee in favor of the
Agent in accordance with the Security Agreement) in and lien on all
right, title and interest of Lessee (now owned or hereafter acquired)
in and to all Properties, to the extent such is personal property and
irrevocably grants and conveys a lien, deed of trust and mortgage on
all right, title and interest of Lessee (now owned or hereafter
acquired) in and to all Properties to the extent such is real property,
and to secure the obligations of each Credit Party now existing or
hereafter arising under the Operative Agreements, (i) this Lease shall
be a security agreement and financing statement within the meaning of
Article 9 of the Uniform Commercial Code respecting each of the
Properties and all proceeds (including without limitation insurance
proceeds thereof) to the extent such is personal property and an
irrevocable grant and conveyance of a lien, deed of trust and mortgage
on each of the Properties and all proceeds (including without
limitation insurance proceeds thereof) to the extent such is real
property; (ii) the acquisition of title (or to the extent applicable, a
leasehold interest pursuant to a Ground Lease) in each Property
referenced in Article II constitutes a grant by Lessee to Lessor of a
security interest, lien, deed of trust and mortgage in all of Lessee's
right, title and interest in and to each Property and all proceeds
(including without limitation insurance proceeds thereof) of the
conversion, voluntary or involuntary, of the foregoing into cash,
investments, securities or other property, whether in the form of cash,
investments, securities or other property, and an assignment of all
rents, profits and income produced by each Property; and (iii)
notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or
agents (as applicable) of Lessee shall be deemed to have been given for
the purpose of perfecting such lien, security interest, mortgage lien
and deed of trust under applicable law. Lessor and Lessee shall
promptly take such actions as may be necessary or advisable in either
party's opinion (including without limitation the filing of Uniform
Commercial Code Financing Statements, Uniform Commercial Code Fixture
Filings and memoranda (or short forms) of this Lease and the various
Lease Supplements) to ensure that the lien, security interest, lien,
mortgage lien and deed of trust in each Property and the other items
referenced above will be deemed to be a perfected lien, security
interest, mortgage lien and deed of trust of first priority under
applicable law and will be maintained as such throughout the Term.
7
<PAGE> 13
ARTICLE VIII
8.1 CONDITION OF THE PROPERTIES.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH
PROPERTY "AS-IS WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS
OR IMPLIED) BY LESSOR (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND
CLEAR OF LESSOR LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF
TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY
STATE OF FACTS REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY
MIGHT SHOW, (D) ALL APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL
REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF AND/OR THE DATE OF THE
APPLICABLE LEASE SUPPLEMENT. NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY
HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE
AND CLEAR OF LESSOR LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER
AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT
NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE COMMENCEMENT DATE WILL
HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT EACH PROPERTY AND THE
IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT, EACH
LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS,
ON THE ONE (1) HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2 POSSESSION AND USE OF THE PROPERTIES.
(a) At all times during the Term with respect to each
Property, such Property shall be a Permitted Facility and shall be used
by Lessee in the ordinary course of its business. Lessee shall pay, or
cause to be paid, all charges and costs required in connection with the
use of the Properties as contemplated by this Lease. Lessee shall not
commit or permit any waste of the Properties or any part thereof,
except as expressly permitted under the Operative Agreements.
(b) The address stated in Section 29.1 of this Lease is the
principal place of business and chief executive office of Lessee (as
such terms are used in Section 9-103(3) of the Uniform Commercial Code
of any applicable jurisdiction), and Lessee will provide Lessor with
prior written notice of any change of location of its principal place
of business or chief executive office. Regarding a particular Property,
each Lease Supplement correctly identifies the initial location of the
related Equipment (if any) and
8
<PAGE> 14
Improvements (if any) and contains an accurate legal description for
the related parcel of Land or a copy of the Ground Lease (if any). The
Equipment (other than those items in transit for repair or under
repair) and Improvements respecting each particular Property will be
located only at the location identified in the applicable Lease
Supplement.
(c) Lessee will not attach or incorporate any item of
Equipment to or in any other item of equipment or personal property or
to or in any real property in a manner that could give rise to the
assertion of any Lien on such item of Equipment by reason of such
attachment or the assertion of a claim that such item of Equipment has
become a fixture if in either case such Equipment thereby becomes
subject to a Lien in favor of a third party that is prior to the Liens
thereon created by the Operative Agreements.
(d) On the Commencement Date for each Property, Lessor and
Lessee shall execute a Lease Supplement in regard to such Property
which shall contain an Equipment Schedule that generally describes the
Equipment which is then or shall be a part of the Property, an
Improvement Schedule that generally describes the Improvements which
are then or shall be a part of the Property and a legal description of
the Land which is then or shall be leased hereunder (or in the case of
any Property subject to a Ground Lease to be subleased hereunder). Each
Property subject to a Ground Lease shall be ground subleased from
Lessor to Lessee as of the Commencement Date pursuant to a ground
sublease (in form and substance satisfactory to Lessor and Lessee), and
such ground sublease shall be in effect until this Lease is terminated
or expires, in each case in accordance with the terms and provisions
hereof. Lessee shall satisfy and perform all obligations imposed on
Lessor under each Ground Lease. Simultaneously with the execution and
delivery of each Lease Supplement, such Equipment, Improvements, Land,
ground subleasehold interest, all additional Equipment and Improvements
which are financed under the Operative Agreements after the
Commencement Date and the remainder of such Property shall be deemed to
have been accepted by Lessee for all purposes of this Lease and to be
subject to this Lease.
(e) At all times during the Term with respect to each
Property, Lessee will comply with all obligations under and (to the
extent no Event of Default exists and provided that such exercise will
not materially impair the value, utility or remaining useful life of
such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar
agreements applicable to such Property.
8.3 INTEGRATED PROPERTIES.
On the Rent Commencement Date for each Property, such Property
and the applicable property subject to a Ground Lease shall constitute (and for
the duration of the Term shall continue to constitute) all of the equipment,
facilities, rights, other personal property and other real property necessary or
appropriate to operate, utilize, maintain and control a Permitted Facility in a
commercially reasonable manner.
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8.4 LESSEE'S EQUIPMENT.
At Lessee's sole cost and expense, Lessee shall be entitled to remove
Lessee's Equipment from the applicable Property at any time during the Term.
Lessee shall repair any and all damage (to the satisfaction of Lessor) caused to
the applicable Property with respect to Lessee's removal of Lessee's Equipment.
ARTICLE IX
9.1 COMPLIANCE WITH LEGAL REQUIREMENTS, INSURANCE REQUIREMENTS AND
MANUFACTURER'S SPECIFICATIONS AND STANDARDS.
Subject to the terms of Article XIII relating to permitted
contests, Lessee, at its sole cost and expense, shall (a) comply with all
applicable Legal Requirements (including without limitation all Environmental
Laws), all Insurance Requirements relating to the Properties and all
manufacturer's specifications and standards, including without limitation the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration thereof, whether or not
compliance therewith shall require structural or extraordinary changes in any
Property or interfere with the use and enjoyment of any Property, and (b)
procure, maintain and comply with all licenses, permits, orders, approvals,
consents and other authorizations required for the acquisition, installation,
testing, use, development, construction, operation, maintenance, repair,
refurbishment and restoration of the Properties, unless the failure to procure,
maintain and comply with such items identified in subparagraphs (a) and (b),
individually or in the aggregate, shall not and could not reasonably be expected
to have a Material Adverse Effect. Lessor agrees to take such actions as may be
reasonably requested by Lessee in connection with the compliance by Lessee of
its obligations under this Section 9.1.
ARTICLE X
10.1 MAINTENANCE AND REPAIR; RETURN.
(a) Lessee, at its sole cost and expense, shall maintain each
Property in good condition, repair and working order (ordinary wear and
tear excepted) and in the repair and condition as when originally
delivered to Lessor and make all necessary repairs thereto and
replacements thereof, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by
Section 9.1 and on a basis consistent with the operation and
maintenance of properties or equipment comparable in type and function
to the applicable Property, such that such Property is capable of being
immediately utilized by a third party and in compliance with standard
industry practice subject, however, to the provisions of Article XV
with respect to Casualty and Condemnation.
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(b) Lessee shall not use or locate any component of any
Property outside of any Approved State. Lessee shall not move or
relocate any component of any Property beyond the boundaries of the
Land (comprising part of such Property) described in the applicable
Lease Supplement, except for the temporary removal of Equipment and
other personal property for repair or replacement. The foregoing
provisions of this Section 10.1(b) shall not apply to Lessee's
Equipment and title thereto shall vest in Lessee or Lessee's designee.
(c) If any component of any Property becomes worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered
unfit for use, Lessee, at its own expense, will within a reasonable
time replace such component with a replacement component which is free
and clear of all Liens (other than Permitted Liens and Lessor Liens)
and has a value, utility and useful life at least equal to the
component replaced (assuming the component replaced had been maintained
and repaired in accordance with the requirements of this Lease). All
components which are added to any Property shall immediately become the
property of (and title thereto shall vest in) Lessor and shall be
deemed incorporated in such Property and subject to the terms of this
Lease as if originally leased hereunder. All components of any Property
so replaced shall immediately become the property of (and title thereto
shall vest in) Lessee. The foregoing provisions of this Section 10.1(c)
shall not apply to Lessee's Equipment.
(d) Upon reasonable advance notice but only in compliance with
all applicable Law, Lessor and its agents shall have the right to
inspect each Property and all maintenance records with respect thereto
at any reasonable time during normal business hours but shall not, in
the absence of an Event of Default, materially disrupt the business of
Lessee.
(e) If, at any time, the aggregate appraised value of
Properties then subject to this Lease for which the Agent has received
an Appraisal pursuant to the terms of Section 5.3 of the Participation
Agreement is less than twenty percent (20%) of the aggregate Property
Cost at such time (the "Base Amount"), then Lessee will cause an
additional Appraisal or Appraisals to be immediately delivered to
Lessor in an amount sufficient to cause such aggregate appraised value
to equal or exceed the Base Amount. In addition, Lessee shall cause to
be delivered to Lessor (at Lessee's sole expense) one (1) or more
additional Appraisals (or reappraisals of Property) as Lessor may
request if any one (1) of Lessor, the Agent, the Trust Company, any
Lender or any Holder is required pursuant to any applicable Legal
Requirement to obtain such Appraisals (or reappraisals) and upon the
occurrence of any Event of Default.
(f) Lessor shall under no circumstances be required to build
any improvements or install any equipment on any Property, make any
repairs, replacements, alterations or renewals of any nature or
description to any Property, make any expenditure whatsoever in
connection with this Lease or maintain any Property in any way. Lessor
shall not be required to maintain, repair or rebuild all or any part of
any Property, and Lessee waives the right to (i) require Lessor to
maintain, repair, or rebuild
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all or any part of any Property, or (ii) make repairs at the expense of
Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenant, condition or restriction at any time in
effect.
