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 November 30, 1994.
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to .
Commission file number 1-10426
THE HILLHAVEN CORPORATION
(Exact name of registrant as specified in its charter)
FOR THE QUARTER ENDED NOVEMBER 30, 1994
Nevada 91-1459952
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1148 Broadway Plaza
Tacoma, WA 98402
(Address of principal executive offices)
(206) 572-4901
(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 X No
The number of shares of Common Stock, par value $.75 per share,
outstanding on January 1, 1995: 28,624,463.
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THE HILLHAVEN CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets as of
November 30, 1994 and May 31, 1994 1
Consolidated Statements of Income for
the Three Months and Six Months Ended
November 30, 1994 and 1993 3
Consolidated Statements of Cash Flows
for the Six Months Ended
November 30, 1994 and 1993 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
NOTE: Items 2 - 5 of Part II are omitted because they are
not applicable.
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<PAGE>
<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED BALANCE SHEETS
November 30, 1994 and May 31, 1994
(Unaudited)
(In thousands)
<CAPTION>
November 30, May 31,
1994 1994
(restated)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 43,501 $ 49,888
Accounts and notes receivable, less
allowance for doubtful accounts of
$11,337 at November 30, 1994 and
$10,337 at May 31, 1994 156,656 152,962
Inventories 18,465 20,772
Prepaid expenses and other current assets 38,565 35,011
Total current assets 257,187 258,633
Long-term notes receivable, less allowance
for doubtful accounts of $15,334 at
November 30, 1994 and $14,608 at May 31, 1994 83,615 84,944
Property and equipment, net 793,135 784,337
Intangible assets, net of accumulated
amortization of $21,729 at November 30, 1994
and $19,336 at May 31, 1994 29,892 31,331
Other noncurrent assets, net 38,093 33,248
$ 1,201,922 $ 1,192,493
</TABLE>
See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
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<PAGE>
<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED BALANCE SHEETS
November 30, 1994 and May 31, 1994
(Unaudited)
(In thousands, except share information)
<CAPTION>
November 30, May 31,
1994 1994
(restated)
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 38,234 $ 46,389
Accounts payable 51,268 65,150
Employee compensation and benefits 59,104 52,444
Other accrued liabilities 49,474 56,977
Total current liabilities 198,080 220,960
Convertible debentures 133,593 134,223
Other long-term debt 444,011 444,812
Other long-term liabilities 33,115 28,751
Stockholders' equity:
Series C Preferred Stock, $0.15 par value;
35,000 shares authorized, issued and
outstanding (liquidation preference
of $35,000) 5 5
Series D Preferred Stock, $0.15 par value;
300,000 shares authorized, 62,388 and
60,546 issued and outstanding at
November 30, 1994 and May 31, 1994
(liquidation preference of $62,388) 10 9
Common stock, $0.75 par value; 60,000,000
shares authorized; 28,623,663 and
28,434,756 issued and outstanding at
November 30, 1994 and May 31, 1994 21,468 21,326
Additional paid-in capital 336,569 329,537
Retained earnings 40,114 16,081
Unearned compensation (5,043) (3,211)
Total stockholders' equity 393,123 363,747
$ 1,201,922 $1,192,493
</TABLE>
See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
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<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months and Six Months Ended November 30, 1994 and 1993
(Unaudited)
(In thousands, except per share)
<CAPTION>
Three Months Six Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net operating revenues $ 392,982 $367,189 $ 775,047 $726,899
Expenses:
Operating and
administrative 332,106 315,270 660,321 622,815
Depreciation and
amortization 14,261 13,555 28,194 27,181
Rent 13,337 13,847 27,203 27,728
Interest 12,189 13,242 24,556 29,104
Restructuring --- (21,904) --- (20,225)
Total expenses 371,893 334,010 740,274 686,603
Operating income 21,089 33,179 34,773 40,296
Interest income 3,093 3,245 6,426 7,135
Income before income taxes
and extraordinary charge 24,182 36,424 41,199 47,431
Income tax expense 7,990 10,309 13,613 13,136
Income before extraordinary
charge 16,192 26,115 27,586 34,295
Extraordinary charge -
early extinguishment
of debt, net of income
taxes (52) (940) (174) (940)
Net income $ 16,140 $ 25,175 $ 27,412 $ 33,355
</TABLE>
See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
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<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months and Six Months Ended November 30, 1994 and 1993
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three Months Six Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary income per common share:
Income before extraordinary
charge $ .50 $ .95 $ .85 $ 1.25
Extraordinary charge --- (.04) (.01) (.04)
Net income $ .50 $ .91 $ .84 $ 1.21
Fully diluted income per
common share:
Income before extraordinary
charge $ .44 $ .75 $ .75 $ 1.02
Extraordinary charge --- ( .03) --- ( .03)
Net income $ .44 $ .72 $ .75 $ .99
Weighted average common
shares and equivalents
outstanding:
Primary 28,866 24,863 28,747 24,731
Fully diluted 36,891 33,515 36,791 33,505
</TABLE>
See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
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<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended November 30, 1994 and 1993
(Unaudited)
(In thousands)
<CAPTION>
1994 1993
<S> <C> <C>
Net cash provided by operating activities
(including changes in all operating
assets and liabilities) $ 52,556 $ 35,021
Cash flows from investing activities:
Purchases of property and equipment (24,535) (18,569)
Purchase of previously leased
nursing centers (3,923) (1,575)
Proceeds from sales of property
and equipment 4,238 490
Proceeds from collection of notes
receivable 2,705 15,908
(Investments in) distributions from
joint ventures and partnerships, net (1,653) 1,424
Increase in other noncurrent assets (5,846) (12,647)
Net cash used in
investing activities (29,014) (14,969)
Cash flows from financing activities:
Net increase in borrowings under
revolving lines of credit 10,000 16,000
Proceeds from long-term debt 6,221 356,035
Payments of principal on long-term debt (31,472) (462,446)
Proceeds from sale of preferred stock --- 63,399
Increase in intangible assets (1,604) (14,683)
Other, items (13,074) (3,807)
Net cash used in financing
activities (29,929) (45,502)
Net decrease in cash (6,387) (25,450)
Cash and cash equivalents at beginning
of period 49,888 73,253
Cash and cash equivalents at end of period $ 43,501 $ 47,803
</TABLE>
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<TABLE>
THE HILLHAVEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended November 30, 1994 and 1993
(Unaudited)
(In thousands)
<CAPTION>
1994 1993
<S> <C> <C>
Supplemental disclosures
Cash paid for:
Interest $ 25,932 $ 21,118
Income taxes 11,713 6,983
Noncash investing and financing activities:
Long-term debt incurred in connection with
purchase of previously leased properties --- 13,705
Adjustment to property and equipment and
capital lease obligations --- 23,600
Notes receivable issued in connection
with sale of nursing centers 500 ---
Preferred stock issued to retire debt --- 56,601
Financing for equipment purchases 2,535 ---
</TABLE>
See accompanying Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
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THE HILLHAVEN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. The unaudited financial information furnished herein, in the
opinion of management, reflects all adjustments which are
necessary to state fairly the financial position, cash flows
and results of operations of The Hillhaven Corporation
("Hillhaven" or "the Company") as of and for the periods
indicated. Hillhaven presumes that users of the interim
financial information herein have read or have access to the
Company's audited financial statements and Management's
Discussion and Analysis of Financial Condition and Results
of Operations for the preceding fiscal year and that the
adequacy of additional disclosure needed for a fair
presentation, except in regard to material contingencies,
may be determined in that context. Accordingly, footnote
and other disclosures which would substantially duplicate
the disclosures contained in Hillhaven's most recent annual
report to stockholders have been omitted.
2. The provision for doubtful accounts and notes receivable is
included in operating and administrative expenses.
Provisions totalled $1,727, $3,300, $1,589 and $2,882 for
the three months and six months ended November 30, 1994 and
1993, respectively.
3. On September 30, 1994, the Company sold its 30% ownership
interest in a closely-held institutional pharmacy and
recognized a pretax gain of $8,077.
4. On October 31, 1994, the Company acquired closely-held CPS
Pharmaceutical Services, Inc. (CPS) and Advanced Infusion
Systems, Inc. (AIS) in a business combination accounted for
as a pooling of interests. CPS and AIS, which provide
diversified pharmaceutical and infusion services through
locations in Northern California, became part of the
Company's Medisave Pharmacies subsidiary through the
exchange of 1,262,062 shares of the Company's common stock
valued at approximately $29,000. The accompanying financial
statements for the three and six months ended November 30,
1994 are presented on the basis that the companies were
combined for the entire period, and financial statements of
the prior-year periods have been restated to give effect to
the combination.
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Summarized results of operations of the separate companies
for the period from June 1, 1994 through October 31, 1994,
the date of acquisition, are as follows:
<TABLE>
<CAPTION>
Hillhaven CPS/AIS
<S> <C> <C>
Net operating revenues $ 636,305 $ 10,164
Income (loss) before
extraordinary item $ 23,790 $ (240)
Net income (loss) $ 23,616 $ (240)
</TABLE>
Following is a reconciliation of the amounts of net
operating revenues and net income previously reported for
the three and six months ended November 30, 1993:
<TABLE>
<CAPTION>
Three Six
Months Months
<S> <C> <C>
Net operating revenues:
As previously reported $ 361,427 $ 716,241
Acquired companies 5,762 10,658
As restated $ 367,189 $ 726,899
Net income:
As previously reported $ 24,872 $ 32,896
Acquired companies 303 459
As restated $ 25,175 $ 33,355
</TABLE>
5. On October 28, 1994, the Company restructured its bank
financing and increased its available borrowing capacity by
$20,000. The amended $320,000 commercial bank facility,
with a syndicate of 22 major banks, lowers borrowing costs,
extends the term of the agreement to five years, reduces
principal repayment requirements and relaxes many covenants.
Proceeds and enhanced cash flow from reduced repayment terms
will be used to expand subacute programs, repay higher cost
debt and fund future acquisition opportunities.
6. The extraordinary charges resulted from the write-off of
capitalized financing costs in connection with the
refinancing of certain of the Company's industrial revenue
bonds and are shown net of the tax effect of $30 and $85 in
the three and six months ended November 30, 1994,
respectively, and $426 in both the three and six months
ended November 30, 1993.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollars in thousands)
The following material should be read in conjunction with the
consolidated financial statements of the Company and the related
notes thereto. All references in this discussion and analysis to
years are to fiscal years of the Company ended May 31 of such
year.
Acquisitions
On October 31, 1994, the Company acquired closely-held CPS
Pharmaceutical Services, Inc. (CPS) and Advanced Infusion
Systems, Inc. (AIS) in a business combination accounted for as a
pooling of interests. CPS and AIS, which provide diversified
pharmaceutical and infusion services through locations in
Northern California, became part of the Company's Medisave
Pharmacies subsidiary (Medisave) through the exchange of
1,262,062 shares of the Company's common stock valued at
approximately $29,000. The accompanying financial statements for
the three and six months ended November 30, 1994 are presented on
the basis that the companies were combined for the entire period,
and financial statements of the prior-year periods have been
restated to give effect to the combination. See Note 4 of Notes
to Consolidated Financial Statements.
Results of Operations
In the 1995 second quarter, Hillhaven realized earnings of
$16,140 compared to $25,175 in the prior-year period. Net income
for the six months ended November 30, 1994 and 1993 amounted to
$27,412 and $33,355, respectively. Prior-year earnings include a
$21,904 credit resulting from the conclusion of the Company's
facility disposition program.
Net operating revenues were $392,982, $775,047, $367,189 and
$726,899 in the three and six months ended November 30, 1994 and
1993, respectively. Operating income before property-related
expenses (which are comprised of rent, depreciation and
amortization and interest) and restructuring credits for the
three and six months ended November 30, 1994 was $60,876 (15.5%
of net operating revenues) and $114,726 (14.8% of net operating
revenues), respectively, an increase of approximately 17.3% and
10.2% from $51,919 (14.1% of net operating revenues) and $104,084
(14.3% of net operating revenues) in the same periods in the
prior year.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
The following table summarizes selected operating statistics:
<TABLE>
<CAPTION>
At November 30,
1994 1993
<S> <C> <C>
Nursing Centers
Number of nursing centers 272 284
Number of licensed beds 34,186 35,141
Centers managed for others 15 17
Pharmacy Outlets 57 83
Retirement Housing Communities 19 20
</TABLE>
The following table identifies the Company's sources of net
operating revenues.
<TABLE>
<CAPTION>
Three months ended Six months ended
November 30, November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Percentage of net
operating revenues:
Nursing Centers:
Long term care 58.1% 62.2% 58.9% 62.6%
Subacute medical and
rehabilitation 24.5 19.9 23.7 19.8
Other operating
revenues 1.9 2.5 2.2 2.3
Total nursing
centers 84.5 84.6 84.8 84.7
Pharmacies 13.3 13.3 13.0 13.2
Retirement Housing 2.2 2.1 2.2 2.1
Total 100.0% 100.0% 100.0% 100.0%
Net patient revenues
per patient day:
Long term care $ 89.58 $ 84.54 $ 88.72 $ 83.91
Subacute medical and
rehabilitation $275.43 $243.67 $266.78 $239.96
Combined $112.02 $100.45 $109.78 $ 99.41
Average number of
beds available 34,252 35,195 34,247 35,169
Average occupancy 93.0% 93.8% 93.1% 93.6%
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Nursing center net operating revenues, comprised primarily of
patient revenues, increased 6.9% and 6.7% in the three and six
months ended November 30, 1994 and 1993 to $332,072 and $656,897,
respectively, from $310,544 and $615,537 in the same periods in
the prior year.
Patient revenues are affected by changes in Medicare and Medicaid
reimbursement rates, private pay and other rates charged by
Hillhaven, occupancy levels, the nature of services provided and
the payor mix.
Data for nursing center operations with respect to sources of net
patient revenues and patient mix by payor type are set forth
below. Included in private and other revenues are per diem
amounts received from managed care contracts.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Patient Revenues
Medicaid 47.1% 51.6% 47.6% 51.7%
Private and other 26.5 26.4 26.8 26.5
Medicare 26.4 22.0 25.6 21.8
Patient Census
Medicaid 65.7% 67.6% 65.8% 67.6%
Private and other 23.3 23.0 23.4 23.0
Medicare 11.0 9.4 10.8 9.4
</TABLE>
In the past year, Hillhaven received rate increases from Medicare
and Medicaid and increased its private pay rates.