(g) Lessee shall, upon the expiration or earlier termination
of this Lease with respect to a Property, if Lessee shall not have
exercised its Purchase Option with respect to such Property and
purchased such Property, surrender such Property (i) to Lessor pursuant
to the exercise of the applicable remedies upon the occurrence of a
Lease Event of Default or (ii) pursuant to the second paragraph of
Section 22.1(a) hereof to Lessor, or the third party purchaser, as the
case may be, subject to Lessee's obligations under this Lease
(including without limitation the obligations of Lessee at the time of
such surrender under Sections 9.1, 10.1(a) through (f), 10.2, 11.1,
12.1, 22.1 and 23.1).
10.2 ENVIRONMENTAL INSPECTION.
If Lessee has not given notice of exercise of its Purchase
Option on the Expiration Date pursuant to Section 20.1 or for whatever reason
Lessee does not purchase a Property in accordance with the terms of this Lease,
then not more than one hundred twenty (120) days nor less than sixty (60) days
prior to the Expiration Date, Lessee at its expense shall cause to be delivered
to Lessor a Phase I environmental site assessment recently prepared (no more
than thirty (30) days prior to the date of delivery) by an independent
recognized professional reasonably acceptable to the Agent, and in form, scope
and content reasonably satisfactory to the Agent.
ARTICLE XI
11.1 MODIFICATIONS.
(a) Lessee at its sole cost and expense (subject to Section
11.1(c)), at any time and from time to time without the consent of
Lessor may make modifications, alterations, renovations, improvements
and additions to any Property or any part thereof and substitutions and
replacements therefor (collectively, "Modifications"), and Lessee shall
make any and all Modifications required to be made pursuant to all
Legal Requirements, Insurance Requirements and manufacturer's
specifications and standards; provided, that: (i) no Modification shall
materially impair the value, utility or useful life of any Property
from that which existed immediately prior to such Modification; (ii)
each Modification shall be done expeditiously and in a good and
workmanlike manner; (iii) no Modification shall adversely affect the
structural integrity of any Property; (iv) to the extent required by
Section 14.2(a), Lessee shall maintain builders' risk insurance at all
times when a Modification is in progress; (v) subject to the terms of
Article XIII relating to permitted contests, Lessee shall pay all costs
and expenses and discharge any Liens (that are not Permitted Liens or
Lessor Liens) arising with respect to any Modification; (vi) each
Modification shall comply with the requirements of this Lease
(including without limitation Sections 8.2 and 10.1); and (vii) no
Improvement shall be demolished or
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otherwise rendered unfit for use unless Lessee shall finance the
proposed replacement Modification outside of this lease facility;
provided, further, Lessee shall not make any Modification to the extent
any such Modification, individually or in the aggregate, shall or could
reasonably be expected to have a Material Adverse Effect. All
Modifications shall immediately and without further action upon their
incorporation into the applicable Property (1) become property of
Lessor, (2) be subject to this Lease and (3) be titled in the name of
Lessor. Lessee shall not remove or attempt to remove any Modification
from any Property. Each Ground Lease for a Property shall expressly
provide for the provisions of the foregoing sentence. Lessee, at its
own cost and expense, will pay for the repairs of any damage to any
Property caused by the removal or attempted removal of any
Modification.
(b) The construction process provided for in the Agency
Agreement is acknowledged by Lessor and the Agent to be consistent with
and in compliance with the terms and provisions of this Article XI.
(c) Lessor shall fund each Advance for a Modification to the
extent (i) the requirements in the Operative Agreements are satisfied
for such Advance and (ii) such Modification complies with the
requirements of this Lease.
ARTICLE XII
12.1 WARRANTY OF TITLE.
(a) Lessee hereby acknowledges and shall cause title in each
Property (including without limitation all Equipment, all Improvements,
all replacement components to each Property and all Modifications)
immediately and without further action to vest in and become the
property of Lessor and to be subject to the terms of this Lease
(provided, respecting each Property subject to a Ground Lease, Lessor's
interest therein is acknowledged to be a leasehold interest pursuant to
such Ground Lease) from and after the date hereof or such date of
incorporation into any Property. Lessee agrees that, subject to the
terms of Article XIII relating to permitted contests, Lessee shall not
directly or indirectly create or allow to remain, and shall promptly
discharge at its sole cost and expense, any Lien, defect, attachment,
levy, title retention agreement or claim upon any Property, any
component thereof or any Modifications or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by
Lessor, the Agent or any Holder pursuant to any Operative Agreement,
other than Permitted Liens and Lessor Liens. Lessee shall promptly
notify Lessor in the event it receives actual knowledge that a Lien
other than a Permitted Lien or Lessor Lien has occurred with respect to
a Property, the Rent or any other such amounts, and Lessee represents
and warrants to, and covenants with, Lessor that the Liens in favor of
Lessor created by the Operative Agreements are (and until the financing
parties under the Operative Agreements have been paid in full shall
remain) first priority perfected Liens subject only to Permitted Liens
and Lessor Liens. At all times subsequent to the Commencement Date
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respecting a Property, Lessee shall (i) cause a valid, perfected, first
priority Lien on each applicable Property to be in place in favor of
the Agent (for the benefit of the Lenders and the Holders) and (ii)
file all necessary documents under the applicable real property law and
Article 9 of the Uniform Commercial Code to perfect such title and
Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to
or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to any Property or any part thereof. NOTICE
IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR
TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR
IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES.
Except to the extent otherwise provided for in Section 11 of
the Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement,
Imposition or utility charge payable pursuant to Section 4.1 or any Lien,
attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay,
settle or otherwise compromise any such item, provided, that (a) the
commencement and continuation of such proceedings shall suspend the collection
of any such contested amount from, and suspend the enforcement thereof against,
the applicable Properties, Lessor, each Holder, the Agent and each Lender; (b)
there shall not be imposed a Lien (other than Permitted Liens and Lessor Liens)
on any Property and no part of any Property nor any Rent would be in any danger
of being sold, forfeited, lost or deferred; (c) at no time during the permitted
contest shall there be a risk of the imposition of criminal liability or
material civil liability on Lessor, any Holder, the Agent or any Lender for
failure to comply therewith; and (d) in the event that, at any time, there shall
be a material risk of extending the application of such item beyond the end of
the Term, then Lessee shall deliver to Lessor an Officer's Certificate
certifying as to the matters set forth in clauses (a), (b) and (c) of this
Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.
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ARTICLE XIV
14.1 PUBLIC LIABILITY AND WORKERS' COMPENSATION INSURANCE.
During the Term for each Property, Lessee shall procure and
carry, at Lessee's sole cost and expense, commercial general liability and
umbrella liability insurance for claims for injuries or death sustained by
persons or damage to property while on such Property or respecting the Equipment
and such other public liability coverages as are then customarily carried by
similarly situated companies conducting business similar to that conducted by
Lessee. Such insurance shall be on terms and in amounts that are no less
favorable than insurance maintained by Lessee with respect to similar properties
and equipment that it owns and are then carried by similarly situated companies
conducting business similar to that conducted by Lessee, and in no event shall
have a minimum combined single limit per occurrence coverage (i) for commercial
general liability of less than $1,000,000 and (ii) for excess liability of less
than $10,000,000. The policies shall name Lessee as the insured and shall be
endorsed to name Lessor, the Holders, the Agent and the Lenders as additional
insureds. The policies shall also specifically provide that such policies shall
be considered primary insurance which shall apply to any loss or claim before
any contribution by any insurance which Lessor, any Holder, the Agent or any
Lender may have in force. In the operation of the Properties, Lessee shall
comply with applicable workers' compensation laws and protect Lessor, each
Holder, the Agent and each Lender against any liability under such laws.
14.2 PERMANENT HAZARD AND OTHER INSURANCE.
(a) During the Term for each Property, Lessee shall keep such
Property insured against all risk of physical loss or damage by fire
and other risks and shall maintain builders' risk insurance during
construction of any Improvements or Modifications in each case in
amounts no less than the Termination Value from time to time and on
terms that (i) are no less favorable than insurance covering other
similar properties owned by Lessee and (ii) are then carried by
similarly situated companies conducting business similar to that
conducted by Lessee. The policies shall name Lessee as the insured and
shall be endorsed to name Lessor, the Holders and the Agent (on behalf
of the Lenders and the Holders) as a named additional insured and loss
payee, to the extent of their respective interests; provided, so long
as no Event of Default exists, any loss payable under the insurance
policies required by this Section for losses up to $1,000,000 will be
paid to Lessee.
(b) If, during the Term with respect to a Property the area in
which such Property is located is designated a "flood-prone" area
pursuant to the Flood Disaster Protection Act of 1973, or any
amendments or supplements thereto or is in a zone designated A or V,
then Lessee shall comply with the National Flood Insurance Program as
set forth in the Flood Disaster Protection Act of 1973. In addition,
Lessee will fully comply with the requirements of the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as
each may be amended from time to time, and with any other Legal
Requirement, concerning flood insurance to the extent that it applies
to any
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such Property. During the Term, Lessee shall, in the operation and use
of each Property, maintain workers' compensation insurance consistent
with that carried by similarly situated companies conducting business
similar to that conducted by Lessee and containing minimum liability
limits of no less than $100,000. In the operation of each Property,
Lessee shall comply with workers' compensation laws applicable to
Lessee, and protect Lessor, each Holder, the Agent and each Lender
against any liability under such laws.
14.3 COVERAGE.
(a) As of the date of this Lease and annually thereafter
during the Term, Lessee shall furnish the Agent (on behalf of Lessor
and the other beneficiaries of such insurance coverage) with
certificates prepared by the insurers or insurance broker of Lessee
showing the insurance required under Sections 14.1 and 14.2 to be in
effect, naming (to the extent of their respective interests) Lessor,
the Holders, the Agent and the Lenders as additional insureds and loss
payees and evidencing the other requirements of this Article XIV. All
such insurance shall be at the cost and expense of Lessee and provided
by nationally recognized, financially sound insurance companies having
an A+ or better rating by A.M. Best's Key Rating Guide. Lessee shall
cause such certificates to include a provision for thirty (30) days'
advance written notice by the insurer to the Agent (on behalf of Lessor
and the other beneficiaries of such insurance coverage) in the event of
cancellation or material alteration of such insurance. If an Event of
Default has occurred and is continuing and Lessor so requests, Lessee
shall deliver to the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) copies of all insurance
policies required by Sections 14.1 and 14.2.
(b) Lessee agrees that the insurance policy or policies
required by Sections 14.1, 14.2(a) and 14.2(b) shall include an
appropriate clause pursuant to which any such policy shall provide that
it will not be invalidated should Lessee or any Contractor, as the case
may be, waive, at any time, any or all rights of recovery against any
party for losses covered by such policy or due to any breach of
warranty, fraud, action, inaction or misrepresentation by Lessee or any
Person acting on behalf of Lessee. Lessee hereby waives any and all
such rights against Lessor, the Holders, the Agent and the Lenders to
the extent of payments made to any such Person under any such policy.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with
any insurance required under this Article XIV, except that Lessor may
carry separate liability insurance at Lessor's sole cost so long as (i)
Lessee's insurance is designated as primary and in no event excess or
contributory to any insurance Lessor may have in force which would
apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this
Article XIV to be subject to a coinsurance exception of any kind.