The Company is continuing its strategy of improving its quality
mix of private pay and Medicare patients by expanding its
subacute medical and rehabilitation programs and services. These
higher revenue services include physical, occupational, speech
and respiratory therapy and subacute care services, such as
stroke therapy and wound care. The Company has increased the
number of managed care contracts it maintains with insurance
companies and other payors to provide subacute medical and
rehabilitation care to their insureds, offering a less expensive
alternative to acute care hospitals. The average daily number of
managed care patients in Hillhaven's nursing centers, including
long term care patients, was approximately 525 in the first six
months of 1995 compared to 380 in 1994.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Net operating revenues from pharmacy operations increased to
$52,336 and $101,179 in the three and six months ended
November 30, 1994, respectively, from $48,743 and $95,819 in the
prior-year periods. Pharmacy operations produced operating
income before property-related expenses of $13,907 in the current
quarter (26.6% of net operating revenues), compared to $6,723
(13.8% of net operating revenues) in the prior-year quarter. For
the six months ended November 30, 1994, operating income before
property-related expenses amounted to $21,773 (21.5% of net
operating revenues) compared to $12,298 (12.8% of net operating
revenues) in the same period in the prior year. Revenues and
operating income for the three and six months ended November 30,
1994 include an $8,077 gain on the sale of a closely-held
institutional pharmacy and costs associated with the acquisition
of AIS and CPS amounting to $1,038.
Institutional revenues accounted for approximately 95% and 91% of
pharmacy net operating revenues in the three and six months ended
November 30, 1994, respectively, versus 79% and 78% in the same
periods in the prior year. The growing contribution from
institutional operations reflects the Company's increasing focus
on the nursing home market, disposition of retail outlets and
continuing pricing pressure in the retail operations. The leases
of the remaining 14 Wal-Mart outlets were terminated in the 1995
first quarter. Institutional revenues increased by 29.0% and
22.1% to $49,516 and $91,644 in the three and six months ended
November 30, 1994, respectively, from $38,380 and $75,061 in the
prior-year periods. These increases are the result of an
increase in the number of nursing center beds serviced and higher
sales volumes per bed. The increase in per bed sales reflects
the Company's strategy of aggressively marketing higher-margin
ancillary products and services, such as respiratory and
intravenous therapies and enteral and urological supplies.
During the quarter Hillhaven announced plans to form the MediLife
Pharmacy Network (MediLife), a joint venture between Medisave and
Life Care Centers of America (Life Care). Beginning February 1,
1995, MediLife will provide pharmaceutical and consulting
services to certain of Life Care's long term and subacute care
facilities. Medisave will contribute four of its existing
institutional pharmacies to the joint venture and will account
for its 50% ownership interest by the equity method. Medisave
will receive a management fee for managing MediLife. As a result
of it's contribution of four pharmacies to the joint venture,
subsequent to February 1, 1995, the Company will report a
decrease in pharmacy net operating revenues. However, this
transaction is not expected to result in a material decrease in
income for the Company for the year ended May 31, 1995.
Net operating revenues from retirement housing operations
increased to $8,574 and $16,971 in the three and six months ended
November 30, 1994 respectively, from $7,902 and $15,543 in the
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
prior-year periods. These increases were due to increases in
rates charged. Retirement housing average occupancy was 95.3% in
both the three an six months ended November 30, 1994 and 96.7%
and 95.6% in the three and six months ended November 30, 1993,
respectively.
Operating and administrative expenses of the Company's nursing
centers increased by 7.6% and 7.8% in the three and six months
ended November 30, 1994 to $288,111 and $569,686, respectively,
from $267,797 and $528,252 in the same periods in the prior year.
These increases were attributable primarily to the expansion of
subacute and medical rehabilitation services. Labor and related
benefits, which represented approximately 77% of nursing centers
operating and administrative expenses in both the current three-
and six-month periods, increased by 6.1% and 6.6% to $220,585
and $437,859 in the three and six months ended November 30, 1994,
respectively from $207,994 and $410,866 in the prior-year
periods. These increases were the result of an increase in the
number of therapists in the Company's nursing centers to
accommodate the increase in the number of medically complex
patients, as well as general wage rate increases.
The increase in the non-labor components of operating and
administrative expenses, including ancillary supplies, reflects
the higher costs associated with caring for higher acuity
patients.
Interest expense decreased by $1,053 to $12,189 in the current
quarter and by $4,548 to $24,556 in the current six-month period.
This decrease is due to the refinancing of certain of the
Company's indebtedness as part of the recapitalization program
completed in 1994 as well as the restructuring of the Company's
bank financing in October 1994.
Cash Flows and Financial Condition
Cash provided by operations in the first six months of 1995
amounted to $52,556, compared to $35,021 in the prior year. The
increase is due primarily to higher operating income before
property-related expenses and fluctuations in current assets and
liabilities.
Net cash used in investing activities amounted to $29,014 in the
first six months of 1995 compared to $14,969 in the prior-year
period. In the prior year, the Company received cash proceeds
from unscheduled notes receivable payoffs totalling $14,621.
Capital expenditures for routine replacements and refurbishment
of facilities and capital additions amounted to $24,535 in the
current six-month period compared to $18,569 in the prior year.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Net cash used in financing activities decreased to $29,929 from
$45,502 in the prior year. During the six months ended November
30, 1993, Hillhaven expended $14,816 for financing costs
associated with the recapitalization program.
The Company has an $85,000 revolving bank line of credit which
had an outstanding balance of $18,000 at November 30, 1994. The
Company also has an accounts receivable-backed revolving bank
line of credit which provides for borrowings of up to $40,000,
all of which was available at November 30, 1994.
On October 28, 1994, the Company restructured its bank financing
and increased its available borrowing capacity by $20,000. The
amended $320,000 commercial bank facility, with a syndicate of 22
major banks, lowers borrowing costs, extends the term of the
agreement to five years, reduces principal repayment requirements
and relaxes many covenants. Proceeds and enhanced cash flow from
reduced repayment terms will be used to expand subacute programs,
repay higher-cost debt and fund future acquisition opportunities.
<PAGE>
<PAGE>
Part II. OTHER INFORMATION
Item 1 Legal Proceedings
On August 22, 1994, the Company was served with a lawsuit
in the matter of Nita P. Heckendorn vs. The Hillhaven
Corporation et al. Ms. Heckendorn, who joined the
Company in 1992, alleged breach of implied employment
contract; discharge in violation of public policy (sex
and ethnic discrimination); tortious interference with
prospective economic advantage; and intentional
infliction of emotional distress. The suit sought
damages for wages, earnings and other benefits, punitive
damages, attorneys' fees and costs of suit. The Company
believed that Ms. Heckendorn's claims were without merit.
On November 18, 1994, the suit was voluntarily dismissed
with prejudice. Neither the Company nor the other named
defendants paid any amounts to the plaintiff in
connection with this lawsuit.
Items 2 - 5 are not applicable.
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibits:
(10) Amendment No. 4 to Credit Agreement, dated as
of October 28, 1994, Amending (and Restating)
the $360,000,000 Credit Agreement dated as of
September 1, 1993.
(11) Statement Re: Computation of per share
earnings for the three months and six months
ended November 30, 1994 and 1993.
(27) Financial Data Schedule (included only in the
EDGAR filing)
(99) Hillhaven press release dated December 21,
1994.
(B) Reports filed on Form 8-K
A Form 8-K, dated October 11, 1994, was filed during
the quarter to disclose an agreement to acquire CPS
Pharmaceutical Services, Inc. and Advanced Infusion
Systems, Inc. as follows:
<PAGE>
<PAGE>
Part II. OTHER INFORMATION (Continued)
On October 11, 1994, The Hillhaven Corporation (the
"Company") signed a definitive agreement to acquire,
through a share for share exchange, CPS
Pharmaceutical Services, Inc. and Advanced Infusion
Systems, Inc. The purchase price will be
approximately $29 million, consisting of
approximately 1.3 million shares of the Company's
common stock, subject to certain adjustments. The
transaction will be structured as a pooling of
interests.
No financial statements were filed with the Form
8-K.
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE HILLHAVEN CORPORATION
(Registrant)
Date: January 11, 1995 /s/ Robert F. Pacquer
Robert F. Pacquer
Senior Vice President and
Chief Financial Officer
* Robert F. Pacquer is signing in the dual capacities as i)
principal accounting officer, and ii) a duly authorized
officer of the Company.
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
THE HILLHAVEN CORPORATION
Statement Re: Computation of Per Share Earnings
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
FOR PRIMARY EARNINGS PER SHARE
Shares outstanding at beginning
of period (1) <F1> 28,444 22,232 28,435 22,241
Shares issued upon exercise of
stock options and convertible
debentures 30 25 21 17
Dilutive effect of outstanding stock
options and contingent shares 268 216 230 210
Dilutive effect of warrants held
by NME --- 2,390 --- 2,271
Restricted shares issued
(forfeited) 124 --- 61 (8)
Weighted average number of shares
and share equivalents
outstanding (2) <F2> 28,866 24,863 28,747 24,731
Income before extraordinary
item (1) $ 16,192 $ 26,115 $27,586 $ 34,295
Preferred stock dividends (1,736) (2,672) (3,379) (3,394)
Adjusted income 14,456 23,443 24,207 30,901
Extraordinary charge - early
extinguishment of debt,
net of tax (52) (940) (174) (940)
Net income as adjusted $ 14,404 $22,503 $24,033 $29,961
Primary earnings per share:
Income before extraordinary
item $ .50 $ .95 $ .85 $ 1.25
Extraordinary charge --- (.04) (.01) (.04)
Net income $ .50 $ .91 $ .84 $ 1.21
</TABLE>
(Continued on next page)
<PAGE>
<PAGE>
<TABLE>
Exhibit 11 (Continued)
THE HILLHAVEN CORPORATION
Statement Re: Computation of Per Share Earnings
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
FOR FULLY DILUTED EARNINGS PER SHARE
Weighted average number of shares
used in primary calculation 28,866 24,863 28,747 24,731
Additional dilutive effect of
stock options and warrants --- 268 8 390
Assumed conversion of dilutive
convertible debentures 8,026 8,384 8,036 8,384
Fully diluted weighted average
number of shares (2) <F2> 36,892 33,515 36,791 33,505
Income before extraordinary
charge adjusted per
primary calculation $ 14,456 $23,443 $24,207 $30,901
Adjustment for interest expense 2,412 2,358 4,825 4,486
Income tax effect (627) (613) (1,255) (1,166)
Interest on convertible
debentures, net of tax 1,785 1,745 3,570 3,320
Adjusted income 16,241 25,188 27,777 34,221
Extraordinary charge - early
extinguishment of debt,
net of tax (52) (940) (174) (940)
Adjusted income used in fully-
diluted calculation $ 16,189 $24,248 $27,603 $33,281
Fully-diluted earnings per share:
Income before extraordinary
charge $ .44 $ .75 $ .75 $ 1.02
Extraordinary charge --- (.03) --- (.03)
Net income $ .44 $ .72 $ .75 $ .99
----------
<FN>
(1)<F1> Income and share amounts have been adjusted for the acquisition in
October, 1994 of CPS Pharmaceutical Services, Inc. and Advanced
Infusion Systems, Inc. The transaction was accounted for as a
pooling of interests.
(2)<F2> All shares in these tables are weighted on the basis of the number
of days the shares were outstanding or assumed to be outstanding
during each period.
</TABLE>
<PAGE>
<PAGE>
AMENDMENT NO. 4
dated as of October 28, 1994
amending (and restating) the
$360,000,000 CREDIT AGREEMENT
dated as of September 1, 1993
among
FIRST HEALTHCARE CORPORATION,
as Borrower
THE HILLHAVEN CORPORATION,
as Guarantor
THE BANKS REFERRED TO HEREIN
THE LC ISSUING BANKS REFERRED TO HEREIN
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
CHEMICAL BANK,
as Administrative Agent
and
J.P. MORGAN DELAWARE,
as Collateral Agent
<PAGE>
<PAGE>
TABLE OF CONTENTS
(Note: The Table of Contents is not a part of this Agreement)
Page
ARTICLE I
DEFINITIONS
1.01 Definitions 3
1.02 Accounting Terms and Determinations 27
1.03 Classes and Types of Commitments and Loans 27
1.04 Other Definitional Provisions 27
ARTICLE II
THE FACILITIES
2.01 Commitments to Lend 28
2.02 Method of Borrowing 29
2.03 Notes 30
2.04 Interest Rates 30
2.05 Method of Electing Interest Rates 32
2.06 Letters of Credit 34
2.07 Commitment Fees 43
2.08 Repayments and Prepayments of Loans 44
2.09 Termination or Reduction of Commitments 47
2.10 General Provisions as to Payments 48
2.11 Funding Losses 48
2.12 Computation of Interest and Fees 49
2.13 Regulation D Compensation 49
ARTICLE III
CONDITIONS
3.01 Closing 50
3.02 Credit Events 54
3.03 Effectiveness of Amendment No. 4 55
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Corporate Existence and Power 56
4.02 Corporate and Governmental
Authorization; No Contravention 57
4.03 Binding Effect; Liens of
Collateral Documents 57
4.04 Financial Information 57
4.05 Litigation 59
4.06 Compliance with ERISA 59
4.07 Taxes 59
4.08 Compliance with Laws 59
4.09 Investment Company Act 59
<PAGE>
<PAGE>
4.10 Public Utility Holding Company Act 60
4.11 Outstanding Debt 60
4.12 No Defaults 60
4.13 Ownership of Property, Liens 60
4.14 Intellectual Property 60
4.15 No Burdensome Restrictions 61
4.16 Labor Matters 61
4.17 Full Disclosure 61
4.18 Representations in Other
Documents True and Correct 61
4.19 Use of Proceeds and Letters of Credit 62
4.20 Environmental Matters 62
4.21 Solvency, Etc. 64
4.22 Certain Matters at Closing Date 64
ARTICLE V
COVENANTS
5.01 Information 65
5.02 Payment of Obligations 71
5.03 Maintenance of Property 71
5.04 Insurance 71
5.05 Compliance with Law 72
5.06 Inspection of Property, Books and Records 72
5.07 Maintenance of Existence, Rights, Etc. 73
5.08 Lines of Business 73
5.09 Fiscal Year 73
5.10 Maintenance of Equity Securities
of Subsidiaries 73
5.11 Limitation on Debt 73
5.12 Negative Pledge 76
5.13 Consolidations, Mergers and Asset Sales 77
5.14 Restricted Payments 78
5.15 Limitation on Investments and
Asset Acquisitions 80
5.16 Capital Expenditures 82
5.17 Transactions with Affiliates 82
5.18 Limitation on Restrictions Affecting
Subsidiaries 83
5.19 Preferred Stock 84
5.20 No Modification of Certain
Documents Without Consent 85
5.21 Limitation on Prepayments of Debt 85
5.22 Fixed Charge Coverage 85
5.23 Cash Flow Coverage 86
5.24 Leverage Ratio 86
5.25 Minimum Consolidated Tangible Net Worth 87
5.26 Replacement of Real Estate Collateral
Due to Environmental Liabilities 87
5.27 Further Assurances 87
<PAGE>
<PAGE>
ARTICLE VI
DEFAULTS
6.01 Defaults 88
6.02 Notice of Default 91
6.03 Cash Cover 91
ARTICLE VII
THE AGENTS
7.01 Appointment and Authorization 92
7.02 Agents and Affiliates 92
7.03 Action by Agents 93
7.04 Consultation with Experts 93
7.05 Liability of Agents 93
7.06 Indemnification 93
7.07 Credit Decision 94
7.08 Agents' Fees 94
7.09 Successor Agents 94
7.10 Collateral Agent 94
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
8.01 Basis for Determining Interest Rate
Inadequate or Unfair 95
8.02 Illegality 96
8.03 Increased Cost and Reduced Return 96
8.04 Taxes 99
8.05 Domestic Loans Substituted for Affected
Euro-Dollar Loans 101
ARTICLE IX
GUARANTEE BY THE GUARANTOR
OF THE OBLIGATIONS OF THE BORROWER
9.01 The Guarantee 102
9.02 Guarantee Unconditional 102
9.03 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances 103
9.04 Waiver 103
9.05 Subrogation 103
9.06 Stay of Acceleration 104
<PAGE>
<PAGE>
ARTICLE X
MISCELLANEOUS
10.01 Notices 104
10.02 No Waiver; Benefits of Mortgages 104
10.03 Expenses; Indemnification 105
10.04 Sharing of Set-Offs 105
10.05 Amendments and Waivers 106
10.06 Successors and Assigns 107
10.07 Margin Stock 109
10.08 Substitution of Real Estate Collateral 109
10.09 Failure of Bank to Satisfy Minimum
Rating Condition 111
10.10 Pledge of Hillhaven Funding Collateral 112
10.11 Governing Law; Submission to Jurisdiction 114
10.12 Counterparts; Integration; Effectiveness 115
10.13 WAIVER OF JURY TRIAL 115
10.14 Confidentiality 115
SIGNATURES 117
<PAGE>
<PAGE>
Schedule I - Commitments of the Banks
Schedule II - Related Transaction Documents
Schedule III - Certain Existing Debt
Schedule IV - Affiliate Agreements
Schedule V - LC Issuing Banks
Schedule VI - Mortgaged Facilities
Schedule VII - Subsidiaries and Investments
Schedule VIII - Intentionally Omitted
Schedule IX - Designated IRB Debt
Schedule X - Insurance Requirements
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Revolver Note
Exhibit B - Form of Opinion of the General Counsel of the
Borrower and the Guarantor
Exhibit C - Form of Opinion of Davis Polk & Wardwell
Exhibit D - Form of Agreement Designating Additional LC
Issuing Bank
Exhibit E - Form of Borrower Security Agreement
Exhibit F - Form of Guarantor Pledge Agreement
Exhibit G - Form of Mortgage
Exhibit H - Form of Financial Officer's Certificate
Exhibit I - Form of Opinion of the General Counsel of the
Borrower and the Guarantor to be delivered in
connection with Amendment No. 4
Exhibit J - Form of Opinion of Davis Polk & Wardwell to be
delivered in connection with Amendment No. 4
<PAGE>
<PAGE>
AMENDMENT NO. 4 TO CREDIT AGREEMENT
AMENDMENT NO. 4 dated as of October 28, 1994 ("Amendment No. 4")
to the Credit Agreement dated as of September 1, 1993 (as amended
from time to time, the "Credit Agreement") among FIRST HEALTHCARE
CORPORATION, as Borrower, THE HILLHAVEN CORPORATION, as
Guarantor, the BANKS referred to in the Credit Agreement, the LC
ISSUING BANKS referred to in the Credit Agreement, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent, CHEMICAL BANK, as
Administrative Agent, and J.P. MORGAN DELAWARE, as Collateral
Agent;
W I T N E S S E T H:
WHEREAS, the Guarantor has completed a recapitalization plan
(the "Recapitalization Plan") pursuant to which, among other
things, the Guarantor (i) purchased 23 health care facilities
that it formerly leased from its former parent, National Medical
Enterprises, Inc. (with its successors, "NME"), for a purchase
price of $111,800,000, (ii) repaid its outstanding debt to NME in
an aggregate principal amount of approximately $147,200,000 and
(iii) released NME from its obligations as guarantor of
approximately $400,000,000 of debt of the Guarantor and its
subsidiaries;
WHEREAS, the Recapitalization Plan was financed
by, among other things, the proceeds of (i) up to $360,000,000 of
senior bank debt incurred by the Borrower on the terms and
conditions set forth in the Credit Agreement, (ii) $175,000,000
of senior subordinated notes issued by the Guarantor,
(iii) $120,000,000 of a new series of preferred stock issued by
the Guarantor to NME and (iv) up to $40,000,000 of commercial
paper issued by Hillhaven Funding Corporation, a special purpose
subsidiary of the Guarantor that purchases substantially all of
the Medicaid accounts receivable originated by the Guarantor's
subsidiaries;
WHEREAS, the Guarantor and the Borrower entered
into the $175,000,000 term loan facility provided in the Credit
Agreement (the "Term Loan Facility") to finance a portion of the
payments to be made by the Guarantor and its subsidiaries under
the Recapitalization Plan;
WHEREAS, the Guarantor and the Borrower entered
into the $85,000,000 revolving credit facility provided in the
Credit Agreement (the "Revolving Credit Facility") to provide
loans, and up to $20,000,000 of standby letters of credit, for
general corporate purposes;
<PAGE>
<PAGE>
WHEREAS, the Guarantor and the Borrower entered
into the $100,000,000 backstop credit facility provided in the
Credit Agreement (the "IRB Backstop Facility") to provide new
letters of credit to backstop existing letters of credit which
support outstanding industrial revenue bonds issued for the
benefit of the Borrower or certain partnerships in which the
Borrower is a general partner or for which the Borrower is
otherwise liable;
WHEREAS, the Banks have made loans to the
Borrower under the Term Loan Facility and the Revolving Credit
Facility, and have participated in letters of credit issued under
the Revolving Credit Facility and the IRB Backstop Facility, on
the terms and conditions provided in the Credit Agreement;
WHEREAS, the LC Issuing Banks have issued
letters of credit under the Revolving Credit Facility and the IRB
Backstop Facility on the terms and conditions provided in the
Credit Agreement;
WHEREAS, in order to induce the Banks, the LC
Issuing Banks and the Agents to enter into the Credit Agreement:
(i) the Guarantor has guaranteed all obligations of the
Borrower under the Credit Agreement;
(ii) the Borrower has secured its obligations under the
Credit Agreement by granting to the Collateral Agent mortgages
on and security interests in, among other things, specified
health care facilities owned by the Borrower, all of the
accounts receivable of the Borrower (except Medicaid accounts
receivable sold to Hillhaven Funding Corporation and certain
other accounts receivable pledged to other lenders), all
intercompany accounts owed to the Borrower and all of the
capital stock of certain subsidiaries of the Borrower; and
(iii) the Guarantor has secured its obligations under its
guarantee referred to above by granting to the Collateral
Agent security interests in all of the capital stock of
Medisave Pharmacies, Inc., all of the capital stock of
Hillhaven Funding Corporation and all intercompany accounts
owed by Hillhaven Funding Corporation to the Guarantor;
WHEREAS, the Credit Agreement has heretofore
been amended by three amendments dated as of October 12, 1993,
December 30, 1993 and May 27, 1994, respectively;
<PAGE>
<PAGE>
WHEREAS, the parties to the Credit Agreement
wish to further amend the Credit Agreement to (i) reduce the
aggregate amount of the IRB Backstop Commitments by $20,000,000
and concurrently allow the Borrower to borrow additional Term
Loans thereunder in an aggregate principal amount not to exceed
$20,500,000, (ii) extend the Final Maturity Date from September
1, 1998 to October 28, 1999 and (iii) make certain other changes
as hereinafter provided; and
WHEREAS, the parties hereto wish to set forth
herein the provisions of the Credit Agreement as amended by the
three prior amendments thereto and by this Amendment No. 4;
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following
terms, as used herein, have the following meanings:
"Additional Term Commitment" means, with respect
to each Bank, the obligation of such Bank to make one or more
term loans to the Borrower pursuant to Section 2.01(a) of this
Agreement as amended by Amendment No. 4 in an aggregate principal
amount equal to the amount set forth opposite the name of such
Bank under the heading "Additional Term Commitments" in Schedule
I hereto.
"Adjusted Consolidated Net Income" means, for
any period, Consolidated Net Income for such period, adjusted to
exclude therefrom, without duplication, (i) gains or losses from
the sale of assets (other than inventory sold in the ordinary
course of business) net of related tax effects and (ii) the net
income (or loss) of any Person (other than a Consolidated
Subsidiary or Non-Consolidated Partnership) in which the
Guarantor or a Consolidated Subsidiary has an ownership interest,
except to the extent that such Person pays dividends or
distributions in cash to the Guarantor or a Consolidated
Subsidiary during such period.
"Administrative Agent" means Chemical Bank, in
its capacity as administrative agent for the Banks under the
Financing Documents, and its successors in such capacity.
"Administrative Questionnaire" means, with
respect to each Bank, an administrative questionnaire in the form
prepared by the Administrative Agent and submitted to the
Administrative Agent (with a copy to the Borrower and the Agent)
duly completed by such Bank.
<PAGE>
<PAGE>
"Affiliate" means any Person (other than a
Subsidiary of the Guarantor) directly or indirectly controlling,
controlled by or under common control with the Guarantor. As
used in this definition, the term "control" means possession,
directly or indirectly, of the power to vote 10% or more of any
class of voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Affiliate Agreements" means the agreements
listed in Schedule IV hereto.
"Agent" means Morgan, in its capacity as
syndication and documentation agent for the Banks under the
Financing Documents, and its successors in such capacity.
"Agents" means the Agent, the Administrative
Agent and the Collateral Agent.
"Agreement", when used with respect to this
Agreement, means the Credit Agreement dated as of September 1,
1993 among the Borrower, the Guarantor, the Banks, the LC Issuing
Banks, the Agent, the Administrative Agent and the Collateral
Agent, as amended and in effect from time to time.
"Amendment No. 4 Effective Date" means the date
Amendment No. 4 becomes effective in accordance with Section
3.03.
"Amendment No. 4" means Amendment No. 4 dated as
of October 28, 1994 to this Agreement.
"Applicable Lending Office" means, with respect
to any Bank, (i) in the case of its Domestic Loans, its Domestic
Lending Office, and (ii) in the case of its Euro-Dollar Loans,
its Euro-Dollar Lending Office.
"Applicable Margin" has the meaning set forth in
Section 2.04(f).
"Applicable Percentage" means, with respect to
any Bank:
(i) when used with respect to IRB Letters of
Credit or related LC Liabilities, (A) the percentage that such
Bank's IRB Backstop Commitment constitutes of the aggregate
amount of the IRB Backstop Commitments of all the Banks or (B)
if the IRB Backstop Commitments shall have terminated, the
percentage that such Bank's IRB Backstop Commitment
immediately prior to such termination constituted of the
aggregate amount of the IRB Backstop Commitments of all the
Banks at such time; and
<PAGE>
<PAGE>
(ii) when used with respect to Revolver Letters of Credit
or related LC Liabilities, (A) the percentage that such Bank's
Revolver Commitment constitutes of the aggregate amount of the
Revolver Commitments of all the Banks or (B) if the Revolver
Commitments shall have terminated, the percentage that such
Bank's Revolver Commitment immediately prior to such
termination constituted of the aggregate amount of the
Revolver Commitments of all the Banks at such time.
"Asset Acquisition" means (i) the acquisition of
any health care facility, nursing center, retirement housing
facility or pharmacy (or any interest in any of the foregoing) by
the Guarantor or any of its Subsidiaries and (ii) any acquisition
of assets by the Guarantor or any of its Subsidiaries outside the
ordinary course of business.
"Asset Sale" means any sale, lease or other
disposition by the Guarantor or any of its Subsidiaries of any
asset (excluding any Sold Asset Note), excluding (i) dispositions
of inventory and used, surplus or worn out equipment in the
ordinary course of business, (ii) dispositions constituting
Casualty Events, (iii) dispositions to the Borrower or a
Subsidiary of the Borrower, (iv) dispositions of Medicaid
accounts receivable to Hillhaven Funding and (v) cash payments
otherwise permitted under this Agreement.
"Assignee" has the meaning set forth in Section
10.06(c).
"Bank" means each bank or other financial
institution listed on the signature pages hereof under the
heading "Banks", each Assignee which becomes a "Bank" for
purposes hereof pursuant to Section 8.03(d) or 10.06(c), and
their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and (ii)
the sum of 1/2 of 1% plus the Federal Funds Rate for such day.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means First Healthcare Corporation, a
Delaware corporation, and its successors.
"Borrower Security Agreement" means the Security
Agreement dated as of September 1, 1993 between the Borrower and
the Collateral Agent, substantially in the form of Exhibit E
hereto, as the same may be amended from time to time.
<PAGE>
<PAGE>
"Borrowing" means a borrowing hereunder
consisting of Loans made to the Borrower at the same time by the
Banks pursuant to Article II.
"Capital Lease" means a lease that would be
capitalized on a balance sheet of the lessee prepared in
accordance with generally accepted accounting principles.
"Cash Flow Ratio" means, at the end of any
Fiscal Quarter, the ratio of (x) Consolidated Operating Cash Flow
for the period of four consecutive Fiscal Quarters then ended to
(y) Consolidated Debt for Borrowed Money at the end of such
period.
"Casualty Event" means (i) any destruction of or
damage to property through one or more related events for which
the Guarantor or any of its Subsidiaries may be entitled to
insurance proceeds or restitution payments or (ii) any
condemnation of property, or any transfer or other disposition of
property in lieu of condemnation, for which the Guarantor or any
of its Subsidiaries may be entitled to a condemnation award or
other compensation.
"Casualty Proceeds" means, with respect to any
Casualty Event, all insurance proceeds (except proceeds of
business interruption insurance), restitution payments,
condemnation awards and other compensation received by the
Guarantor or any of its Subsidiaries (or, in the case of a
Casualty Event relating to a Mortgaged Facility, by the
Collateral Agent in accordance with the Collateral Documents) in
respect thereof.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from
time to time, and the regulations promulgated thereunder.
"Charter Documents" means, in relation to any
corporation, the certificate of incorporation, by-laws and other
constitutional documents of such corporation, including the
certificate of designation for any series of preferred stock.
"Chemical" means Chemical Bank, and its
successors.
"Class" has the meaning set forth in Section
1.03.
"Closing Date" means September 2, 1993.