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(d) Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall renew or
replace each policy prior to the expiration date thereof or otherwise
maintain the coverage required by such Sections without any lapse in
coverage.
ARTICLE XV
15.1 CASUALTY AND CONDEMNATION.
(a) Subject to the provisions of the Agency Agreement and this
Article XV and Article XVI (in the event Lessee delivers, or is
obligated to deliver or is deemed to have delivered, a Termination
Notice), and prior to the occurrence and continuation of a Default or
an Event of Default, Lessee shall be entitled to receive (and Lessor
hereby irrevocably assigns to Lessee all of Lessor's right, title and
interest in) any condemnation proceeds, award, compensation or
insurance proceeds under Sections 14.2(a) or 14.2(b) hereof to which
Lessee or Lessor may become entitled by reason of their respective
interests in a Property (i) if all or a portion of such Property is
damaged or destroyed in whole or in part by a Casualty or (ii) if the
use, access, occupancy, easement rights or title to such Property or
any part thereof is the subject of a Condemnation; provided, however,
if a Default or an Event of Default shall have occurred and be
continuing or if such award, compensation or insurance proceeds shall
exceed $1,000,000, then such award, compensation or insurance proceeds
shall be paid directly to Lessor or, if received by Lessee, shall be
held in trust for Lessor, and shall be paid over by Lessee to Lessor
and held in accordance with the terms of this paragraph (a). All
amounts held by Lessor hereunder on account of any award, compensation
or insurance proceeds either paid directly to Lessor or turned over to
Lessor shall be applied to reduce Lessee's obligations hereunder and
under the other Operative Agreements.
(b) Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At Lessee's reasonable
request, and at Lessee's sole cost and expense, Lessor and the Agent
shall participate in any such proceeding, action, negotiation,
prosecution or adjustment. Lessor and Lessee agree that this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.
(c) If Lessee shall receive notice of a Casualty or a
Condemnation of a Property or any interest therein where damage to the
affected Property is estimated to equal or exceed twenty-five percent
(25%) of the Property Cost of such Property, Lessee shall give notice
thereof to Lessor and to the Agent promptly after Lessee's receipt of
such notice. In the event such a Casualty or Condemnation occurs
(regardless of whether Lessee gives notice thereof), then Lessee shall
be deemed to have delivered a Termination Notice to Lessor and the
Agent and the provisions of Sections 16.1 and 16.2 shall apply.
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(d) In the event of a Casualty or a Condemnation (regardless
of whether notice thereof must be given pursuant to paragraph (c)),
this Lease shall terminate with respect to the applicable Property in
accordance with Section 16.1 if Lessee, within thirty (30) days after
such occurrence, delivers to Lessor and the Agent a notice to such
effect.
(e) If pursuant to this Section 15.1 this Lease shall continue
in full force and effect following a Casualty or Condemnation with
respect to the affected Property, Lessee shall, at its sole cost and
expense and using, if available, the proceeds of any award,
compensation or insurance with respect to such Casualty or Condemnation
(including without limitation any such award, compensation or insurance
which has been received by Lessor or the Agent which shall be turned
over to Lessee (subject to 15.1(a)) pursuant to the terms of the
Operative Agreements, and if not available or sufficient, using its own
funds), promptly and diligently repair any damage to the applicable
Property caused by such Casualty or Condemnation in conformity with the
requirements of Sections 10.1 and 11.1, using the as-built Plans and
Specifications or manufacturer's specifications for the applicable
Improvements, Equipment or other components of the applicable Property
(as modified to give effect to any subsequent Modifications, any
Condemnation affecting the applicable Property and all applicable Legal
Requirements), so as to restore the applicable Property to the same or
a greater remaining economic value, useful life, utility, condition,
operation and function as existed immediately prior to such Casualty or
Condemnation (assuming all maintenance and repair standards have been
satisfied). In such event, title to the applicable Property shall
remain with Lessor.
(f) In no event shall a Casualty or Condemnation affect
Lessee's obligations to pay Rent pursuant to Article III.
(g) Notwithstanding anything to the contrary set forth in
Section 15.1(a) or Section 15.1(e), if during the Term with respect to
a Property a Casualty occurs with respect to such Property or Lessee
receives notice of a Condemnation with respect to such Property, and
following such Casualty or Condemnation, the applicable Property cannot
reasonably be restored, repaired or replaced on or before the day one
hundred eighty (180) days prior to the Expiration Date or the date nine
(9) months after the occurrence of such Casualty or Condemnation (if
such Casualty or Condemnation occurs during the Term) to the same or a
greater remaining economic value, useful life, utility, condition,
operation and function as existed immediately prior to such Casualty or
Condemnation (assuming all maintenance and repair standards have been
satisfied) or on or before such day such Property is not in fact so
restored, repaired or replaced, then Lessee shall be required to
exercise its Purchase Option for such Property on the next Payment Date
(notwithstanding the limits on such exercise contained in Section 20.2)
and pay Lessor the Termination Value for such Property; provided, if
any Default or Event of Default has occurred and is continuing, Lessee
shall also promptly (and in any event within three (3) Business Days)
pay Lessor any award, compensation or insurance proceeds received on
account of any Casualty or Condemnation with respect to any Property;
provided, further, that if no Default or Event of Default has occurred
and is continuing, any Excess
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Proceeds shall be paid to Lessee. If a Default or an Event of Default
has occurred and is continuing and any Loans, Holder Advances or other
amounts are owing with respect thereto, then any Excess Proceeds (to
the extent of any such Loans, Holder Advances or other amounts owing
with respect thereto) shall be paid to Lessor, held as security for the
performance of Lessee's obligations hereunder and under the other
Operative Agreements and applied to such obligations upon the exercise
of remedies in connection with the occurrence of an Event of Default,
with the remainder of such Excess Proceeds in excess of such Loans,
Holder Advances and other amounts owing with respect thereto being
distributed to the Lessee.
15.2 ENVIRONMENTAL MATTERS.
Promptly upon Lessee's actual knowledge of the presence of
Hazardous Substances in any portion of any Property or Properties in
concentrations and conditions that constitute an Environmental Violation and
which, in the reasonable opinion of Lessee, the cost to undertake any legally
required response, clean up, remedial or other action will or might result in a
cost to Lessee of more than $50,000, Lessee shall notify Lessor in writing of
such condition. In the event of any Environmental Violation (regardless of
whether notice thereof must be given), Lessee shall, not later than thirty (30)
days after Lessee has actual knowledge of such Environmental Violation, either
deliver to Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at Lessee's sole cost
and expense, promptly and diligently undertake and diligently complete any
response, clean up, remedial or other action (including without limitation the
pursuit by Lessee of appropriate action against any off-site or third party
source for contamination) necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. Any such
undertaking shall be timely completed in accordance with prudent industry
standards. If Lessee does not deliver a Termination Notice with respect to such
Property pursuant to Section 16.1, Lessee shall, upon completion of remedial
action by Lessee (to the extent such remedial action costs in excess of
$50,000), cause to be prepared by a reputable environmental consultant
acceptable to Lessor a report describing the applicable Environmental Violation
and the actions taken by Lessee (or its agents) in response to such
Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with applicable
Environmental Law. Not less than sixty (60) days prior to any time that Lessee
elects to cease operations with respect to any Property or to remarket any
Property pursuant to Section 20.1 hereof or any other provision of any Operative
Agreement, Lessee at its expense shall cause to be delivered to Lessor a Phase I
environmental site assessment respecting such Property recently prepared (no
more than thirty (30) days prior to the date of delivery) by an independent
recognized professional selected by Lessee and acceptable to the Agent in its
reasonable discretion and in form, scope and content satisfactory to the Agent
in its reasonable discretion. Notwithstanding any other provision of any
Operative Agreement, if Lessee fails to comply with the foregoing obligation
regarding the Phase I environmental site assessment, Lessee shall be obligated
to purchase such Property for its Termination Value and shall not be permitted
to exercise (and Lessor shall have no obligation to honor any such exercise) any
rights under any Operative Agreement regarding a sale of such Property to a
Person other than Lessee or any Affiliate of Lessee.
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15.3 NOTICE OF ENVIRONMENTAL MATTERS.
Promptly, but in any event within five (5) Business Days from
the date Lessee has actual knowledge thereof, Lessee shall provide to Lessor
written notice of any pending or threatened claim, action or proceeding
involving any Environmental Law or any Release on or in connection with any
Property or Properties. All such notices shall describe in reasonable detail the
nature of the claim, action or proceeding and Lessee's proposed response
thereto. In addition, Lessee shall provide to Lessor, within five (5) Business
Days of receipt, copies of all material written communications with any
Governmental Authority relating to any Environmental Law in connection with any
Property. Lessee shall also promptly provide such detailed reports of any such
material Environmental Claims as may reasonably be requested by Lessor.
ARTICLE XVI
16.1 TERMINATION UPON CERTAIN EVENTS.
If Lessee has delivered, or is deemed to have delivered,
written notice of a termination of this Lease with respect to the applicable
Property to Lessor and the Agent in the form described in Section 16.2(a) (a
"Termination Notice") pursuant to the provisions of this Lease, then following
the applicable Casualty, Condemnation or Environmental Violation, this Lease
shall terminate with respect to the affected Property on the applicable
Termination Date.
16.2 PROCEDURES.
(a) A Termination Notice shall contain: (i) notice of
termination of this Lease with respect to the affected Property on a
Payment Date not more than sixty (60) days after Lessor's receipt of
such Termination Notice (the "Termination Date"); and (ii) a binding
and irrevocable agreement of Lessee to pay the Termination Value for
the applicable Property and purchase such Property on such Termination
Date.
(b) On each Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, and Lessor shall convey
such Property or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 20.2.