"Collateral" means all property, real and
personal, tangible and intangible, with respect to which Liens
are created or are purported to be created pursuant to the
Collateral Documents.
<PAGE>
<PAGE>
"Collateral Agent" means Morgan Delaware, in its
capacity as Collateral Agent for the Banks, the LC Issuing Banks
and the Agents under the Financing Documents, and its successors
in such capacity.
"Collateral Documents" means the Borrower
Security Agreement, the Guarantor Pledge Agreement, the Mortgages
and all other supplemental or additional security agreements,
pledge agreements, mortgages or similar instruments delivered
pursuant hereto or thereto.
"Commitment" means any Additional Term
Commitment, Revolver Commitment or IRB Backstop Commitment, and
"Commitments" means any or all of the foregoing, as the context
may require.
"Consolidated Capital Expenditures" means, for
any Fiscal Year, the gross additions to property, plant and
equipment and other capital expenditures of the Guarantor and its
Consolidated Subsidiaries for such Fiscal Year, as the same are
or would be reflected in a consolidated statement of cash flows
of the Guarantor and its Consolidated Subsidiaries for such
Fiscal Year; provided that "Consolidated Capital Expenditures" in
any Fiscal Year shall exclude (i) any such expenditure for the
restoration or replacement of fixed assets which are subject to a
casualty loss or a condemnation event to the extent that a
Financial Officer of the Guarantor shall have delivered to the
Agent a certificate stating that the cost thereof is offset (or
reasonably expected to be offset) by any related insurance
proceeds, restitution payments, condemnation awards or other
compensation (but such cost shall be deemed to be a Consolidated
Capital Expenditure when, and to the extent that, a Financial
Officer of the Guarantor no longer reasonably expects that such
offsetting compensation will be received) and (ii) additions to
the property, plant and equipment reflected in the consolidated
financial statements of the Guarantor and its Consolidated
Subsidiaries that are attributable to the acquisition by the
Borrower of additional partnership interests in a Person which
was theretofore a Non-Consolidated Partnership and the resulting
inclusion of its pre-existing property, plant and equipment in
such consolidated financial statements.
"Consolidated Debt for Borrowed Money" means at
any date the sum, without duplication, of (x) the aggregate
amount of Debt of the types described in clauses (i), (ii) and
(iv) of the definition of "Debt" which is either Debt of the
Guarantor and its Consolidated Subsidiaries or Debt of others
Guaranteed by the Guarantor or any of its Consolidated
Subsidiaries, and (y) the aggregate amount of Debt of the type
described in clause (vi) of the definition of "Debt" which is
either non-contingent Debt of the Guarantor and its Consolidated
Subsidiaries or non-contingent Debt of others Guaranteed by the
Guarantor or any of its Consolidated Subsidiaries, all determined
on a consolidated basis as of such date after excluding accrued
interest for the then current period not yet due and payable.
<PAGE>
<PAGE>
"Consolidated EBITDARG" means, for any period,
Adjusted Consolidated Net Income for such period plus, to the
extent deducted in determining Adjusted Consolidated Net Income
for such period, the sum of (i) Consolidated Interest Expense,
(ii) income tax expense, (iii) depreciation, amortization and
other similar noncash charges, (iv) noncash compensation expense,
(v) Consolidated Rental Expense and (vi) NME Guarantee Fees, and
minus (A) to the extent included in determining Adjusted
Consolidated Net Income for such period, any interest income
during such period (other than interest income on Sold Asset
Notes) and (B) any cash paid during such period in respect of
noncash compensation expense accrued during any prior period.
"Consolidated Interest Expense" means, for any
period, the interest expense of the Guarantor and its
Consolidated Subsidiaries, determined on a consolidated basis for
such period; provided that Consolidated Interest Expense shall
not (i) include interest capitalized in accordance with generally
accepted accounting principles or (ii) be reduced by any interest
income.
"Consolidated Net Income" means, for any period,
the net income (or loss) of the Guarantor and its Consolidated
Subsidiaries, determined on a consolidated basis for such period.
"Consolidated Operating Cash Flow" means, for
any period, (i) Adjusted Consolidated Net Income for such period,
plus (ii) to the extent deducted in determining Adjusted
Consolidated Net Income for such period, the sum of (A)
depreciation, amortization and other similar noncash charges and
(B) noncash compensation expense, plus (iii) any increase (or
minus any decrease) during such period in the consolidated
deferred tax liabilities of the Guarantor and its Consolidated
Subsidiaries, plus (iv) any decrease (or minus any increase)
during such period in the consolidated deferred tax assets of the
Guarantor and its Consolidated Subsidiaries, minus (v) any cash
paid during such period in respect of noncash compensation
expense accrued during any prior period.
"Consolidated Rental Expense" means, for any
period, the rental expense for operating leases of the Guarantor
and its Consolidated Subsidiaries, determined on a consolidated
basis for such period.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Guarantor in its consolidated
financial statements if such statements were prepared as of such
date.
<PAGE>
<PAGE>
"Consolidated Tangible Net Worth" means at any
date the consolidated stockholders' equity of the Guarantor and
its Consolidated Subsidiaries less their consolidated Intangible
Assets, all determined as of such date. For purposes of this
definition "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated stockholders' equity)
of (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of such
business) subsequent to May 31, 1993 in the book value of any
asset owned by the Guarantor, a Consolidated Subsidiary or a
Non-Consolidated Partnership, (ii) all equity investments in
Persons which are not Consolidated Subsidiaries or
Non-Consolidated Partnerships and (iii) all unamortized debt
discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible
assets (excluding deferred tax assets).
"Convertible Subordinated Debenture Indenture"
means the indenture dated as of November 1, 1992 between the
Guarantor and Bankers Trust Company, as trustee.
"Convertible Subordinated Debentures" means the
Guarantor's 7-3/4% Convertible Subordinated Debentures due 2002
issued pursuant to the Convertible Subordinated Debenture
Indenture.
"Credit Event" means (i) the making of a Loan,
(ii) the issuance of a Letter of Credit or (iii) the extension of
the expiry date of a Letter of Credit.
"Credit Exposure" means, as to any Bank at any
time, the sum of (i) the principal amount of its Term Loans
outstanding at such time plus the unused portion of its
Additional Term Commitment (if then in effect), (ii) its Revolver
Commitment (or, if its Revolver Commitment shall have terminated,
its Revolver Exposure at such time) and (iii) its IRB Backstop
Commitment (or, if its IRB Backstop Commitment shall have
terminated, its Applicable Percentage of the LC Liabilities in
respect of IRB Letters of Credit at such time).
"Debt" of any Person means, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, (iv) all obligations of such Person as lessee under
Capital Leases, (v) all obligations of such Person to purchase
securities which arise out of or in connection with the sale of
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the same or substantially similar securities, (vi) all
obligations of such Person (whether contingent or non-contingent)
to reimburse any bank or other Person in respect of amounts paid
under a letter of credit, banker's acceptance or similar
instrument, (vii) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of
such Person, and (viii) all Debt of others Guaranteed by such
Person; provided that neither trade accounts payable arising in
the ordinary course of business nor obligations in respect of
insurance policies or performance or surety bonds which are not
themselves Guarantees of Debt (nor drafts, acceptances or similar
instruments evidencing the same nor obligations in respect of
letters of credit supporting the payment of the same) shall
constitute Debt.
"Default" means any condition or event that
constitutes an Event of Default or that with the giving of notice
or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Designated IRB Debt" means industrial revenue
bonds or similar instruments issued for the benefit of the
Borrower, any of its Subsidiaries or any partnership in which the
Borrower or one of its Subsidiaries is a general partner (or for
which the Borrower is otherwise liable) which are outstanding on
the Effective Date and (x) identified in Schedule IX hereto or
(y) designated by the Borrower by written notice to the Banks as
"Designated IRB Debt" for all purposes hereunder.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized by law to close.
"Domestic Lending Office" means, as to each
Bank, its office located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Administrative
Agent.
"Domestic Loan" means (i) a Loan which bears
interest at a rate based on the Base Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Article VIII or (ii) an overdue
amount that was a Domestic Loan immediately before it became
overdue.
"Effective Date" means September 2, 1993, the
date this Agreement became effective in accordance with Section
10.12.
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"Enforceable Judgment" means a judgment or order
of a court or arbitral or regulatory authority as to which the
period, if any, during which the enforcement of such judgment or
order is stayed shall have expired. A judgment or order which is
under appeal or as to which the time in which to perfect an
appeal has not expired shall not be deemed an Enforceable
Judgment so long as enforcement thereof is effectively stayed
pending the outcome of such appeal or the expiration of such
period, as the case may be.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions
relating to the environment or to the effect of the environment
on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the
environment, including ambient air, surface water, ground water
or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"Environmental Liabilities" means any and all
liabilities of or relating to the Guarantor or any of its
Subsidiaries (including any entity which is, in whole or in part,
a predecessor of the Guarantor or any of its Subsidiaries),
whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which arise under or relate to
matters covered by Environmental Laws.
"Equity Security" of any Person means any
capital stock or other equity security issued by such Person or
any warrant or other right to purchase or otherwise acquire such
an equity security from such Person. For purposes of this
Agreement, the term "Equity Securities" shall include the
Convertible Subordinated Debentures and the PIP Convertible
Debentures.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and the
Guarantor and any Subsidiary of either and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with the Borrower or the Guarantor or any Subsidiary of
either, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for international
business (including dealings in dollar deposits) in London.
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"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or affiliate located at its address set
forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Euro-Dollar Lending Office)
or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means (i) a Loan which bears
interest at a rate based on the London Interbank Offered Rate
pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or (ii) an overdue amount that was a Euro-
Dollar Loan immediately before it became overdue.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 2.13.
"Event of Default" has the meaning set forth in
Section 6.01.
"Excess Proceeds of Sold Asset Notes" means all
cash proceeds received by the Guarantor or any of its
Subsidiaries from the prepayment of any Sold Asset Note less (i)
the amount of any underlying Debt that is required to be repaid,
or that the Guarantor or such Subsidiary elects to repay, in
connection with such prepayment and (ii) any pre-payment premiums
and other expenses reasonably incurred in connection with
repaying such underlying Debt; provided that, if the Guarantor or
such Subsidiary shall be required or shall have elected to repay
such underlying Debt in connection with any such prepayment,
subsequent scheduled payments of principal of such Sold Asset
Note that would have been applied to repay such underlying Debt
shall be treated as Excess Proceeds of Sold Asset Notes when
received.
"Executive Officer" means any "executive
officer" of the Guarantor or the Borrower within the meaning of
Rule 3b-7 under the Securities Exchange Act of 1934, as amended.
"Federal Funds Rate" means, for any day, the
rate per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) 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 on such day, as
published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such
day is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted
to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.
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"Final Maturity Date" means October 28, 1999.
"Financial Accommodations" means arrangements
for the extension of credit or other financial accommodation to
the Guarantor and/or one or more of its Subsidiaries, including
committed or uncommitted lines of credit for advances or other
financial accommodation, letters of credit, performance and
surety bonds and the like, committed or uncommitted agreements
for the purchase of accounts receivable or other financial
assets, with or without recourse or repurchase obligation,
forward and future contracts for purchase of bullion or foreign
currencies and other similar arrangements and interest rate swaps
and other similar arrangements, but excluding trade accounts
payable arising in the ordinary course of business.
"Financial Officer" means the chief financial
officer, chief accounting officer or treasurer of the Borrower or
the Guarantor.
"Financing Documents" means this Agreement, the
Notes, the Collateral Documents and any Substitute Reimbursement
Agreement that the Borrower and the Guarantor designate as an
additional Financing Document after the Closing Date pursuant to
Section 2.06(p).
"Fiscal Quarter" means a fiscal quarter of the
Guarantor.
"Fiscal Year" means a fiscal year of the
Guarantor.
"Fixed Charge Ratio" means, for any period, the
ratio of (x) Consolidated EBITDARG for such period to (y) the sum
of Consolidated Interest Expense, Consolidated Rental Expense and
NME Guarantee Fees for such period.
"Group of Loans" means at any time a group of
Loans of any Class consisting of (i) all Loans of such Class that
are Domestic Loans at such time or (ii) all Loans of such Class
that are Euro-Dollar Loans having the same Interest Period at
such time; provided that, if Loans of any particular Bank are
converted to or made as Domestic Loans pursuant to Section 8.02
or 8.05, such Loans shall be included in the same Group or Groups
of Loans from time to time as they would have been in if they had
not been so converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase
or pay (or advance or supply funds for the purchase or payment
of) such Debt (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into
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for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder
against loss in respect thereof (in whole or in part); provided
that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The
term "Guarantee", when used as a verb, has a corresponding
meaning.
"Guarantor" means The Hillhaven Corporation,
a Nevada corporation, and its successors.
"Guarantor Pledge Agreement" means the Pledge
Agreement dated as of September 1, 1993 between the Guarantor and
the Collateral Agent, substantially in the form of Exhibit F
hereto, as the same may be amended from time to time.
"Hazardous Substances" means any toxic,
radioactive, corrosive or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, whether or not
regulated under Environmental Laws.
"Hillhaven Funding" means Hillhaven Funding
Corporation, a Nevada corporation, and its successors.
"Indemnitee" has the meaning set forth in
Section 10.03(b).
"Information Memorandum" means the confidential
descriptive memorandum dated July, 1993 furnished to the Banks in
connection with the transactions contemplated hereby.
"Interest Period" means, with respect to each
Euro-Dollar Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and
ending one, two, three or six months thereafter, as a Borrower
may elect in the applicable notice; provided that:
(a) any Interest Period that would otherwise
end on a day that is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day
unless such day falls in another calendar month, in which case
such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period that begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to the provisions of paragraph (c) of this proviso,
end on the last Euro-Dollar Business Day of a calendar month;
and
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(c) if any Interest Period includes a date on
which a payment of principal of any Loan is required (as of
the commencement of such Interest Period) to be made under
Section 2.08(a) or (b) but does not end on such date, then (i)
the principal amount (if any) of each Euro-Dollar Loan
required to be repaid on such date shall have an Interest
Period ending on such date and (ii) the remainder (if any) of
each such Euro-Dollar Loan shall have an Interest Period
determined as set forth above.
"Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended, or any successor statute.
"Investment" means, with respect to any Person
(the "Investor"), any investment by the Investor in any other
Person, whether by means of share purchase, capital contribution,
loan, advance, purchase of Debt, payment in respect of a
Guarantee of Debt, time deposit or otherwise.
"IRB Backstop Commitment" means, with respect to
each Bank, as the context may require, either (i) the obligation
of such Bank to participate in IRB Letters of Credit or (ii) the
amount set forth opposite the name of such Bank under the heading
"IRB Backstop Commitments" in Schedule I hereto, as such amount
may be reduced from time to time pursuant to Section 2.09.
"IRB Letter of Credit" means (i) a standby
letter of credit issued by an LC Issuing Bank pursuant to
Section 2.06(b) for the account of the Borrower or
(ii) a Substitute IRB Letter of Credit.
"LC Fee Rate" has the meaning set forth in
Section 2.06(g).
"LC Issuing Banks" means (i) the banks listed in
Schedule V hereto, (ii) any bank which hereafter becomes an "LC
Issuing Bank" pursuant to an agreement substantially in the form
of Exhibit D hereto signed by such bank and the Borrower and
delivered to each of the Agents and (iii) their respective
successors. Promptly upon receiving notice of the designation of
any bank as an additional LC Issuing Bank pursuant to clause (ii)
of this definition, the Agent shall notify each of the Banks
thereof.
"LC Liabilities" means at any time the sum,
without duplication, of (i) the aggregate amount available for
drawing under Letters of Credit outstanding at such time and (ii)
the aggregate unpaid amount at such time of Reimbursement
Obligations in respect of drawings theretofore made under Letters
of Credit.
"LC Payment Date" has the meaning set forth in
Section 2.06(h).
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"LC Reimbursement Date" means, with respect to
any Letter of Credit, an LC Payment Date applicable to such
Letter of Credit, or, if later, the Domestic Business Day next
succeeding the Domestic Business Day on which the Administrative
Agent shall have notified the Borrower of such LC Payment Date
and of the amount payable by the relevant LC Issuing Bank under
such Letter of Credit on such LC Payment Date.
"Leased Facilities" means the health care
facilities identified in Exhibit A to the NME Agreement leased by
the Borrower from NME prior to the Closing Date that were
purchased from NME as part of the Recapitalization Plan.
"Letter of Credit" means any Revolver Letter of
Credit or IRB Letter of Credit, and "Letters of Credit" means any
or all of the foregoing, as the context may require.
"Level I Status" exists at any date if the
Quarter-End Leverage Ratio at such date is not greater than 1.00
to 1.
"Level II Status" exists at any date if the
Quarter-End Leverage Ratio at such date is greater than 1.00 to 1
but not greater than 1.25 to 1.
"Level III Status" exists at any date if the
Quarter-End Leverage Ratio at such date is greater than 1.25 to 1
but not greater than 1.50 to 1.
"Level IV Status" exists at any date if the
Quarter-End Leverage Ratio at such date is greater than 1.50 to 1
but not greater than 1.75 to 1.
"Level V Status" exists at any date if the
Quarter-End Leverage Ratio at such date is greater than 1.75 to 1
but not greater than 2.00 to 1.
"Level VI Status" exists at any date if the
Quarter-End Leverage Ratio at such date is greater than 2.00 to
1.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset or any other arrangement the
economic effect of which is to give a creditor preferential
access to such asset to satisfy its claim. For the purpose of
this Agreement, the Guarantor or any Subsidiary of the Guarantor
shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement or other title retention
agreement relating to such asset or any Capital Lease.
"Loan" means any Term Loan or Revolver Loan, and
"Loans" means any or all of the foregoing, as the context may
require.
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"London Interbank Offered Rate" has the meaning
set forth in Section 2.04(b).
"Material Adverse Effect" means (i) any material
adverse effect upon the condition (financial or otherwise),
results of operations, properties, assets, liabilities, business,
operations, capitalization, stockholders' equity, licenses or
franchises of the Guarantor and its Subsidiaries, taken as a
whole, (ii) a material adverse effect on the ability of the
Obligors to remain at all times in compliance with the
requirements of this Agreement or (iii) a material adverse effect
on the rights and remedies of the Agents, the Banks or the LC
Issuing Banks under the Financing Documents.
"Material Debt" means Debt (other than Debt
arising under this Agreement) of the Guarantor and/or one or more
of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding
$10,000,000.
"Material Plan" means at any time a Plan or
Plans having aggregate Unfunded Liabilities in excess of
$1,000,000.
"Medisave" means Medisave Pharmacies, Inc.,
a Delaware corporation, and its successors.
"Moody's" means Moody's Investors Service, Inc.
and its successors.
"Morgan" means Morgan Guaranty Trust Company of
New York, and its successors.
"Morgan Delaware" means J.P. Morgan Delaware,
and its successors.
"Mortgaged Facilities" means the health care
facilities identified in Schedule VI hereto, as such Schedule may
be modified from time to time in accordance with Section 10.08.
"Mortgages" means the mortgages, deeds of trust
and similar instruments relating to the Mortgaged Facilities,
substantially in the form of Exhibit G hereto, as each of the
same may be amended from time to time.
"Multiemployer Plan" means at any time an
employee pension benefit plan within the meaning of
Section 4001(a)(3) of ERISA to which any member of the ERISA
Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which
ceased to be a member of the ERISA Group during such five year
period.
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"Net Cash Proceeds" means, with respect to any
Asset Sale, an amount equal to the cash proceeds received by the
Guarantor or any or its Subsidiaries from or in respect of such
Asset Sale (including any cash proceeds received as income and
any noncash proceeds of any Asset Sale which are converted into
cash, but excluding any Sold Asset Note), less (x) any expenses
reasonably incurred by such Person in respect of such Asset Sale
and (y) the amount of any Debt that is secured by a Lien on one
or more of the assets being sold and that is required to be
repaid in connection with the sale thereof, and any taxes paid or
payable by such Person (as estimated in good faith by a Financial
Officer) in respect of such Asset Sale.
"NME" means National Medical Enterprises, Inc.,
a Nevada corporation, and its successors and, unless the context
otherwise requires, any or all of its Subsidiaries.
"NME Agreement" means the letter agreement dated
June 22, 1993 between NME and the Guarantor.
"NME Guarantee Fees" means fees payable by the
Guarantor to NME pursuant to the NME Guarantee Reimbursement
Agreement.
"NME Guarantee Reimbursement Agreement" means
the Guarantee Reimbursement Agreement dated as of January 31,
1990, as amended, between NME and the Guarantor.
"Non-Consolidated Partnership" means any
partnership (i) in which the Guarantor or one of its Consolidated
Subsidiaries is a general partner and (ii) which is not a
Consolidated Subsidiary of the Guarantor.
"Note" means a promissory note of the Borrower
payable to the order of a Bank evidencing the Borrower's
obligation to repay such Bank's Loans of a specific Class or of a
specific Type and Class. Each Note shall be substantially in the
form of Exhibit A hereto for the relevant Class (modified as
provided in Section 2.03(b), if applicable). "Notes" means any
or all of such promissory notes, as the context may require.
"Notice of Borrowing" has the meaning set forth
in Section 2.02(a).
"Notice of Interest Rate Election" has the
meaning set forth in Section 2.05(a).
"Obligors" means the Borrower and the Guarantor.
"Outstanding LC Exposure" means, as to any Bank
at any time, the sum of (i) its Applicable Percentage of the
LC Liabilities in respect of IRB Letters of Credit at such time
and (ii) its Applicable Percentage of the LC Liabilities in
respect of Revolver Letters of Credit at such time.
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"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in
Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Permitted Encumbrances" means, with respect to
any real property owned or leased by the Guarantor or any of its
Subsidiaries (including Mortgaged Facilities):
(a) Liens for taxes, assessments or other
governmental charges not yet due or which are being contested
in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of
the Guarantor or such Subsidiary, as the case may be, in
accordance with generally accepted accounting principles;
(b) carriers', warehousemen's, mechanics',
materialmens', repairmens' or other like Liens arising by
operation of law in the ordinary course of business so long as
(A) the underlying obligations are not overdue for a period of
more than 60 days or (B) such Liens are being contested in
good faith and by appropriate proceedings and adequate
reserves with respect thereto are maintained on the books of
the Guarantor or such Subsidiary, as the case may be, in
accordance with generally accepted accounting principles; and
(c) other Liens or title defects (including
matters which an accurate survey might disclose) which (x) do
not secure Debt and (y) do not materially detract from the
value of such real property or materially impair the use
thereof by the Guarantor or such Subsidiary in the operation
of its business.
"Permitted Intercompany Debt" means:
(a) Debt of the Guarantor or any Subsidiary of
the Guarantor owing to the Borrower;
(b) Debt of the Borrower owing to the Guarantor
or any Subsidiary of the Guarantor;
(c) Debt of the Guarantor owing to Medisave in
an aggregate outstanding principal amount not exceeding the
outstanding principal amount of Debt of the Guarantor owing to
Medisave at May 31, 1993;
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(d) additional Debt of the Guarantor owing to
Medisave so long as, immediately after giving effect to the
incurrence of such Debt, the sum of (i) the aggregate amount
of dividends declared by Medisave after May 31, 1993 and (ii)
the aggregate principal amount of Debt of the Guarantor
permitted to be outstanding pursuant to this paragraph (d)
would not exceed the consolidated net income (if positive) of
Medisave and its Subsidiaries for the period (treated as one
accounting period) beginning on June 1, 1993 and ending at the
end of the most recent Fiscal Quarter ending before such
proposed Debt is incurred; and
(e) Debt of Medisave owing to any of its
Subsidiaries, and Debt of any Subsidiary of Medisave owing to
Medisave.
"Permitted Liens" means the Liens permitted to
exist under Section 5.12.
"Permitted Preferred Stock" means the Series A
Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock and the Series D Preferred Stock.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"PIP Convertible Debentures" means the
Guarantor's Convertible Debentures due 1999 issued to PIP Funding
pursuant to the Guarantor's 1991 Performance Investment Plan and
held by PIP Funding as of the Closing Date.
"PIP Funding" means Hillhaven PIP Funding I,
Inc., a Delaware corporation, and its successors.
"PIP Options" means options outstanding on the
Closing Date entitling the holders thereof to acquire PIP
Convertible Debentures from PIP Funding in accordance with the
terms of such options.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is covered
by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
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"Pricing Level" means Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or
Level VI Status.
"Prime Rate" means the rate of interest publicly
announced by the Administrative Agent in New York City from time
to time as its Prime Rate.
"Qualification" means, with respect to any
report of independent public accountants covering financial
statements, a qualification to such report (such as a "subject
to" or "except for" statement therein) (i) resulting from a
limitation on the scope of examination of such financial
statements or the underlying data, (ii) as to the capability of
the Person whose financial statements are certified to continue
operations as a going concern or (iii) which could be eliminated
by changes in financial statements or notes thereto covered by
such report (such as, by the creation of or increase in a reserve
or a decrease in the carrying value of assets) and which if so
eliminated by the making of any such change and after giving
effect thereto would occasion a Default; provided that neither of
the following shall constitute a Qualification: (a) a
consistency exception relating to a change in accounting
principles with which the independent public accountants for the
Person whose financial statements are being examined have
concurred or (b) a qualification relating to the outcome or
disposition of any uncertainty, including but not limited to
threatened litigation, pending litigation being contested in good
faith, pending or threatened claims or other contingencies, the
impact of which litigation, claims, contingencies or
uncertainties cannot be determined with sufficient certainty to
permit quantification in such financial statements.
"Quarter-End Leverage Ratio" means for any day
the ratio of Consolidated Debt for Borrowed Money to Consolidated
Tangible Net Worth at the date of the then most recent
consolidated financial statements of the Guarantor delivered to
the Administrative Agent pursuant to Section 4.04(a), 5.01(a)(i)
or 5.01(b)(i).
"Quarterly Date" means any March 31, June 30,
September 30 or December 31 or, if any such date in any year is
not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"Recapitalization Plan" has the meaning set
forth in the first recital.
"Reference Banks" means the principal London
offices of Morgan, Chemical and Swiss Bank Corporation.
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"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Regulation U" means Regulation U of the Board
of Governors of the Federal Reserve System, as in effect from
time to time.
"Reimbursement Obligations" means, at any time,
all non-contingent obligations of the Borrower then outstanding
under Section 2.06(i) or any Substitute Reimbursement Agreement
to reimburse the LC Issuing Banks for drawings under Letters of
Credit, including all such non-contingent obligations of the
Borrower arising under its guarantee of the obligations of any
partnership account party under any Substitute Reimbursement
Agreement.
"Related Transaction Documents" means the
agreements and other documents listed in Schedule II hereto.
"Release" means any discharge, emission or release,
including a Release as defined in CERCLA at 42 U.S.C. Section
9601(22). The term "Release", when used as a verb, has a
corresponding meaning.
"Required Banks" means at any time Banks having
at least 51% of the aggregate amount of the Credit Exposures of
all the Banks at such time.
"Restricted Payment" means (i) any dividend or
other distribution on any Equity Securities of the Guarantor or
any Subsidiary of the Guarantor (except dividends payable solely
in Equity Securities of the same class of the same issuer) and
(ii)
any payment on account of the purchase, redemption, retirement or
acquisition of (A) any Equity Securities of the Guarantor or any
Subsidiary of the Guarantor, (B) any option, warrant or other
right to acquire Equity Securities of the Guarantor or any
Subsidiary of the Guarantor or (C) any PIP Option; provided that
payments to the Borrower or any of its Subsidiaries or to
Medisave or any of its Subsidiaries shall not constitute
Restricted Payments.
"Revolver Commitment" means, with respect to
each Bank, as the context may require, either (i) the obligation
of such Bank to make loans to the Borrower pursuant to Section
2.01(b) and to participate in letters of credit issued by the LC
Issuing Banks pursuant to Section 2.06(a) or (ii) the amount set
forth opposite the name of such Bank under the heading "Revolver
Commitments" in Schedule I hereto, as such amount may be reduced
from time to time pursuant to Section 2.09.
"Revolver Exposure" means, with respect to any
Bank at any time, the sum of (i) the aggregate outstanding
principal amount of its Revolver Loans at such time and (ii) its
Applicable Percentage of the LC Liabilities in respect of
Revolver Letters of Credit at such time.
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"Revolver Letter of Credit" means a standby
letter of credit issued by an LC Issuing Bank pursuant to
Section 2.06(a) for the account of the Borrower.
"Revolver Loan" means a loan made by a Bank
pursuant to Section 2.01(b); provided that if any such loan or
loans (or portions thereof) are combined or subdivided pursuant
to a Notice of Interest Rate Election, the term "Revolver Loan"
shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be.
"S&P" means Standard and Poor's Ratings Group
and its successors.
"Series A Preferred Stock" means the Guarantor's
Series A Junior Participating Preferred Stock that may be issued
to holders of the Guarantor's common stock from time to time
after the Closing Date pursuant to the Guarantor's preferred
stock purchase rights plan.
"Series B Preferred Stock" means the Guarantor's
Non-Voting Series B Convertible Preferred Stock that may be
issued to holders of PIP Convertible Debentures from time to
time after the Closing Date upon the conversion thereof pursuant
to the Guarantor's 1991 Performance Investment Plan.