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ARTICLE XVII
17.1 LEASE EVENTS OF DEFAULT.
If any one (1) or more of the following events (each a "Lease
Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent
(except as set forth in clause (ii)) within three (3) days after the
same has become due and payable or (ii) any Termination Value, on the
date any such payment is due and payable, or any payment of Basic Rent
or Supplemental Rent due on the due date of any such payment of
Termination Value, or any amount due on the Expiration Date;
(b) Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in Section 17.1(a)(ii)) or
any other Credit Party shall fail to make any payment of any amount
under any Operative Agreement which has become due and payable within
three (3) days after receipt of notice that such payment is due;
(c) Lessee shall fail (i) to maintain insurance as required by
Article XIV of this Lease or (ii) to deliver any requisite annual
certificate with respect thereto within ten (10) days after the date
such certificate is due under the terms hereof, but only after notice
of such delinquent certificate has been provided by Lessor or the Agent
to Lessee;
(d) (i) Lessee shall fail to observe or perform any term,
covenant, obligation or condition of Lessee under this Lease (including
without limitation the Incorporated Covenants) or any other Material
Operative Agreement to which Lessee is a party other than those set
forth in Sections 17.1(a), (b) or (c) hereof, or any other Credit Party
shall fail to observe or perform any term, covenant, obligation or
condition of such Credit Party under any Material Operative Agreement
other than those set forth in Section 17.1(b) hereof and such failure
shall continue for fifteen (15) days (or with respect to the
Incorporated Covenants, the grace period, if any, applicable thereto
under the Lessee Credit Agreement) after notice thereof to the Lessee
or such Credit Party, or (ii) any representation or warranty made by
Lessee or any other Credit Party set forth in this Lease (including
without limitation the Incorporated Representation and Warranties) or
in any other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document, certificate or
financial or other statement delivered in connection herewith or
therewith shall be false or inaccurate in any material way when made;
(e) An Agency Agreement Event of Default shall have occurred
and be continuing;
(f) Any Credit Party or any Subsidiary of any Credit Party
shall default (beyond applicable periods of grace and/or notice and
cure) in the payment when due of any principal of or interest on any
Indebtedness having an outstanding principal amount of at least
$5,000,000; or any event or condition shall occur which results in the
acceleration of the maturity of any such Indebtedness or enables the
holder of any such Indebtedness or any Person acting on such holder's
behalf to accelerate the maturity thereof;
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(g) The liquidation or dissolution of any Credit Party, or the
suspension of the business of any Credit Party, or the filing by any
Credit Party of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any other
relief under the United States Bankruptcy Code, as amended, or under
any other insolvency act or law, state or federal, now or hereafter
existing, or any other action of any Credit Party indicating its
consent to, approval of or acquiescence in, any such petition or
proceeding; the application by any Credit Party for, or the appointment
by consent or acquiescence of any Credit Party of a receiver, a trustee
or a custodian of any Credit Party for all or a substantial part of its
property; the making by any Credit Party of any assignment for the
benefit of creditors; any Credit Party is generally not paying its
debts and other financial obligations as they become due and payable;
or any Credit Party taking any corporate action to authorize any of the
foregoing;
(h) The filing of an involuntary petition against any Credit
Party in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the United
States Bankruptcy Code, as amended, or under any other insolvency act
or law, state or federal, now or hereafter existing; or the involuntary
appointment of a receiver, a trustee or a custodian of any Credit Party
for all or a substantial part of its property; or the issuance of a
warrant of attachment, execution or similar process against any
substantial part of the property of any Credit Party, and the
continuance of any of such events for ninety (90) days undismissed or
undischarged;
(i) The adjudication of any Credit Party as bankrupt or
insolvent;
(j) The entering of any order in any proceedings against any
Credit Party or any Subsidiary of any Credit Party decreeing the
dissolution, divestiture or split-up of any Credit Party or any
Subsidiary of any Credit Party, and such order remains in effect for
more than sixty (60) days;
(k) Any report, certificate, financial statement or other
instrument delivered to Lessor by or on behalf of any Credit Party
pursuant to the terms of this Lease or any other Operative Agreement is
false or misleading in any material respect when made or delivered;
(l) Any Lessee Credit Agreement Event of Default shall have
occurred and be continuing and shall not have been waived;
(m) A final judgment or judgments for the payment of money
shall be rendered by a court or courts against any Credit Party or any
Subsidiary of any Credit Party or any of their assets in excess of
$500,000 in the aggregate, and (i) the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within thirty (30) days from the date of
entry thereof, or (ii) any Credit Party or such Subsidiary shall not,
within said period of thirty (30) days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal,
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or (iii) such judgment or judgments shall not be discharged (or
provisions shall not be made for such discharge) within thirty (30)
days after a decision has been reached with respect to such appeal and
the related stay has been lifted;
(n) A notice of lien, levy or assessment is filed of record
against any portion of the assets of Lessee or any of its Subsidiaries
by the United States, or any department, agency or instrumentality
thereof, or by any other Governmental Authority or any other Person,
including without limitation the PBGC, or if any taxes or debts owing
at any time or times hereafter to any one of them becomes a Lien (other
than a Permitted Lien) upon the Collateral or any other asset of Lessee
or any of its Subsidiaries, and the same is not dismissed, released,
bonded or discharged within five (5) days after the same becomes a Lien
or, in the case of ad valorem taxes, prior to the last day when payment
may be made without penalty and, if bonded, such bond (or a replacement
bond) shall not continue in effect at all times until such judgment is
dismissed or discharged, and any such event shall or could reasonably
be expected to have a Material Adverse Effect;
(o) The occurrence of a Change of Control;
(p) Martin S. Rash or Richard D. Gore shall cease to be the
Chief Executive Officer and Chief Financial Officer, respectively, of
the Lessee or cease to be involved in the day-to-day operations of the
Lessee and its Subsidiaries, and within 120 days following the
cessation of their respective involvement, the relevant executive is
not succeeded by a chief executive officer or chief financial officer,
as applicable, reasonably acceptable to the Majority Secured Parties;
(q) The Lessee or any Subsidiary, to the extent, if any,
presently participating or required by law to participate, in Medicaid,
Medicare or MediCal programs shall fail to be eligible for any reason
to participate in Medicaid, Medicare or MediCal programs or to accept
assignments or rights to reimbursement under Medicaid Regulations,
Medicare Regulations or MediCal Regulations, 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 Lessee or such Subsidiary in good faith;
(r) Any Operative Agreement shall cease to be in full force
and effect; or
(s) The occurrence of any of the following events: (i) the
happening of a Reportable Event that could give rise to liability (that
is not waived by the PBGC or by the Majority Secured Parties, or if
such liability can be avoided by any corrective action of Lessee, such
corrective action is not completed within ninety (90) days after the
occurrence of such Reportable Event) with respect to any Pension Plan;
(ii) the termination of any Pension Plan in a "distress termination"
under the provisions of Section 4041 of ERISA; (iii) the appointment of
a trustee by an appropriate United States District Court to administer
any Pension Plan; (iv) the institution of any proceedings by the PBGC
to terminate any Pension Plan or to appoint a trustee to administer any
such plan; and (v) the failure of Lessee to notify the Lenders and the
Holders promptly upon
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receipt by Lessee of the institution of any proceeding or any other
actions that may result in the termination of any such plan;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h) or (i), and this Lease shall terminate, and
all rights of Lessee under this Lease shall cease. Lessee shall, to the fullest
extent permitted by law, pay as Supplemental Rent all costs and expenses
incurred by or on behalf of Lessor or any other Financing Party, including
without limitation reasonable fees and expenses of counsel, as a result of any
Lease Event of Default hereunder.
A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY
ALLOW LESSOR TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.
17.2 SURRENDER OF POSSESSION.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall, upon thirty (30) days written notice, surrender to
Lessor possession of the Properties. Lessor may enter upon and repossess the
Properties by such means as are available at law or in equity, and may remove
Lessee and all other Persons and any and all personal property and Lessee's
equipment and personalty and severable Modifications from the Properties. Lessor
shall have no liability by reason of any such entry, repossession or removal
performed in accordance with applicable law. Upon the written demand of Lessor,
Lessee shall return the Properties promptly to Lessor, in the manner and
condition required by, and otherwise in accordance with the provisions of,
Section 22.1(c) hereof.
17.3 RELETTING.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessor may, but shall be under no obligation to, relet any or all
of the Properties, for the account of Lessee or otherwise, for such term or
terms (which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
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17.4 DAMAGES.
Neither (a) the termination of this Lease as to all or any of
the Properties pursuant to Section 17.1; (b) the repossession of all or any of
the Properties; nor (c) the failure of Lessor to relet all or any of the
Properties, the reletting of all or any portion thereof, nor the failure of
Lessor to collect or receive any rentals due upon any such reletting, shall
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any Lease Event of
Default shall have occurred and be continuing and notwithstanding any
termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay
to Lessor all Rent and other sums due and payable hereunder to and including
without limitation the date of such termination. Thereafter, on the days on
which the Basic Rent or Supplemental Rent, as applicable, are payable under this
Lease or would have been payable under this Lease if the same had not been
terminated pursuant to Section 17.1 and until the end of the Term hereof or what
would have been the Term in the absence of such termination, Lessee shall pay
Lessor, as current liquidated damages (it being agreed that it would be
impossible accurately to determine actual damages) an amount equal to the Basic
Rent and Supplemental Rent that are payable under this Lease or would have been
payable by Lessee hereunder if this Lease had not been terminated pursuant to
Section 17.1, less the net proceeds, if any, which are actually received by
Lessor with respect to the period in question of any reletting of any Property
or any portion thereof; provided, that Lessee's obligation to make payments of
Basic Rent and Supplemental Rent under this Section 17.4 shall continue only so
long as Lessor shall not have received the amounts specified in Section 17.6. In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Lessor's, any Holder's, the Agent's and any Lender's reasonable
expenses in connection therewith, including without limitation repossession
costs, brokerage or sales commissions, fees and expenses for counsel and any
necessary repair or alteration costs and expenses incurred in preparation for
such reletting. To the extent Lessor receives any damages pursuant to this
Section 17.4, such amounts shall be regarded as amounts paid on account of Rent.
Lessee specifically acknowledges and agrees that its obligations under this
Section 17.4 shall be absolute and unconditional under any and all circumstances
and shall be paid and/or performed, as the case may be, without notice or demand
and without any abatement, reduction, diminution, setoff, defense, counterclaim
or recoupment whatsoever.
17.5 POWER OF SALE.
Without limiting any other remedies set forth in this Lease,
in the event that a court of competent jurisdiction rules that this Lease
constitutes a mortgage, deed of trust or other secured financing as is the
intent of the parties, then Lessor and Lessee agree that Lessee has granted,
pursuant to Section 7.1(b) hereof and each Lease Supplement, a Lien against the
Properties WITH POWER OF SALE, and that, upon the occurrence and during the
continuance of any Lease Event of Default, Lessor shall have the power and
authority, to the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Properties.
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17.6 FINAL LIQUIDATED DAMAGES.