"Series C Preferred Stock" means the Guarantor's
8-1/4% Cumulative Non-Voting Series C Preferred Stock.
"Series D Preferred Stock" means (i) the
Guarantor's Payable-in-Kind Non-Voting Series D Preferred Stock
and (ii) additional shares of such preferred stock issued in lieu
of cash dividends in accordance with the terms of such preferred
stock.
"Sold Asset Note" means any promissory note or
other instrument received as consideration for the sale of
(i) any health care facility, nursing center or retirement
housing facility or any leasehold interest in any of the
foregoing or (ii) any land held for investment.
"Subordinated Note Indenture" means the
indenture dated as of September 2, 1993 between the Guarantor and
State Street Bank and Trust Company, as trustee.
"Subordinated Notes" means the Guarantor's 10-
1/8% Senior Subordinated Notes due 2001 issued pursuant to the
Subordinated Note Indenture.
"Subsidiary" means any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by the Guarantor (or, if
such term is used with reference to any other Person, by such
other Person).
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"Substitute IRB Letter of Credit" has the
meaning set forth in Section 2.06(p).
"Substitute Reimbursement Agreement" has the
meaning set forth in Section 2.06(p).
"Temporary Cash Investment" means any Investment
in (i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any
agency thereof, in each case having maturities of not more than
one year after the date of acquisition thereof, (ii) commercial
paper rated at least P-1 by Moody's or at least A-1 by S&P and in
each case maturing within 180 days after the date of acquisition
thereof, (iii) time deposits, bankers' acceptances and
certificates of deposit having maturities of not more than 30
days after the date of acquisition thereof with any office
located in the United States of any bank or trust company which
has (or is a subsidiary of a holding company which has) a short-
term debt rating of at least P-1 by Moody's or at least A-1 by
S&P, or (iv) repurchase agreements with respect to securities
described in clause (i) above entered into with banks described
in clause (iii) above.
"Term Loan" means (i) a loan made to the
Borrower on the Closing Date pursuant to Section 2.01(a) of this
Agreement as then in effect or (ii) a loan made to the Borrower
after the Amendment No. 4 Effective Date pursuant to Section
2.01(a) of this Agreement as amended by Amendment No. 4; provided
that if any such loan or loans (or portions thereof) are combined
or subdivided pursuant to a Notice of Interest Rate Election, the
term "Term Loan" shall refer to the combined principal amount
resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case
may be.
"Title Insurer" means Chicago Title Insurance
Company or such other title insurance company or companies as are
acceptable to the Agent.
"Type" has the meaning set forth in Section
1.03.
"Unfunded Liabilities" means, with respect to
any Plan at any time, the amount (if any) by which (i) the value
of all benefit liabilities under such Plan, determined on a plan
termination basis using the assumptions prescribed by the PBGC
for purposes of Section 4044 of ERISA, exceeds (ii) the fair
market value of all Plan assets allocable to such liabilities
under Title I of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
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"Wholly-Owned Subsidiary" means, with respect to
any Person, any Subsidiary all of the Equity Securities of which
are at the time owned by such Person and one or more of its
Wholly-Owned Subsidiaries.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared
in accordance with generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except
for changes concurred in by the Guarantor's independent public
accountants) with the most recent audited consolidated financial
statements of the Guarantor and its Consolidated Subsidiaries
delivered to the Banks; provided that if the Borrower notifies
the Agent that it wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if
the Agent notifies the Borrower that the Required Banks wish to
amend Article V for such purpose), then compliance with such
covenant shall be determined
on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally
accepted accounting principles became effective, until either
such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower, the Guarantor and the Required
Banks.
SECTION 1.03. Classes and Types of Commitments
and Loans. (a) Commitments hereunder are distinguished by
"Class", which refers to the determination of whether such
Commitment is an Additional Term Commitment, a Revolver
Commitment or an IRB Backstop Commitment. (b)Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan
(or of a Borrowing or Group of Loans comprised of such Loans)
refers to the determination whether such Loan is a Term Loan or a
Revolver Loan, each of which constitutes a Class. The "Type" of
a Loan refers to the determination whether such Loan is a
Euro-Dollar Loan or a Domestic Loan. Identification of a Loan
(or a Borrowing or Group of Loans) by both Class and Type (e.g.,
a "Revolver Euro-Dollar Loan") indicates that such Loan is both a
Revolver Loan and a Euro-Dollar Loan (or that such Borrowing or
Group of Loans is comprised of such Loans).
SECTION 1.04. Other Definitional Provisions.
References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" are to Articles, Sections, Schedules or
Exhibits of or to this Agreement unless otherwise specifically
provided. Any of the terms defined in Section 1.01 may, unless
the context otherwise requires, be used in the singular or plural
depending on the reference. "Include", "includes" and
"including" are deemed to be followed by "without limitation"
whether or not they are in fact followed by such words or words
of like import.
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"Writing", "written" and comparable terms refer to printing,
typing and other means of reproducing words in a visible form.
References to any agreement or contract are to such agreement or
contract as amended, modified or supplemented from time to time
in accordance with the terms hereof and thereof.
ARTICLE II
THE FACILITIES
SECTION 2.01. Commitments to Lend.
(a) Term Loans. In addition to the Term Loans
originally made to the Borrower on the Closing Date pursuant to
Section 2.01(a) of this Agreement (as then in effect), each Bank
agrees, subject to the terms and conditions set forth in this
Agreement, to make one or more term loans from time to time
during the period from and including the Amendment No. 4
Effective Date to and including October 27, 1995 to the Borrower
after the Amendment No. 4 Effective Date in the aggregate
principal amount set forth opposite such Bank's name on Schedule
I hereto. Each Borrowing under this Section 2.01(a) shall be in
an aggregate principal amount of $5,000,000 or any larger
multiple of $1,000,000 (except that any such Borrowing may be in
an aggregate amount equal to the unused Additional Term
Commitments) and shall be made from the several Banks ratably in
proportion to their respective Additional Term Commitments.
(b) Revolving Credit Facility. Subject to the
terms and conditions set forth in this Agreement, each Bank
severally agrees to make loans to the Borrower pursuant to this
Section 2.01(b) from time to time during the period from and
including the Closing Date to but excluding the Final Maturity
Date; provided that, immediately after each such loan is made,
such Bank's Revolver Exposure shall not exceed its Revolver
Commitment. Within the limits specified in this Agreement, the
Borrower may borrow pursuant to this Section 2.01(b), repay
Revolver Loans and reborrow pursuant to this Section 2.01(b).
Each Borrowing under this Section 2.01(b) shall be in an
aggregate principal amount of $5,000,000 or any larger multiple
of $1,000,000 (except that any such Borrowing may be in an
aggregate amount equal to the unused Revolver Commitments) and
shall be made from the several Banks ratably in proportion to
their respective Revolver Commitments.
SECTION 2.02. Method of Borrowing. (a) The
Borrower shall give the Administrative Agent notice (a "Notice of
Borrowing") not later than (x) 12:00 Noon (New York City time) on
the date of each Domestic Borrowing or (y) 12:00 Noon (New York
City time) on the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
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(i) the proposed date of such Borrowing, which
shall be a Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the Type and Class of the Loans comprising such
Borrowing; and
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
Borrowing, and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(c) Not later than 1:00 P.M. (New York City
time) on the date of each Borrowing, each Bank shall make
available its ratable share of such Borrowing, in Federal or
other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to
Section 10.01. Unless the Administrative Agent determines that
any applicable condition specified in Section 3.02 has not been
satisfied, the Administrative Agent will make the funds so
received from the Banks available to the Borrower on such date at
the Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any Borrowing
that such Bank will not make available to the Administrative
Agent such Bank's share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in
accordance with Section 2.02(c) and the Administrative Agent may
(but shall not be obligated to), in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall
not have so made such share available to the Administrative
Agent, such Bank and the Borrower severally agree to repay to the
Administrative 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 Administrative Agent, at (i) in the case
of the Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.04, and (ii) in the case of such Bank, the
Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
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SECTION 2.03. Notes. (a) Each Bank's Loans of
each Class shall be evidenced by a single Note payable to the
order of such Bank for the account of its Applicable Lending
Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans of such Class.
(b) Each Bank may, by notice to the Borrower
and the Agent, request that its Loans of a particular Type and
Class be evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such Note
shall be in the appropriate form for such Class, with appropriate
modifications to reflect the fact that it evidences solely Loans
of the relevant Type. Each reference in this Agreement to the
"Notes" of such Bank shall be deemed to refer to and include any
or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Notes pursuant
to Section 3.01, the Agent shall forward such Notes to such Bank.
Each Bank shall record the date and amount of each Loan made by
it and the date and amount of each payment of principal made by
the Borrower with respect thereto, and prior to any transfer of
any of its Notes shall endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing
information with respect to each Loan of the relevant Class then
outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations
of the Borrower hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to endorse its
Notes and to attach to and make a part of its Notes a
continuation of any such schedule as and when required.
SECTION 2.04. Interest Rates. (a) Each
Domestic Loan of any Class shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is
made (or is converted to a Domestic Loan) until it becomes due,
at a rate per annum equal to the sum of the Applicable Margin for
such Class for such day plus the Base Rate for such day. Such
interest shall be payable monthly in arrears on the last day of
each calendar month and, with respect to the principal amount of
any Domestic Loan converted to a Euro-Dollar Loan, on the date
such Domestic Loan is so converted. Any overdue principal of or
interest on any Domestic Loan of any Class shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the rate otherwise applicable to
Domestic Loans of such Class for such day.
(b) Each Euro-Dollar Loan of any Class shall
bear interest on the outstanding principal amount thereof, for
each day during each Interest Period applicable thereto, at a
rate per annum equal to the sum of the Applicable Margin for such
Class for such day plus the London Interbank Offered Rate
applicable to such Interest Period. Such interest shall be
payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, three months
after the first day thereof.
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The "London Interbank Offered Rate" applicable
to any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates
per annum at which deposits in dollars are offered to each of the
Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately
equal to the principal amount of the Euro-Dollar Loan of such
Reference Bank to which such Interest Period is to apply and for
a period of time comparable to such Interest Period.
(c) Any overdue principal of or interest on any
Euro-Dollar Loan of any Class shall bear interest, payable on
demand, for each day from and including the date payment thereof
was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the Applicable Margin for
such Class for such day plus the higher of (i) the London
Interbank Offered Rate applicable to such Loan at the date such
payment was due and (ii) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates
per annum at which one day (or, if such amount due remains unpaid
more than three Euro-Dollar Business Days, then for such other
period of time not longer than six months as the Administrative
Agent may select) deposits in dollars in an amount approximately
equal to such overdue payment due to each of the Reference Banks
are offered to such Reference Bank in the London interbank market
for the applicable period determined as provided above (or, if
the circumstances described in Section 8.01(a) or (b) shall
exist, at a rate per annum equal to the sum of 2% plus the rate
applicable to Domestic Loans of such Class for such day).
(d) The Administrative Agent shall determine
each interest rate applicable to the Loans hereunder. The
Administrative Agent shall give prompt notice to the Borrower and
the Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of
manifest error.
(e) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Administrative Agent as
contemplated hereby upon receipt of notice from the
Administrative Agent that it has received a Notice of Borrowing
or a Notice of Interest Rate Election. If any Reference Bank
does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference Bank
or Banks or, if none of such quotations is available on a timely
basis, the provisions of Section 8.01 shall apply.
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(f) The "Applicable Margin" for any day on and
after the Amendment No. 4 Effective Date means the applicable
percentage set forth in the table below for Loans of the relevant
Type determined by reference to the Pricing Level existing on
such day:
Level Level Level Level Level Level
Type I II III IV V VI
of Loan Status Status Status Status Status Status
Domestic 0.00% 0.00% 0.00% 0.125% 0.375% 0.625%
Euro-
Dollar 0.625% 0.75% 0.875% 1.125% 1.375% 1.625%
The "Applicable Margin" for any day prior to the Amendment No. 4
Effective Date means the Applicable Margin for such day
determined in accordance with the provisions of this subsection
(f) as in effect prior to the Amendment No. 4 Effective Date.
SECTION 2.05. Method of Electing Interest Rates. (a)
The Loans included in each Borrowing shall bear interest
initially at the type of rate specified by the Borrower in the
applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject in each case
to the provisions of Article VIII), as follows:
(i) if such Loans are Domestic Loans, the Borrower may
elect to convert such Loans to Euro-Dollar Loans as of any
Euro-Dollar Business Day, provided that notice of such
election may not be given if, on the third Euro-Dollar
Business Day before such conversion is to be effective, an
Event of Default shall have occurred and be continuing; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Domestic Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice
(a "Notice of Interest Rate Election") to the Administrative
Agent not later than 12:00 Noon (New York City time) on the third
Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of
the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the
Loans comprising such Group and (ii) the portion to which such
notice applies, and the remaining portion to which it does not
apply, are each at least $5,000,000.
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(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of Section 2.05(a);
(iii) if the Loans comprising such Group are to be
converted, the new Type of Loans and, if such new Loans are
Euro-Dollar Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar
Loans for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election
from the Borrower pursuant to Section 2.05(a), the Administrative
Agent shall promptly notify each Bank of the contents thereof and
such notice shall not thereafter be revocable by the Borrower.
If the Borrower fails to deliver a timely Notice of Interest Rate
Election to the Administrative Agent for any Group of Euro-Dollar
Loans, such Loans shall be converted into Domestic Loans on the
last day of the then current Interest Period applicable thereto.
SECTION 2.06. Letters of Credit.
(a) Revolver Letters of Credit. Subject to the terms
and conditions set forth in this Agreement, each LC Issuing Bank
agrees upon the request of the Borrower to issue standby letters
of credit for the account of the Borrower from time to time
during the period from and including the Closing Date to but
excluding the fifth Domestic Business Day prior to the Final
Maturity Date for the purpose of providing credit support for
obligations of the Borrower or any of its Subsidiaries in respect
of self-insurance requirements, workers' compensation
requirements and similar requirements in the ordinary course of
business; provided that (i) the obligation of such LC Issuing
Bank to issue such letters of credit shall be subject to any
limitations set forth with respect to it in Schedule V hereto or
in the applicable agreement designating such bank as an
additional LC Issuing Bank and (ii) immediately after each such
letter of credit is issued, the aggregate amount of the Revolver
Exposures shall not exceed the aggregate amount of the Revolver
Commitments.
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(b) IRB Letters of Credit. Subject to the terms and
conditions set forth in this Agreement, each LC Issuing Bank
agrees upon the request of the Borrower to issue standby letters
of credit for the account of the Borrower from time to time
during the period from and including the Closing Date to but
excluding September 1, 1995 to backstop letters of credit that
provide credit support for Designated IRB Debt; provided that the
obligation of such LC Issuing Bank to issue such letters of
credit shall be subject to any limitations set forth with respect
to it in Schedule V hereto or in the applicable agreement
designating such bank as an additional LC Issuing Bank.
(c) Expiry Dates. No Letter of Credit shall have an
expiry date later than the fifth Domestic Business Day prior to
the Final Maturity Date. Subject to the preceding sentence, each
Letter of Credit issued hereunder shall expire on or before the
second anniversary of the date of such issuance; provided that
the expiry date of any Letter of Credit may, upon the request of
the Borrower, be extended from time to time for a period not
exceeding two years so long as the LC Issuing Bank agrees to so
extend such Letter of Credit no earlier than three months, in the
case of a Revolver Letter of Credit, or five months, in the case
of an IRB Letter of Credit, prior to such then existing expiry
date.
(d) Notice of and Conditions to Issuances. The Borrower
shall give the relevant LC Issuing Bank and the Administrative
Agent at least three Domestic Business Days' notice prior to the
proposed issuance of any Letter of Credit, specifying (A) the
proposed date of issuance of such Letter of Credit, (B) whether
such Letter of Credit is a Revolver Letter of Credit or an IRB
Letter of Credit, (C) the proposed expiry date of such Letter of
Credit (subject to Section 2.06(c)), (D) the other proposed terms
of such Letter of Credit (subject, in the case of IRB Letters of
Credit, to Section 2.06(f) or 2.06(p), as applicable) and (E) the
nature of the transactions proposed to be supported thereby.
Upon receipt of such notice, the Administrative Agent shall
promptly notify each Bank of the contents thereof and of the
amount of such Bank's participation in such proposed Letter of
Credit. The issuance by an LC Issuing Bank of any Letter of
Credit shall be subject to the conditions that (x) such Letter of
Credit shall be satisfactory in form and substance to such
LC Issuing Bank and the Administrative Agent, (y) the Borrower
shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as such LC Issuing
Bank shall have reasonably requested (and, in the case of an IRB
Letter of Credit issued pursuant to Section 2.06(b), the Borrower
shall have delivered to such LC Issuing Bank a Financial
Officer's certificate to the effect that the face amount of such
IRB Letter of Credit complies with clause (i) of Section 2.06(f))
and (z) the Administrative Agent shall not have determined that
any applicable condition to such issuance specified in
Section 3.02 has not been satisfied and shall have so advised
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such LC Issuing Bank on the date of such issuance. Upon any such
issuance, such LC Issuing Bank shall be deemed, without further
action by any party hereto, to have sold to each Bank, and each
Bank shall be deemed, without further action by any party hereto,
to have purchased from such LC Issuing Bank, a participation in
such Letter of Credit and the related LC Liabilities in
proportion to such Bank's Applicable Percentage.
(e) Notice of and Conditions to Extensions of Expiry
Dates. Each LC Issuing Bank shall give the Administrative Agent
at least three Domestic Business Days' notice prior to extending
the expiry date of any Letter of Credit issued by it, specifying
(A) the date on which such extension is to be made and (B) the
date to which such expiry date is to be so extended. Upon
receipt of such notice, the Administrative Agent shall promptly
notify each Bank of the contents thereof. The extension of the
expiry date of any Letter of Credit by an LC Issuing Bank shall
be subject to the condition that the Administrative Agent shall
not have determined that any applicable condition to such
extension specified in Section 3.02 has not been satisfied and
shall have so advised such LC Issuing Bank on the date of such
extension.
(f) Permitted Terms of IRB Letters of Credit. The terms
of each IRB Letter of Credit issued by an LC Issuing Bank
hereunder shall comply with Section 2.06(c) and with the
following additional provisions:
(i) the face amount of any IRB Letter of Credit may not
exceed the sum of (A) the estimated maximum amount of one
installment of interest on the related industrial revenue
bonds (the "Underlying Debt") and (B) the aggregate face or
principal amount of the existing letter of credit or other
credit facility which supports such Underlying Debt (the
"Existing Support Facility");
(ii) the named beneficiary of any IRB Letter of Credit
issued to support any Underlying Debt (A) shall be the
provider of the related Existing Support Facility and (B) may
not be the LC Issuing Bank issuing such IRB Letter of Credit
(or any of its affiliates);
(iii) no amount drawn under any IRB Letter of Credit may
be subject to reinstatement, and no IRB Letter of Credit may
be subject to multiple drawings;
(iv) no IRB Letter of Credit may be drawn unless the
Underlying Debt has been redeemed or accelerated, or called
for redemption or acceleration, in full; and
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(v) no IRB Letter of Credit which has been issued in
respect of an Existing Support Facility for which the primary
obligor is a Person other than the Borrower may be drawn
unless the named beneficiary of such IRB Letter of Credit
assigns all of its claims against such Person (and all
security therefor) to the Borrower in connection with such
drawing.
(g) Fees. The Borrower shall pay to the Administrative
Agent, for the account of the Banks ratably in accordance with
their respective Applicable Percentages, a letter of credit fee,
at the LC Fee Rate in effect from time to time, on the aggregate
amount available for drawings under each Letter of Credit
outstanding hereunder from time to time. Such letter of credit
fee shall be payable in arrears on each Quarterly Date for so
long as such Letter of Credit is outstanding hereunder and on the
final expiry date thereof. The Borrower shall pay to each LC
Issuing Bank additional fronting fees and reasonable expenses in
the amounts and at the times agreed between the Borrower and such
LC Issuing Bank. The LC Issuing Banks shall furnish to the
Administrative Agent upon request such information as the
Administrative Agent shall require in order to calculate the
amount of any fee payable for the account of the Banks under this
Section 2.06(g).
"LC Fee Rate" for each day on and after the Amendment No.
4 Effective Date means a rate per annum equal to (i) 0.50% for
any such day on which Level I Status exists, (ii) 0.625% for any
such day on which Level II Status exists, (iii) 0.75% for any
such day on which Level III Status exists, (iv) 0.875% for any
such day on which Level IV Status exists, (v) 1.125% for any such
day on which Level V Status exists and (vi) 1.50% for any such
day on which Level VI Status exists.
"LC Fee Rate" for any day prior to the Amendment No. 4
Effective Date means the LC Fee Rate for such day determined in
accordance with the provisions of this subsection (g) as in
effect prior to the Amendment No. 4 Effective Date.
(h) Drawings. Upon receiving any demand for payment
under any Letter of Credit from the beneficiary thereof, the
relevant LC Issuing Bank shall promptly notify the Borrower and
the Administrative Agent as to the amount to be paid by such LC
Issuing Bank as a result of such demand and the proposed payment
date (an "LC Payment Date"). The responsibility of such LC
Issuing Bank to the Borrower and to each Bank shall be only to
determine that the documents (including each demand for payment)
delivered under such Letter of Credit in connection with such
presentment are in conformity in all material respects with such
Letter of Credit. Each LC Issuing Bank shall endeavor to
exercise the same care in the issuance and administration of each
Letter of Credit issued by it as it does with respect to letters
of credit in which no participations are granted, it being
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understood that in the absence of any gross negligence or willful
misconduct by such LC Issuing Bank, each Bank shall be
irrevocably and unconditionally obligated, without regard to the
occurrence and continuation of any Default or to the satisfaction
of any condition precedent whatsoever, to reimburse such LC
Issuing Bank on demand for (i) such Bank's Applicable Percentage
of the amount of each payment made by such LC Issuing Bank under
such Letter of Credit to the extent such amount is not reimbursed
to the LC Issuing Bank by the Borrower (or any other obligor)
plus (ii) interest on the foregoing amount to be reimbursed to
such LC Issuing Bank by such Bank, for each day from the date of
such LC Issuing Bank's demand for such reimbursement (or, if such
demand is made after 11:00 A.M. (New York City time) on such
date, from the next succeeding Domestic Business Day) to the date
on which such Bank pays the amount to be reimbursed by it, at a
rate per annum equal to the Federal Funds Rate for such day.
(i) Reimbursement. The Borrower shall be irrevocably
and unconditionally obligated to reimburse each LC Issuing Bank
on or before the applicable LC Reimbursement Date for any amounts
paid by such LC Issuing Bank upon any drawing under any Letter of
Credit issued by it, without presentment, demand, protest or
other formalities of any kind; provided that neither the Borrower
nor any Bank shall be precluded from asserting any claim for
direct (but not consequential) damages suffered by the Borrower
or such Bank to the extent, but only to the extent, caused by (A)
the willful misconduct or gross negligence of such LC Issuing
Bank in determining whether a request presented under any such
Letter of Credit complied with the terms thereof or (B) such LC
Issuing Bank's failure to pay under any such Letter of Credit
after the presentation to it of a request strictly complying with
the terms and conditions thereof. All such amounts paid by such
LC Issuing Bank and remaining unpaid by the Borrower shall bear
interest, payable on demand, for each day until paid at a rate
per annum equal to (x) the rate applicable to Term Domestic Loans
for such day if such day falls before the applicable LC
Reimbursement Date or (y) the sum of 2% plus the rate applicable
to Term Domestic Loans for such day if such day falls on or after
the LC Reimbursement Date. Such LC Issuing Bank will pay to each
Bank its Applicable Percentage of all amounts received by such LC
Issuing Bank in payment, in whole or in part, of the
Reimbursement Obligation in respect of any such Letter of Credit,
but only to the extent such Bank has made payment to such LC
Issuing Bank in respect of such Letter of Credit pursuant to
Section 2.06(h).
(j) Increased Cost and Reduced Return. If, on or after
October 15, 1994, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Bank or LC Issuing Bank with any request or
directive (whether or not having the force of law) of any such
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authority, central bank or comparable agency, shall impose,
modify or deem applicable any tax, reserve, special deposit or
similar requirement against or with respect to or measured by
reference to letters of credit or participations therein, and the
result of any of the foregoing is to increase the cost to such
Bank or LC Issuing Bank of issuing or maintaining any Letter of
Credit or any participation therein, or to reduce any amount
receivable by any Bank or LC Issuing Bank under this Section 2.06
in respect of any Letter of Credit or any participation therein
(which increase in cost, or reduction in amount receivable, shall
be the result of such Bank's or LC Issuing Bank's reasonable
allocation of the aggregate of such increases or reductions
resulting from such event), then, within 15 days after demand by
such Bank or LC Issuing Bank (with a copy to the Administrative
Agent), the Borrower agrees to pay to such Bank or LC Issuing
Bank, from time to time as specified by such Bank or LC Issuing
Bank, such additional amounts as shall be sufficient to
compensate such Bank or LC Issuing Bank for such increased cost
or reduction. A certificate of such Bank or LC Issuing Bank
submitted to the Borrower pursuant to this Section 2.06(j) and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
(k) Exculpatory Provisions. The Borrower's obligations
under this Section 2.06 shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or
have had against any LC Issuing Bank, any Bank, any beneficiary
of a Letter of Credit or any other Person. The Borrower agrees
that the LC Issuing Banks and the Banks shall not be responsible
for, and the Reimbursement Obligation in respect of any Letter of
Credit shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, any of its Subsidiaries, the beneficiary of
any Letter of Credit or any other Person or any claims or
defenses whatsoever of the Borrower, any of its Subsidiaries or
any other Person against the beneficiary of any Letter of Credit.
No LC Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with
any Letter of Credit issued by it. The Borrower agrees that any
action taken or omitted by the relevant LC Issuing Bank or any
Bank under or in connection with any Letter of Credit and the
related drafts and documents, if done in good faith and without
gross negligence, shall be binding upon the Borrower and shall
not place such LC Issuing Bank or any Bank under any liability to
the Borrower.
(l) Reliance, Etc. To the extent not inconsistent with
Section 2.06(k), each LC Issuing Bank shall be entitled to rely,
and shall be fully protected in relying upon, any Letter of
Credit, draft, writing, resolution, notice, consent, certificate,
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affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by
it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other
experts selected by such LC Issuing Bank. Each LC Issuing Bank
shall be fully justified in refusing to take any action requested
of it under this Section 2.06 in respect of any Letter of Credit
issued by it unless it shall first have received such advice or
concurrence of the Required Banks as it reasonably deems
appropriate or it shall first be indemnified to its reasonable
satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take, or omitting or continuing to omit, any such
action. Notwithstanding any other provision of this Section
2.06, each LC Issuing Bank shall in all cases be fully protected
in acting, or in refraining from acting, under this Section 2.06
in respect of any Letter of Credit in accordance with a request
of the Required Banks, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Banks
and all future holders of participations in such Letter of
Credit.
(m) Indemnification by the Borrower. The Borrower
agrees to indemnify and hold harmless each Bank, each LC Issuing
Bank and each of the Agents (the "LC Indemnitees") from and
against any and all claims and damages, losses, liabilities,
costs or expenses which such LC Indemnitee may reasonably incur
(or which may be claimed against such LC Indemnitee by any Person
whatsoever) by reason of or in connection with the execution and
delivery or transfer of or payment or failure to pay under any
Letter of Credit or any actual or proposed use of any Letter of
Credit, including any claims, damages, losses, liabilities, costs
or expenses which any LC Issuing Bank may incur by reason of or
in connection with the failure of any Bank to fulfill or comply
with its obligations to such LC Issuing Bank hereunder (but
nothing herein contained shall affect any rights the Borrower may
have against any defaulting Bank); provided that the Borrower
shall not be required to indemnify any LC Indemnitee for any
claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of any LC Issuing Bank in
determining whether a request presented under any Letter of
Credit issued by it complied with the terms of such Letter of
Credit or (ii) any LC Issuing Bank's failure to pay under any
Letter of Credit issued by it after the presentation to it of a
request strictly complying with the terms and conditions of such
Letter of Credit. Nothing in this Section 2.06(m) is intended to
limit the obligations of the Borrower under any other provision
of this Section 2.06.
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(n) Indemnification by the Banks. Each Bank shall,
ratably in accordance with its Applicable Percentage, indemnify
each LC Issuing Bank, its affiliates and their respective
directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct or such LC
Issuing Bank's failure to pay under any Letter of Credit issued
by it after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit)
that such indemnitees may suffer or incur in connection with this
Section 2.06 or any action taken or omitted by such indemnitees
hereunder.
(o) Dual Capacities. In its capacity as a Bank, each LC
Issuing Bank shall have the same rights and obligations as any
other Bank.
(p) Substitute IRB Letters of Credit.