If a Lease Event of Default shall have occurred and be
continuing, whether or not this Lease shall have been terminated pursuant to
Section 17.1 and whether or not Lessor shall have collected any current
liquidated damages pursuant to Section 17.4, Lessor shall have the right to
recover, by demand to Lessee and at Lessor's election, and Lessee shall pay to
Lessor, as and for final liquidated damages, but exclusive of the indemnities
payable under Section 11 of the Participation Agreement (which, if requested,
shall be paid concurrently), and in lieu of all current liquidated damages
beyond the date of such demand (it being agreed that it would be impossible
accurately to determine actual damages) the Termination Value. Upon payment of
the amount specified pursuant to the first sentence of this Section 17.6, Lessee
shall be entitled to receive from Lessor, either at Lessee's request or upon
Lessor's election, in either case at Lessee's cost, an assignment of Lessor's
entire right, title and interest in and to the Properties, Improvements,
Fixtures, Modifications, Equipment and all components thereof, in each case in
recordable form and otherwise in conformity with local custom and free and clear
of the Lien of this Lease (including without limitation the release of any
memoranda of Lease and/or the Lease Supplement recorded in connection therewith)
and any Lessor Liens. The Properties shall be conveyed to Lessee "AS-IS,
WHERE-IS" and in their then present physical condition. If any statute or rule
of law shall limit the amount of such final liquidated damages to less than the
amount agreed upon, Lessor shall be entitled to the maximum amount allowable
under such statute or rule of law; provided, however, Lessee shall not be
entitled to receive an assignment of Lessor's interest in the Properties, the
Improvements, Fixtures, Modifications, Equipment or the components thereof
unless Lessee shall have paid in full the Termination Value. Lessee specifically
acknowledges and agrees that its obligations under this Section 17.6 shall be
absolute and unconditional under any and all circumstances and shall be paid
and/or performed, as the case may be, without notice or demand and without any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever.
17.7 ENVIRONMENTAL COSTS.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall pay directly to any third party (or at Lessor's
election, reimburse Lessor) for the cost of any environmental testing and/or
remediation work undertaken respecting any Property, as such testing or work is
deemed appropriate in the reasonable judgment of Lessor. Lessee shall pay all
amounts referenced in the immediately preceding sentence within ten (10) days of
any request by Lessor for such payment. The provisions of this Section 17.7
shall not limit the obligations of Lessee under any Operative Agreement
regarding indemnification obligations, environmental testing, remediation and/or
work.
17.8 WAIVER OF CERTAIN RIGHTS.
If this Lease shall be terminated pursuant to Section 17.1,
Lessee waives, to the fullest extent permitted by Law, (a) any notice of
re-entry or the institution of legal proceedings to obtain re-entry or
possession; (b) any right of redemption, re-entry or possession; (c) the
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benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt; and (d) any other rights which might otherwise limit or
modify any of Lessor's rights or remedies under this Article XVII.
17.9 ASSIGNMENT OF RIGHTS UNDER CONTRACTS.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall upon Lessor's demand immediately assign, transfer and
set over to Lessor all of Lessee's right, title and interest in and to each
agreement executed by Lessee in connection with the acquisition, installation,
testing, use, development, construction, operation, maintenance, repair,
refurbishment and restoration of the Properties (including without limitation
all right, title and interest of Lessee with respect to all warranty,
performance, service and indemnity provisions), as and to the extent that the
same relate to the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties or any of them.
17.10 REMEDIES CUMULATIVE.
The remedies herein provided shall be cumulative and in
addition to (and not in limitation of) any other remedies available at law,
equity or otherwise, including without limitation any mortgage foreclosure
remedies.
ARTICLE XVIII
18.1 LESSOR'S RIGHT TO CURE LESSEE'S LEASE DEFAULTS.
Lessor, without waiving or releasing any obligation or Lease
Event of Default, may (but shall be under no obligation to) remedy any Lease
Event of Default for the account and at the sole cost and expense of Lessee,
including without limitation the failure by Lessee to maintain the insurance
required by Article XIV, and, may to the fullest extent permitted by law and
notwithstanding any right of quiet enjoyment in favor of Lessee, (a) enter upon
any Property and (b) take all such action thereon as may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of any lessee.
All out-of-pocket costs and expenses so incurred (including without limitation
fees and expenses of counsel), together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid by Lessor, shall be
paid by Lessee to Lessor on demand.
ARTICLE XIX
19.1 PROVISIONS RELATING TO LESSEE'S EXERCISE OF ITS PURCHASE
OPTION.
Subject to Section 19.2, in connection with any termination of
this Lease with respect to any Property pursuant to the terms of Section 16.2,
or in connection with Lessee's
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exercise of its Purchase Option, upon the date on which this Lease is to
terminate with respect to any Property, and upon tender by Lessee of the amounts
set forth in Sections 16.2(b) or 20.2, as applicable, Lessor shall execute and
deliver to Lessee (or to Lessee's designee) at Lessee's cost and expense an
assignment (by deed or other appropriate instrument) of Lessor's entire interest
in such Property, in each case in recordable form and otherwise in conformity
with local custom and free and clear of any Lessor Liens attributable to Lessor
but without any other warranties (of title or otherwise) from Lessor. Such
Property shall be conveyed to Lessee "AS-IS, "WHERE-IS" and in then present
physical condition.
19.2 NO PURCHASE OR TERMINATION WITH RESPECT TO LESS THAN ALL OF A
PROPERTY.
Lessee shall not be entitled to exercise its Purchase Option or the
Sale Option separately with respect to a portion of any Property consisting of
Land, Equipment, Improvements and/or any interest pursuant to a Ground Lease but
shall be required to exercise its Purchase Option or the Sale Option with
respect to an entire Property.
ARTICLE XX
20.1 PURCHASE OPTION OR SALE OPTION-GENERAL PROVISIONS.
Not less than one hundred twenty (120) days and no more than
one hundred eighty (180) days prior to any Payment Date or the Expiration Date
(such Payment Date or Expiration Date being hereinafter referred to as the
"Election Date"), Lessee may give Lessor irrevocable written notice (the
"Election Notice") that Lessee is electing to exercise either (a) (i) in the
case of any Payment Date prior to the Expiration Date, the option to purchase
one or more Properties (subject to the Early Termination Conditions) and (ii) in
the case of the Expiration Date, the option to purchase all, but not less than
all, the Properties (each such option may be referred to as the "Purchase
Option") or (b) (i) in the case of any Payment Date prior to the Expiration
Date, the option to sell to a Person other than Lessee or any Affiliate of the
Lessee one or more Properties (subject to the Early Termination Conditions) and
(ii) in the case of the Expiration Date, the option to sell to a Person other
than Lessee or any Affiliate of Lessee all, but not less than all, the
Properties (each such option may be referred to as that "Sale Option").
Purchases pursuant to the Purchase Option and sales pursuant to the Sale Option
shall be accomplished in a manner consistent with the provisions of the
Operative Agreement including without limitation Articles XIX, XX and XXII of
this Lease. Prior to the Expiration Date, there may be multiple purchases
pursuant to the Purchase Option and sales pursuant to the Sale Option and all
shall be subject to the Early Termination Conditions. If Lessee does not give an
Election Notice indicating the Purchase Option or the Sale Option at least one
hundred twenty (120) days and not more than one hundred eighty (180) days prior
to the Expiration Date, then Lessee shall be deemed to have elected for the
Purchase Option to apply on the Expiration Date. With respect to the Expiration
Date, if Lessee shall either (i) elect (or be deemed to have elected) to
exercise the Purchase Option or (ii) elect the Sale Option and fail to cause
all, but not less than all, the Properties to be sold in accordance with the
terms of Section 22.1 on the applicable Election Date, then in either case
Lessee shall pay to Lessor on the date on which such purchase or sale is
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scheduled to occur an amount equal to the Termination Value for all, but not
less than all, the Properties (which the parties do not intend to be a "bargain"
purchase) and, upon receipt of such amounts and satisfaction of such
obligations, Lessor shall transfer to Lessee all of Lessor's right, title and
interest in and to all, but not less than all, the Properties in accordance with
Section 20.2.
20.2 LESSEE PURCHASE OPTION.
Provided, no Default or Event of Default shall have occurred
and be continuing (other than those that will be cured by the payment of the
Termination Value for all the Properties) and provided, that the Election Notice
has been appropriately given specifying the Purchase Option, Lessee shall
purchase (in the case of any Payment Date prior to the Expiration Date) one or
more Properties or (in the case of the Expiration Date) all, but not less than
all, the Properties. All such purchases shall be made on the applicable Election
Date at a price equal to the Termination Value for all such Properties (which
the parties do not intend to be a "bargain" purchase price).
Subject to Section 19.2, in connection with any termination of
this Lease with respect to any Property pursuant to the terms of Section 16.2,
or in connection with Lessee's exercise of its Purchase Option, upon the date on
which this Lease is to terminate with respect to a Property or all of the
Properties, and upon tender by Lessee of the amounts set forth in Section
16.2(b) or this Section 20.2, as applicable, Lessor shall execute, acknowledge
(where required) and deliver to Lessee, at Lessee's cost and expense, each of
the following: (a) a termination or assignment (as requested by the Lessee) of
each applicable Ground Lease and special or limited warranty Deeds conveying
each Property (to the extent it is real property not subject to a Ground Lease)
to Lessee free and clear of the Lien of this Lease, the Lien of the Credit
Documents and any Lessor Liens; (b) a Bill of Sale conveying each Property (to
the extent it is personal property) to Lessee free and clear of the Lien of this
Lease, the Lien of the Credit Documents and any Lessor Liens; (c) any real
estate tax affidavit or other document required by law to be executed and filed
in order to record the applicable Deed and/or the applicable Ground Lease
termination; and (d) FIRPTA affidavits. All of the foregoing documentation must
be in form and substance reasonably satisfactory to Lessor. The applicable
Property shall be conveyed to Lessee "AS-IS, WHERE-IS" and in then present
physical condition.
If any Property is the subject of remediation efforts
respecting Hazardous Substances at the applicable Election Date which could
materially and adversely impact the Fair Market Sales Value of such Property
(with materiality determined in Lessor's discretion), then Lessee shall be
obligated to repurchase each such Property pursuant to Section 20.2.
On the applicable Election Date on which Lessee has elected to
exercise its Purchase Option, Lessee shall pay (or cause to be paid) to Lessor,
the Agent and all other parties, as appropriate, the sum of all costs and
expenses incurred by any such party in connection with the election by Lessee to
exercise its Purchase Option and all Rent and all other amounts then due and
payable or accrued under this Lease and/or any other Operative Agreement.
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20.3 THIRD PARTY SALE OPTION.
(a) Provided, that (i) no Default or Event of Default shall
have occurred and be continuing and (ii) the Election Notice has been
appropriately given specifying the Sale Option, Lessee shall undertake
to cause a sale (in the case of any Payment Date prior to the
Expiration Date) of one or more Properties and (in the case of the
Expiration Date) of all, but not less than all, of the Properties on
the applicable Election Date (all as specified in the Election Notice),
in accordance with the provisions of Section 22.1 hereof. Such Election
Date on which a sale is required may be hereafter referred to as the
"Sale Date".
(b) In the event Lessee exercises the Sale Option then, as
soon as practicable and in all events not less than sixty (60) days
prior to the Sale Date, Lessee at its expense shall cause to be
delivered to Lessor a Phase I environmental site assessment for each of
the Properties then subject to sale recently prepared (no more than
thirty (30) days old prior to the Sale Date) by an independent
recognized professional reasonably acceptable to the Agent and in form,
scope and content reasonably satisfactory to the Agent. In the event
that the Agent shall not have received such environmental site
assessment by the date sixty (60) days prior to the Sale Date or in the
event that such environmental assessment shall reveal the existence of
any material violation of Environmental Laws, other material
Environmental Violation or potential material Environmental Violation
(with materiality determined in each case by the Agent in its
reasonable discretion), then Lessee on the Sale Date shall pay to
Lessor an amount equal to the Termination Value for all such Properties
then subject to sale and any and all other amounts due and owing
hereunder. Upon receipt of such payment and all other amounts due under
the Operative Agreements, Lessor shall transfer to Lessee all of
Lessor's right, title and interest in and to all such Properties then
subject to sale in accordance with Section 19.1.
ARTICLE XXI
21.1 [INTENTIONALLY OMITTED].
ARTICLE XXII
22.1 SALE PROCEDURE.
(a) During the Marketing Period, Lessee, on behalf of Lessor,
shall obtain bids for the cash purchase of (in the case of a sale
scheduled for a Payment Date prior to the Expiration Date) one or more
Properties subject to sale and (in the case of the Expiration Date)
all, but not less than all, the Properties in connection with a sale to
one or more third party purchasers to be consummated on the applicable
Sale Date for the highest price available, shall notify Lessor promptly
of the name and address of each prospective purchaser and the cash
price which each prospective purchaser shall have
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offered to pay for each such Property and shall provide Lessor with
such additional information about the bids and the bid solicitation
procedure as Lessor may reasonably request from time to time. All such
prospective purchasers must be Persons other than Lessee or any
Affiliate of Lessee. On the applicable Sale Date, Lessee shall pay (or
cause to be paid) to Lessor and all other parties, as appropriate, the
sum of all costs and expenses incurred by Lessor and/or the Agent (as
the case may be) in connection with such sale of one or more
Properties, all Rent and all other amounts then due and payable or
accrued under this Lease and/or any other Operative Agreement.
Lessor may reject any and all bids and may solicit and obtain
bids by giving Lessee written notice to that effect; provided, however,
that notwithstanding the foregoing, Lessor may not reject the bids
submitted by Lessee if such bids, in the aggregate, are (but only
regarding a sale on or with respect to the Expiration Date) greater
than or equal to the sum of the Limited Recourse Amount for all the
Properties then subject to sale in accordance with the terms of this
Lease, and represent bona fide offers from one or more third party
purchasers. If the highest price which a prospective purchaser or the
prospective purchasers shall have offered to pay for all such
Properties on the Sale Date (but only regarding a sale on or with
respect to the Expiration Date) is less than the sum of the Limited
Recourse Amount for all the Properties or if such bids do not represent
bona fide offers from one or more third parties or if there are no
bids, Lessor may elect to retain one or more of the Properties by
giving Lessee prior written notice of Lessor's election to retain the
same, and promptly upon receipt of such notice, Lessee shall surrender,
or cause to be surrendered, each of the Properties specified in such
notice in accordance with the terms and conditions of Section 10.1.
Upon acceptance of any bid, Lessor agrees, at Lessee's request and
expense, to execute a contract of sale with respect to such sale, so
long as the same is consistent with the terms of this Article 22 and
provides by its terms that it is nonrecourse to Lessor.
Unless Lessor shall have elected to retain one or more of the
Properties then subject to sale in accordance with the terms of this
Lease and pursuant to the provisions of the preceding paragraph, Lessee
shall arrange for Lessor to sell all such Properties free and clear of
the Lien of this Lease and any Lessor Liens attributable to Lessor,
without recourse or warranty (of title or otherwise), for cash on the
applicable Sale Date to the purchaser or purchasers offering the
highest cash sales price, as identified by Lessee or Lessor, as the
case may be; provided, however, solely as to Lessor or the Trust
Company, in its individual capacity, any Lessor Lien shall not
constitute a Lessor Lien so long as Lessor or the Trust Company, in its
individual capacity, is diligently and in good faith contesting, at the
cost and expense of Lessor or the Trust Company, in its individual
capacity, such Lessor Lien by appropriate proceedings in which event
the applicable Sale Date, all without penalty or cost to Lessee, shall
be delayed for the period of such contest. To effect such transfer and
assignment, Lessor shall execute, acknowledge (where required) and
deliver to the appropriate purchaser each of the following: (a) special
or limited warranty Deeds conveying each such Property (to the extent
it is real property titled to Lessor) and an assignment of the Ground
Lease conveying the leasehold interest of Lessor in each such Property
(to the extent it is real property and subject to a Ground
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Lease) to the appropriate purchaser free and clear of the Lien of this
Lease, the Lien of the Credit Documents and any Lessor Liens; (b) a
Bill of Sale conveying each such Property (to the extent it is personal
property) titled to Lessor to the appropriate purchaser free and clear
of the Lien of this Lease, the Lien of the Credit Documents and any
Lessor Liens; (c) any real estate tax affidavit or other document
required by law to be executed and filed in order to record each Deed
and/or each Ground Lease assignment; and (d) FIRPTA affidavits, as
appropriate. All of the foregoing documentation must be in form and
substance reasonably satisfactory to Lessor. Lessee shall surrender the
Properties so sold or subject to such documents to each purchaser in
the condition specified in Section 10.1, or in such other condition as
may be agreed between Lessee and such purchaser. Lessee shall not take
or fail to take any action which would have the effect of unreasonably
discouraging bona fide third party bids for any Property. If each of
the Properties (then subject to sale in accordance with the terms of
this Lease) is not either (i) sold on the applicable Sale Date in
accordance with the terms of this Section 22.1, or (ii) retained by
Lessor pursuant to an affirmative election made by Lessor pursuant to
the second sentence of the second paragraph of this Section 22.1(a),
then (x) Lessee shall be obligated to pay Lessor on the applicable Sale
Date an amount equal to the aggregate Termination Value for all such
Properties less any sales proceeds received, and (y) Lessor shall
transfer each applicable Property to Lessee in accordance with Section
20.2.
(b) If the Properties (then subject to sale in accordance with
the terms of this Lease) are sold on a Sale Date to one or more third
party purchasers in accordance with the terms of Section 22.1(a) and
the aggregate purchase price paid for all the Properties is less than
the sum of the aggregate Property Cost for all such Properties
(hereinafter such difference shall be referred to as the "Deficiency
Balance"), then Lessee hereby unconditionally promises to pay to Lessor
on the applicable Sale Date (to the extent such Sale Date is not the
Expiration Date) the Deficiency Balance and (to the extent such Sale
Date is the Expiration Date) the lesser of (i) the Deficiency Balance
or (ii) the Maximum Residual Guarantee Amount for all the Properties.
On a Sale Date if (x) Lessor receives the aggregate Termination Value
for all the Properties (then subject to sale in accordance with the
terms of this Lease) from one (1) or more third party purchasers, (y)
Lessor and such other parties receive all other amounts specified in
the last sentence of the first paragraph of Section 22.1(a) and (z) the
aggregate purchase price paid for all such Properties on such date
exceeds the sum of the aggregate Property Cost for all such Properties,
then Lessee may retain such excess. If one or more of such Properties
is retained by Lessor pursuant to an affirmative election made by
Lessor pursuant to the provisions of Section 22.1(a), then Lessee
hereby unconditionally promises to pay to Lessor on the Sale Date (but
only regarding a sale on or with respect to the Expiration Date) an
amount equal to the Maximum Residual Guarantee Amount for the
Properties so retained. Any payment of the foregoing amounts described
in this Section 22.1(b) shall be made together with a payment of all
other amounts referenced in the last sentence of the first paragraph of
Section 22.1(a).
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(c) In the event that all the Properties (then subject to sale
in accordance with the terms of this Lease) are either sold to one (1)
or more third party purchasers on the Sale Date or retained by Lessor
in connection with an affirmative election made by Lessor pursuant to
the provisions of Section 22.1(a), then in either case on the
applicable Sale Date Lessee shall provide Lessor or such third party
purchaser (unless otherwise agreed by such third party purchaser) with
(i) all permits, certificates of occupancy, governmental licenses and
authorizations necessary to use, operate, repair, access and maintain
each such Property for the purpose it is being used by Lessee, and (ii)
such manuals, permits, easements, licenses, intellectual property,
know-how, rights-of-way and other rights and privileges in the nature
of an easement as are reasonably necessary or desirable in connection
with the use, operation, repair, access to or maintenance of each such
Property for its intended purpose or otherwise as Lessor or such third
party purchaser(s) shall reasonably request (and a royalty-free license
or similar agreement to effectuate the foregoing on terms reasonably
agreeable to Lessor or such third party purchaser(s), as applicable).
All assignments, licenses, easements, agreements and other deliveries
required by clauses (i) and (ii) of this paragraph (c) shall be in form
reasonably satisfactory to the Agent or such third party purchaser(s),
as applicable, and shall be fully assignable (including without
limitation both primary assignments and assignments given in the nature
of security) without payment of any fee, cost or other charge. Lessee
shall also execute any documentation requested by Lessor or such third
party purchaser(s), as applicable, evidencing the continuation or
assignment of each Ground Lease.
22.2 APPLICATION OF PROCEEDS OF SALE.
Lessor shall apply the proceeds of sale of any Property in the
following order of priority:
(a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as
the case may be) for the payment of all reasonable costs and expenses
incurred by Lessor (and/or the Agent, as the case may be) in connection
with the sale (to the extent Lessee has not satisfied its obligation to
pay such costs and expenses);
(b) SECOND, so long as the Credit Agreement is in effect and
any Loans or Holder Advances or any amount is owing to the Financing
Parties under any Operative Agreement, to the Agent to be applied
pursuant to intercreditor provisions among Lessor, the Lenders and the
Holders contained in the Operative Agreements; and
(c) THIRD, to Lessee.
22.3 INDEMNITY FOR EXCESSIVE WEAR.
If the proceeds of the sale described in Section 22.1 with
respect to the Properties on the Expiration Date shall be less than the Limited
Recourse Amount with respect to the Properties, and at the time of such sale it
shall have been reasonably determined (pursuant to the Appraisal Procedure) that
the Fair Market Sales Value of the Properties shall have been impaired
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by greater than expected wear and tear during the term of the Lease, Lessee
shall pay to Lessor within ten (10) days after receipt of Lessor's written
statement (i) the amount of such excess wear and tear determined by the
Appraisal Procedure or (ii) the amount of the Sale Proceeds Shortfall, whichever
amount is less.
22.4 APPRAISAL PROCEDURE.
For determining the Fair Market Sales Value of the Properties
or any other amount which may, pursuant to any provision of any Operative
Agreement, be determined by an appraisal procedure, Lessor and Lessee shall use
the following procedure (the "Appraisal Procedure"). Lessor and Lessee shall
endeavor to reach a mutual agreement as to such amount for a period of ten (10)
days from commencement of the Appraisal Procedure under the applicable section
of the Lease, and if they cannot agree within ten (10) days, then two (2)
qualified appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor,
shall mutually agree thereupon, but if either party shall fail to choose an
appraiser within twenty (20) days after notice from the other party of the
selection of its appraiser, then the appraisal by such appointed appraiser shall
be binding on Lessee and Lessor. If the two (2) appraisers cannot agree within
twenty (20) days after both shall have been appointed, then a third appraiser
shall be selected by the two (2) appraisers or, failing agreement as to such
third appraiser within thirty (30) days after both shall have been appointed, by
the American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee
shall be paid by Lessee; the fees and expenses of the appraiser appointed by
Lessor shall be paid by Lessor (such fees and expenses not being indemnified
pursuant to Section 13 of the Participation Agreement); and the fees and
expenses of the third appraiser shall be divided equally between Lessee and
Lessor.
22.5 CERTAIN OBLIGATIONS CONTINUE.
During the Marketing Period, the obligation of Lessee to pay
Rent with respect to the Properties (including without limitation the
installment of Basic Rent due on the Sale Date) shall continue undiminished
until payment in full to Lessor of the sale proceeds, if any, the Maximum
Residual Guarantee Amount, the amount due under Section 22.3, if any, and all
other amounts due to Lessor or any other Person with respect to all Properties
or any Operative Agreement. Lessor shall have the right, but shall be under no
duty, to solicit bids, to inquire into the efforts of Lessee to obtain bids or
otherwise to take action in connection with any such sale, other than as
expressly provided in this Article XXII.
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ARTICLE XXIII
23.1 HOLDING OVER.
If Lessee shall for any reason remain in possession of a
Property after the expiration or earlier termination of this Lease as to such
Property (unless such Property is conveyed to Lessee), such possession shall be
as a tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to such Property and Lessee shall continue
to pay Basic Rent at the Lesser of the highest lawful rate and at one hundred
ten percent (110%) of the last payment of Basic Rent due with respect to such
Property prior to such expiration or earlier termination of this Lease. Such
Basic Rent shall be payable from time to time upon demand by Lessor and such
additional amount of Basic Rent shall be applied by Lessor ratably to the
Lenders and the Holders based on their relative amounts of the then outstanding
aggregate Property Cost for all Properties. During any period of tenancy at
sufferance, Lessee shall, subject to the second preceding sentence, be obligated
to perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to tenants at sufferance, to continue their occupancy and use of such
Property. Nothing contained in this Article XXIII shall constitute the consent,
express or implied, of Lessor to the holding over of Lessee after the expiration
or earlier termination of this Lease as to any Property (unless such Property is
conveyed to Lessee) and nothing contained herein shall be read or construed as
preventing Lessor from maintaining a suit for possession of such Property or
exercising any other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 RISK OF LOSS.
During the Term, unless Lessee shall not be in actual
possession of any Property in question solely by reason of Lessor's exercise of
its remedies of dispossession under Article XVII, the risk of loss or decrease
in the enjoyment and beneficial use of such Property as a result of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor.
ARTICLE XXV
25.1 ASSIGNMENT.
(a) Lessee may not assign this Lease or any of its rights or
obligations hereunder or with respect to any Property in whole or in
part to any Person without the prior written consent of the Agent, the
Lenders, the Holders and Lessor (except as provided in Section
25.2(b)).
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(b) No assignment by Lessee (referenced in this Section 25.1
or otherwise) or other relinquishment of possession to any Property
shall in any way discharge or diminish any of the obligations of Lessee
to Lessor hereunder and Lessee shall remain directly and primarily
liable under the Operative Agreements as to any rights or obligations
assigned by Lessee or regarding any Property in which rights or
obligations have been assigned or otherwise transferred.
25.2 SUBLEASES.
(a) Promptly, but in any event within five (5) Business Days,
following the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor and the Agent of the execution
of such sublease. As of the date of each Lease Supplement, Lessee shall
lease the respective Properties described in such Lease Supplement from
Lessor, and any existing tenant respecting such Property shall
automatically be deemed to be a subtenant of Lessee and not a tenant of
Lessor (except as provided in Section 25.2(b)).
(b) Without the prior written consent of the Agent, any
Lender, any Holder or Lessor and subject to the other provisions of
this Section 25.2, Lessee may sublet any Property or portion thereof to
any wholly-owned Subsidiary of Lessee or to any physician or ancillary
service provider (and any such wholly-owned Subsidiary of Lessee may
enter into a second tier sublease with any physician or ancillary
service provider, in accordance with this Section 25.2); provided,
however, that (1) concurrent with the execution of such sublease,
Lessee shall certify in writing to the Agent that any such sublease of
all or any portion of a Property has been entered into in accordance
with market terms and for market rental amounts, as both relate to such
Property, and in no way diminishes the fair market value, utility or
useful life of such Property and (2) no such sublease shall be for a
term extending more than seven (7) years beyond the Expiration Date.
Except as referenced in the immediately preceding sentence, no other
subleases shall be permitted unless consented to in writing by Lessor
and the Agent.
(c) No sublease (referenced in this Section 25.2 or otherwise)
or other relinquishment of possession to any Property shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder
and Lessee shall remain directly and primarily liable under this Lease
as to such Property, or portion thereof, so sublet.
ARTICLE XXVI
26.1 NO WAIVER.
No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy upon a
default hereunder, and no acceptance of full or partial payment of Rent during
the continuance of any such default, shall constitute a
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waiver of any such default or of any such term. To the fullest extent permitted
by law, no waiver of any default shall affect or alter this Lease, and this
Lease shall continue in full force and effect with respect to any other then
existing or subsequent default.
ARTICLE XXVII
27.1 ACCEPTANCE OF SURRENDER.
No surrender to Lessor of this Lease or of all or any portion
of any Property or of any part of any thereof or of any interest therein shall
be valid or effective unless agreed to and accepted in writing by Lessor and the
Agent and no act by Lessor or the Agent or any representative or agent of Lessor
or the Agent, other than a written acceptance, shall constitute an acceptance of
any such surrender.
27.2 NO MERGER OF TITLE.
There shall be no merger of this Lease or of the leasehold
estate created hereby by reason of the fact that the same Person may acquire,
own or hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, (b) any right, title or interest in any Property, (c) any Notes, or (d)
a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 INCORPORATION OF COVENANTS.
Reference is made to the Lessee Credit Agreement and the
representations and warranties of Lessee contained in Article IV of the Lessee
Credit Agreement (hereinafter referred to as the "Incorporated Representations
and Warranties") and the covenants contained in Article V and Article VI of the
Lessee Credit Agreement (hereinafter referred to as the "Incorporated
Covenants"). Lessee agrees with Lessor that the Incorporated Representations and
Warranties and the Incorporated Covenants (and all other relevant provisions of
the Lessee Credit Agreement related thereto, including without limitation the
defined terms contained in Article I thereof which are used in the Incorporated
Representations and Warranties and the Incorporated Covenants, hereinafter
referred to as the "Additional Incorporated Terms") are hereby incorporated by
reference into this Lease and shall inure to the benefit of Lessor to the same
extent and with the same effect as if set forth fully herein. In the event a
waiver is granted under the Lessee Credit Agreement or an amendment or
modification is executed with respect to the Lessee Credit Agreement, and such
waiver, amendment and/or modification affects the Incorporated Representations
and Warranties, the Incorporated Covenants or the Additional Incorporated Terms,
then such waiver, amendment or modification shall be effective with respect to
the Incorporated Representations and Warranties, the Incorporated Covenants and
the Additional Incorporated Terms as incorporated by reference into this Lease
upon the date and for
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the duration of effectiveness thereof under the Lessee Credit Agreement (a)
automatically, if the financing parties in the Lessee Credit Agreement hold a
pro rata interest in both the Lessee Credit Agreement and the Commitments and
(b) if the foregoing subsection (a) is not satisfied, only if consented to in
writing by the Agent (acting upon the direction of the Majority Secured
Parties). If such consent referenced in subsection (b) of the previous sentence
is required but is not granted, then the Incorporated Representations and
Warranties, Incorporated Covenants and Additional Incorporated Terms (together
with any modification or amendments approved prior to such time in accordance
with this paragraph) shall continue to be effective hereunder. In the event of
any replacement of the Lessee Credit Agreement with a similar credit facility
(the "New Facility"), the representations and warranties, covenants and
additional terms contained in the New Facility which correspond to the
Incorporated Representations and Warranties, Incorporated Covenants and
Additional Incorporated Terms shall become the Incorporated Representations and
Warranties, the Incorporated Covenants and the Additional Incorporated Terms
hereunder (x) automatically, if the financing parties in the New Facility hold a
pro rata interest in both the New Facility and the Commitments and (y) if the
foregoing subsection (x) is not satisfied, only if consented to in writing by
the Agent (acting upon the direction of the Majority Secured Parties). If such
consent referenced in subsection (y) of the previous sentence is required but is
not granted or if the Lessee Credit Agreement is terminated and not replaced,
then the Incorporated Representations and Warranties, Incorporated Covenants and
Additional Incorporated Terms (together with any modifications or amendments
approved prior to such time in accordance with this paragraph) shall continue to
be effective hereunder.
ARTICLE XXIX
29.1 NOTICES.
All notices required or permitted to be given under this Lease
shall be in writing and delivered as provided in the Participation Agreement.
ARTICLE XXX
30.1 MISCELLANEOUS.
Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any provision of
this Lease shall be held to be unenforceable in any jurisdiction, such
unenforceability shall not affect the enforceability of any other provision of
this Lease and such jurisdiction or of such provision or of any other provision
hereof in any other jurisdiction.
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30.2 AMENDMENTS AND MODIFICATIONS.
Neither this Lease nor any Lease Supplement may be amended,
waived, discharged or terminated except in accordance with the provisions of
Section 12.5 of the Participation Agreement.
30.3 SUCCESSORS AND ASSIGNS.
All the terms and provisions of this Lease shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
30.4 HEADINGS AND TABLE OF CONTENTS.
The headings and table of contents in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
30.5 COUNTERPARTS.
This Lease may be executed in any number of counterparts, each
of which shall be an original, but all of which shall together constitute one
(1) and the same instrument.
30.6 GOVERNING LAW.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, EXCEPT TO
THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE
REQUIRED TO APPLY.
30.7 CALCULATION OF RENT.
All calculation of Rent payable hereunder shall be computed
based on the actual number of days elapsed over a year of three hundred sixty
(360) days or, to the extent such Rent is based on the Prime Lending Rate, three
hundred sixty-five (365) (or three hundred sixty-six (366), as applicable) days.
30.8 MEMORANDA OF LEASE AND LEASE SUPPLEMENTS.
This Lease shall not be recorded; provided, Lessor and Lessee
shall promptly record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B attached hereto) or a short
form lease (in form and substance reasonably satisfactory to the Agent)
regarding each Property promptly after the acquisition thereof in the local
filing office with respect thereto, in all cases at Lessee's cost and expense,
and as required under applicable law to sufficiently evidence this Lease and any
such Lease Supplement in the applicable real estate filing records.
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30.9 ALLOCATIONS BETWEEN THE LENDERS AND THE HOLDERS.
Notwithstanding any other term or provision of this Lease to
the contrary, the allocations of the proceeds of the Properties and any and all
other Rent and other amounts received hereunder shall be subject to the
inter-creditor provisions between the Lenders and the Holders contained in the
Operative Agreements (or as otherwise agreed among the Lenders and the Holders
from time to time).
30.10 LIMITATIONS ON RECOURSE.
Notwithstanding anything contained in this Lease to the
contrary, Lessee agrees to look solely to Lessor's estate and interest in the
Properties (and in no circumstance to the Agent, the Lenders, the Holders or
otherwise to Lessor) for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other property or
assets of Lessor or any shareholder, owner or partner (direct or indirect) in or
of Lessor, or any director, officer, employee, beneficiary, Affiliate of any of
the foregoing shall be subject to levy, execution or other enforcement procedure
for the satisfaction of the remedies of Lessee under or with respect to this
Lease, the relationship of Lessor and Lessee hereunder or Lessee's use of the
Properties or any other liability of Lessor to Lessee. Nothing in this Section
shall be interpreted so as to limit the terms of Sections 6.1 or 6.2 or the
provisions of Section 12.10 of the Participation Agreement.
30.11 WAIVERS OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO
THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY
COUNTERCLAIM THEREIN.
30.12 EXERCISE OF LESSOR RIGHTS.
Lessee hereby acknowledges and agrees that the rights and
powers of Lessor under this Lease have been assigned to the Agent pursuant to
the terms of the Security Agreement and the other Operative Agreements. Lessor
and Lessee hereby acknowledge and agree that (a) the Agent shall, in its
discretion, direct and/or act on behalf of Lessor pursuant to Sections 8.2(h)
and 8.6 of the Participation Agreement, (b) all notices to be given to Lessor
shall be given to the Agent and (c) all notices to be given by Lessor may be
given by the Agent, at its election.
30.13 SUBMISSION TO JURISDICTION; VENUE; ARBITRATION.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
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30.14 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND
CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN
EFFECT. TO THE EXTENT ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER
CHARACTERIZED BY ANY COURT OF COMPETENT JURISDICTION AS THE REPAYMENT OF
PRINCIPAL AND INTEREST THEREON, THIS SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR
PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST."
ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF
THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY
EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF
THE MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED
FOR, CHARGED, OR RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM
NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE
CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR
AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM
NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF
THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE
AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS
CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR
UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF
THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN
EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST,
OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH
AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED
TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF
THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST
WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT
INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND.
ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE
FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR
41
<PAGE> 47
EXTENSION) OF THIS LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH
PAYMENTS DOES NOT EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE
LAW.
[Signature page follows]
42
<PAGE> 48
IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
PROVINCE HEALTHCARE COMPANY
By: /s/ CHRISTOPHER T. HANNON
---------------------------------------
Name: Christopher T. Hannon
-------------------------------------
Title: Vice President - Finance
------------------------------------
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the PHC Real Estate Trust
1998-1, as Lessor
By: /s/ C. SCOTT NIELSON
---------------------------------------
Name: C. Scott Nielson
-------------------------------------
Title: Vice President
------------------------------------
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as the date hereof
FIRST UNION NATIONAL BANK,
as the Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 49
EXHIBIT A TO
THE LEASE
LEASE SUPPLEMENT NO. ___
THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated as of
[________________] between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee under the PHC Real Estate Trust
1998-1, as lessor (the "Lessor"), and PROVINCE HEALTHCARE COMPANY, as lessee
(the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; RULES OF USAGE. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of March 30, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the PHC Real
Estate Trust 1998-1, the various banks and other lending institutions which are
parties thereto from time to time, as the Holders, the various banks and other
lending institutions which are parties thereto from time to time, as the
Lenders, and First Union National Bank, as the Agent for the Lenders and
respecting the Security Documents, as the Agent for the Lenders and Holders, to
the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. THE PROPERTIES. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and [A
LEGAL DESCRIPTION OF THE LAND / A COPY OF THE GROUND LEASE] attached hereto as
Schedule 1-C. Effective upon the execution and delivery of this Lease Supplement
by Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease. Without further action, any and all additional
Equipment funded under the Operative Agreements and any and all additional
Improvements made to the Land shall be deemed to be titled to the Lessor and
subject to the terms and conditions of the Lease and this Lease Supplement.
SECTION 3. USE OF PROPERTY. At all times during the Term with respect
to each Property, Lessee will comply with all obligations under and (to the
extent no Event of Default exists and provided, that such exercise will not
impair the value of such Property) shall be permitted to exercise all rights and
remedies under, all operation and easement agreements and related or similar
agreements applicable to such Property.
A-1
<PAGE> 50
SECTION 4. RATIFICATION; INCORPORATION BY REFERENCE. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. ORIGINAL LEASE SUPPLEMENT. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Agent therefor on or following the signature page thereof shall be the original
executed counterpart of this Lease Supplement (the "Original Executed
Counterpart"). To the extent that this Lease Supplement constitutes chattel
paper, as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY
AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. MORTGAGE; POWER OF SALE. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. COUNTERPART EXECUTION. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
A-2
<PAGE> 51
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the PHC Real Estate Trust
1998-1, as Lessor
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PROVINCE HEALTHCARE
COMPANY, as Lessee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
FIRST UNION NATIONAL BANK, as
the Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
A-3
<PAGE> 52
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as the Owner Trustee under the PHC Real Estate Trust 1998-1, on
behalf of the Owner Trustee.
[Notarial Seal]
-----------------------------------
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of _______________, a
________________ corporation, on behalf of the corporation.
[Notarial Seal]
-----------------------------------
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of ________________ this ____ day of
___________, by _____________, as __________________ of FIRST UNION NATIONAL
BANK, a national banking association, as the Agent.
[Notarial Seal]
-----------------------------------
Notary Public
My commission expires:____________
A-4
<PAGE> 53
SCHEDULE 1
TO LEASE SUPPLEMENT NO. ____
(Description of the Leased Property)
A-5
<PAGE> 54
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. ____
(Equipment)
A-6
<PAGE> 55
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. ____
(Improvements)
A-7
<PAGE> 56
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. ____
[(LAND)/
(GROUND LEASE)]
A-8
<PAGE> 57
EXHIBIT B TO THE LEASE
[MODIFY OR SUBSTITUTE SHORT FORM LEASE
AS NECESSARY FOR LOCAL LAW REQUIREMENTS]
Recordation requested by:
Moore & Van Allen, PLLC
After recordation return to:
Moore & Van Allen, PLLC (WMA)
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
Space above this line
for Recorder's use
- --------------------------------------------------------------------------------
MEMORANDUM OF LEASE AGREEMENT
AND
LEASE SUPPLEMENT NO. _____________
THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO.
____________ ("Memorandum"), dated as of _____________, 1998, is by and between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually, but solely as the Owner Trustee under the PHC Real Estate Trust
1998-1, with an office at 79 South Main Street, Salt Lake City, Utah 84111
(hereinafter referred to as "Lessor") and PROVINCE HEALTHCARE COMPANY, a
Delaware corporation, with an office at ___________________ (hereinafter
referred to as "Lessee").
WITNESSETH:
That for value received, Lessor and Lessee do hereby covenant, promise
and agree as follows:
1. DEMISED PREMISES AND DATE OF LEASE. Lessor has leased to Lessee, and
Lessee has leased from Lessor, for the Term (as hereinafter defined), certain
real property and other property located in ________________, which is described
in the attached Schedule 1 (the "Property"), pursuant to the terms of a Lease
Agreement between Lessor and Lessee dated as of March 30, 1998 (as such may be
amended, modified, extended, supplemented, restated and/or
B-1
<PAGE> 58
replaced from time to time, "Lease") and a Lease Supplement No. _____ between
Lessor and Lessee dated as of ______________ (the "Lease Supplement").
2. TERM, RENEWAL, EXTENSION AND PURCHASE OPTION. The term of the
Lease for the Property ("Term") commenced as of __________, 19__ and shall end
as of _________, 19__, unless the Term is extended or earlier terminated in
accordance with the provisions of the Lease. The Lease contains provisions for
renewal and extension. The tenant has a purchase option under the Lease.
3. TAX PAYER NUMBERS.
Lessor's tax payer number: __________________.
Lessee's tax payer number: ____________________.
4. MORTGAGE; POWER OF SALE. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee has granted, pursuant to the terms of the Lease and the Lease Supplement,
a Lien against the Property WITH POWER OF SALE, and that, upon the occurrence
and during the continuance of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Property.
5. EFFECT OF MEMORANDUM. The purpose of this instrument is to
give notice of the Lease and the Lease Supplement and their respective terms,
covenants and conditions to the same extent as if the Lease and the Lease
Supplement were fully set forth herein. This Memorandum shall not modify in any
manner the terms, conditions or intent of the Lease or the Lease Supplement and
the parties agree that this Memorandum is not intended nor shall it be used to
interpret the Lease or the Lease Supplement or determine the intent of the
parties under the Lease or the Lease Supplement.
[The remainder of this page has been intentionally left blank.]
B-2
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first written.
LESSOR:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner
Trustee under the PHC Real Estate Trust
1998-1
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
LESSEE:
PROVINCE HEALTHCARE COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
B-3
<PAGE> 60
SCHEDULE 1
(Description of Property)
B-4
<PAGE> 61
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No.
_____ was acknowledged before me, the undersigned Notary Public, in the County
of _________________ this _____ day of ______________, by ________________, as
__________________ of FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as the Owner Trustee under the
PHC Real Estate Trust 1998-1, on behalf of the Owner Trustee.
[Notarial Seal]
-----------------------------------
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No.
_____ was acknowledged before me, the undersigned Notary Public, in the County
of _________________ this _____ day of ______________, by ________________, as
__________________ of PROVINCE HEALTHCARE COMPANY, a Delaware corporation, on
behalf of the corporation.
[Notarial Seal]
-----------------------------------
Notary Public
My commission expires:____________
B-5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 6,775
<SECURITIES> 0
<RECEIVABLES> 41,267
<ALLOWANCES> 5,562
<INVENTORY> 3,848
<CURRENT-ASSETS> 52,251
<PP&E> 74,345
<DEPRECIATION> 7,540
<TOTAL-ASSETS> 181,222
<CURRENT-LIABILITIES> 16,563
<BONDS> 52,106
0
0
<COMMON> 130
<OTHER-SE> 95,714
<TOTAL-LIABILITY-AND-EQUITY> 181,222
<SALES> 47,242
<TOTAL-REVENUES> 47,851
<CGS> 0
<TOTAL-COSTS> 38,867
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,082
<INTEREST-EXPENSE> 1,855
<INCOME-PRETAX> 4,047
<INCOME-TAX> 1,772
<INCOME-CONTINUING> 2,275
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,275
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.16
</TABLE>