(i) From time to time after the Closing Date the
Borrower may, by notice to the Agent and the relevant LC
Issuing Bank, request that such LC Issuing Bank issue one or
more direct-pay or standby letters of credit for the account
of the Borrower or a partnership in which the Borrower is a
general partner in substitution for existing direct-pay or
standby letters of credit that support Designated IRB Debt
(each, a "Substitute IRB Letter of Credit"). Such notice
shall be accompanied by the proposed form of the Substitute
IRB Letter of Credit, the proposed form of the related
reimbursement agreement and such other instruments and
agreements relating thereto as the Agent or such LC Issuing
Bank may reasonably request (collectively, the "Underlying LC
Documents"). If (x) the Agent shall have notified the
Borrower and such LC Issuing Bank that such Underlying LC
Documents comply with the provisions of Section 2.06(c) and
are otherwise satisfactory in form and substance to it,
(y) such LC Issuing Bank shall have notified the Borrower and
the Agent that such Underlying LC Documents are satisfactory
in form and substance to it and (z) the Agent shall not have
received notice from any Bank, within ten Domestic Business
Days after delivery of copies of such Underlying LC Documents
to the Banks, stating that such Bank objects to the terms of
such Substitute IRB Letter of Credit or the related
reimbursement agreement for the reasons identified in such
notice, the Agent shall promptly notify the Borrower and such
LC Issuing Bank that such LC Issuing Bank will, subject to the
terms and conditions of this Agreement, issue Substitute IRB
Letters of Credit in such form from time to time prior to
September 1, 1995 upon request of the Borrower; provided that
the obligation of such LC Issuing Bank to issue any such
Substitute IRB Letter of Credit shall be subject to any
limitations set forth with respect to such LC Issuing Bank in
Schedule V hereto or in the applicable agreement designating
such bank as an additional LC Issuing Bank.
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(ii) Any notice given by the Borrower pursuant to Section
2.06(d) requesting the issuance of a Substitute IRB Letter of
Credit shall include definitive copies of such Substitute IRB
Letter of Credit, the related reimbursement agreement and such
other instruments and agreements relating thereto as the Agent
may reasonably request, all of which shall be substantially in
the forms previously furnished to the Agent pursuant to
Section 2.06(p)(i). Upon receipt of such notice and other
documents, the Administrative Agent shall promptly provide
such documents to each Bank. The issuance by an LC Issuing
Bank of any Substitute IRB Letter of Credit shall be subject
to the conditions specified in Section 2.06(d) and to the
additional conditions that (A) if the account party with
respect thereto is a partnership in which the Borrower is a
general partner, (x) such account party shall have executed
and delivered such other instruments and agreements relating
to such Substitute IRB Letter of Credit as such LC Issuing
Bank shall have reasonably requested and (y) the related
reimbursement agreement shall contain an unconditional and
irrevocable guarantee by the Borrower, in form and substance
satisfactory to the Agent, of such account party's obligations
thereunder, and (B) the Borrower and the Guarantor shall have
executed and delivered to the Agent documentation, in form and
substance satisfactory to the Agent, designating the related
reimbursement agreement (a "Substitute Reimbursement
Agreement") as an additional "Financing Document" for all
purposes of this Agreement and the other Financing Documents.
(iii) Notwithstanding the other provisions of this Section
2.06, (A) the terms of any Substitute IRB Letter of Credit
need not comply with the provisions of Section 2.06(f) and (B)
the reimbursement obligations of the Borrower or any
partnership in which the Borrower is a general partner in
respect of any Substitute IRB Letter of Credit shall be
governed by the related Substitute Reimbursement Agreement and
not by Section 2.06(i).
(iv) Any provision of any Substitute Reimbursement
Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the
Borrower (and, if the obligor thereunder is a partnership in
which the Borrower is a general partner, by such obligor) and
the relevant LC Issuing Bank (with the prior written consent
of the Required Banks); provided that no such consent of the
Required Banks shall be required if the effect of such
amendment or waiver would not be adverse in any material
respect to the Banks.
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SECTION 2.07. Commitment Fees. (a) The Borrower shall
pay to the Administrative Agent for the account of each Bank a
commitment fee, at the Commitment Fee Rate in effect on and after
the Amendment No. 4 Effective Date, on the unused portion of such
Bank's Additional Term Commitment. Such commitment fees shall
accrue from and including the Amendment No. 4 Effective Date to
but excluding the date on which the Additional Term Commitments
expire or are fully utilized, and shall be payable on such date.
(b) The Borrower shall pay to the Administrative Agent
for the account of each Bank a commitment fee, at the Commitment
Fee Rate in effect from time to time, on the unused portions of
such Bank's Revolver Commitment and IRB Backstop Commitment.
Such commitment fees shall accrue from and including the
Effective Date to but excluding the date on which the Commitments
of the relevant Class shall have terminated in their entirety
pursuant to this Agreement, and shall be payable quarterly on
each Quarterly Date and on the date of such termination.
"Commitment Fee Rate" means, for each day on and after
the Amendment No. 4 Effective Date, a rate per annum equal to (i)
0.25% for any such day on which Level I Status exists, (ii)
0.3125% for any such day on which Level II or Level III Status
exists, (iii) 0.375% for any such day on which Level IV Status or
Level V Status exists and (iv) 0.50% for any such day on which
Level VI Status exists.
"Commitment Fee Rate" means, for each day prior to the
Amendment No. 4 Effective Date, the applicable rate per annum
determined in accordance with the provisions of Section 2.07(b)
of this Agreement as in effect prior to the Amendment No. 4
Effective Date.
SECTION 2.08. Repayments and Prepayments of Loans.
(a) Final Maturity. The Loans shall mature on the Final
Maturity Date, and any Loans then outstanding shall be due and
payable on such date.
(b) Mandatory Repayments of Term Loans. On each date
set forth below, the Borrower shall repay Term Loans in an
aggregate principal amount equal to the amount listed opposite
such date (subject to reduction as provided in Section 2.08(f)):
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Date Amount
December 1, 1994 $ 7,500,000
March 1, 1995 $ 7,500,000
June 1, 1995 $ 8,000,000
September 1, 1995 $ 8,000,000
December 1, 1995 $ 8,000,000
March 1, 1996 $ 8,000,000
June 1, 1996 $ 8,000,000
September 1, 1996 $ 8,000,000
December 1, 1996 $ 8,000,000
March 1, 1997 $ 8,000,000
June 1, 1997 $ 8,000,000
September 1, 1997 $ 8,000,000
December 1, 1997 $ 8,000,000
March 1, 1998 $ 8,000,000
June 1, 1998 $ 8,000,000
September 1, 1998 $ 8,000,000
December 1, 1998 $ 8,000,000
March 1, 1999 $ 8,000,000
June 1, 1999 $ 8,000,000
September 1, 1999 $ 8,000,000
October 28, 1999 $ 6,000,000
(c) Mandatory Prepayments.
(i) In addition to the scheduled repayments of Term
Loans pursuant to Section 2.08(b), the Borrower shall apply the
following amounts to prepay the principal of the Term Loans:
(A) Asset Sales. Simultaneously with the delivery of
each set of financial statements referred to in Sections 5.01(a)
and (b), the Borrower shall deliver to the Administrative Agent a
report relating to Asset Sales which sets forth (i) a description
of each Asset Sale effected by the Guarantor or any of its
Subsidiaries on or after the Amendment No. 4 Effective Date, (ii)
the amount of Net Cash Proceeds received or expected to be
received by the Guarantor or any such Subsidiary in respect of
each such Asset Sale, (iii) the dates of receipt or expected
receipt of such Net Cash Proceeds, (iv) the amount of Net Cash
Proceeds received in respect of each such Asset Sale that has
been reinvested in assets similar to those to which such Asset
Sale related, including a description of each such reinvestment
and (v) the amount of Net Cash Proceeds received in respect of
each such Asset Sale that has been applied to prepay the Term
Loans pursuant to this Section 2.08(c); provided that an Asset
Sale
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need not be included in such report after the Net Cash Proceeds
thereof have been fully (I) reinvested in assets similar to those
to which such Asset Sale related, (II) applied to prepay the Term
Loans pursuant to this Section 2.08(c) or (III) applied in any
combination of clauses (I) or (II) above. The Borrower shall
apply an amount equal to 100% of the Net Cash Proceeds of each
Asset Sale described in such report to prepay the Term Loans to
the extent that such proceeds have not been reinvested in assets
similar to those to which such Asset Sale related within one year
of receipt by the Guarantor or any of its Subsidiaries.
(B) Casualty Events. If a Casualty Event occurs on or
after the Closing Date, and if at any time after such occurrence
a Financial Officer of the Guarantor reasonably expects that the
Guarantor or any of its Subsidiaries is or may be entitled to any
Casualty Proceeds in respect thereof which will exceed the
expected cost of any restoration, repair or replacement of the
property affected thereby by $250,000 or more (whether as a
result of a determination not to restore, repair or replace or
otherwise), the Borrower shall promptly notify the Administrative
Agent of such expectation with respect to such Casualty Event
(a "Specified Casualty Event"). If the Guarantor or any of its
Subsidiaries receives Casualty Proceeds in respect of any
Specified Casualty Event which, in the aggregate, exceed the
actual cost of completing the restoration, repair or replacement
(if any) of such property, the Borrower shall apply an amount
equal to 100% of such excess to prepay the Term Loans.
(ii) Amounts to be applied to prepay the Term Loans
pursuant to Section 2.08(c)(i) shall be so applied within five
Euro-Dollar Business Days after the expiration of one year after
the relevant proceeds are received by the Guarantor or any of its
Subsidiaries; provided that (i) no such prepayment shall be
required until the aggregate amount to be applied shall be at
least $2,000,000 and (ii) if any such prepayment would otherwise
require prepayment of Euro-Dollar Loans or portions thereof prior
to the last day of the related Interest Period, such prepayment
shall, unless the Administrative Agent otherwise notifies the
Borrower upon the instructions of the Required Banks, be deferred
to such last day.
(d) Notice of Repayment or Prepayment. Prior to the
date of each mandatory repayment or prepayment pursuant to this
Section 2.08, the Borrower shall, by notice to the Administrative
Agent given not later than 12:00 Noon (New York City time) on (i)
the date of repayment or prepayment of any Group of Domestic
Loans or (ii) the third Euro-Dollar Business Day prior to the
date of repayment or prepayment of any Group of Euro-Dollar
Loans, select which outstanding Group or Groups of Loans are to
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be repaid or prepaid. Upon receipt of such notice, the
Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share of such repayment or
prepayment, and such notice shall not thereafter be revocable by
the Borrower.
(e) Optional Prepayments.
(i) Domestic Loans. The Borrower may, upon at least one
Domestic Business Day's notice to the Administrative Agent,
prepay a Group of Domestic Loans in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of
prepayment.
(ii) Euro-Dollar Loans. The Borrower may, upon at least
three Euro-Dollar Business Days' notice to the Administrative
Agent, prepay a Group of Euro-Dollar Loans on the last day of any
Interest Period applicable to such Group, in whole on any such
day, or from time to time in part on any such day in amounts
aggregating $5,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment.
(iii) Notice to Banks. Upon receipt of a notice of
prepayment pursuant to this Section 2.08(e), the Administrative
Agent shall promptly notify each Bank of the contents thereof and
of such Bank's share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
(f) Application of Prepayments. The amount of any
mandatory prepayment of the Term Loans pursuant to Section
2.08(c) or any optional prepayment of the Term Loans pursuant to
Section 2.08(e) shall be applied ratably by amount to reduce each
subsequent scheduled repayment of the Term Loans pursuant to
Section 2.08(b).
(g) Ratable Application. Each repayment or prepayment
of Loans of any Class and Type pursuant to this Section 2.08
shall be applied ratably to the Loans of the same Class and Type
of all Banks.
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(h) Payment of Accrued Interest. On the date of each
repayment or prepayment of Loans of any Class pursuant to this
Section 2.08, the Borrower shall pay interest accrued on the
principal amount repaid or prepaid to the date of repayment or
prepayment.
SECTION 2.09. Termination or Reduction of Commitments.
(a) Mandatory Termination.
(i) The Additional Term Commitments, if still unused,
shall terminate at the close of business on October 27, 1995.
(ii) The Revolver Commitments shall terminate at the
close of business on the Domestic Business Day preceding the
Final Maturity Date.
(iii) The IRB Backstop Commitments shall terminate at
the close of business on September 1, 1995 or, if earlier, the
date on which IRB Letters of Credit with an aggregate original
face amount equal to the aggregate amount of the IRB Backstop
Commitments shall have been issued pursuant to Section 2.06.
(b) Optional Termination or Reduction. The Borrower
may, upon at least three Domestic Business Days' notice to the
Administrative Agent, terminate at any time, or permanently
reduce from time to time by an aggregate amount of $2,000,000 or
any larger multiple of $1,000,000, the unused portion of any
Class of the Commitments; provided that (i) no such termination
or permanent reduction of the Revolver Commitments shall be
effected unless the Term Loans shall have been repaid in full and
(ii) the unused portion of the IRB Backstop Commitments may be
permanently reduced without regard to the foregoing minimum
reduction amount.
(c) Application of Reductions. Each reduction of
Commitments of any Class pursuant to this Section 2.09 shall be
applied ratably to all the Commitments of such Class.
SECTION 2.10. General Provisions as to Payments. (a)
The Borrower shall make each payment of principal of, and
interest on, the Loans and of commitment fees hereunder not later
than 1:00 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York City, to
the Administrative Agent at its address specified in or pursuant
to Section 10.01. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Administrative Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the
Domestic Loans or of commitment fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof
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shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment
of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment
is due to the Banks hereunder that the Borrower will not make
such payment in full, the Administrative Agent may assume that
the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may (but shall
not be obligated to), in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that the
Borrower shall not have so made such payment, each Bank shall
repay to the Administrative Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until
the date such Bank repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.11. Funding Losses. If the Borrower makes any
payment of principal with respect to any Euro-Dollar Loan or if
any Euro-Dollar Loan is converted to a Domestic Loan (whether
such payment or conversion is pursuant to Article II, VI or VIII
or otherwise) on any day other than the last day of an Interest
Period applicable thereto, or the last day of an applicable
period fixed pursuant to Section 2.04(c), or if the Borrower
fails to borrow or prepay any Euro-Dollar Loans after notice has
been given to any Bank in accordance with Section 2.02(b),
2.08(d) or 2.08(e), the Borrower shall reimburse each Bank within
15 days after demand for any resulting loss or expense incurred
by such Bank (or by any existing or prospective Participant in
the related Loan), including any loss incurred in obtaining,
liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or
conversion or failure to borrow or prepay; provided that such
Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.12. Computation of Interest and Fees.
Interest based on the Prime Rate and commitment fees hereunder
shall be computed on the basis of a year of 365 days (or 366 days
in a leap year) and paid for the actual number of days elapsed
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(including the first day but excluding the last day). Interest
based on the London Interbank Offered Rate and letter of credit
fees hereunder shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed (including
the first day but excluding the last day).
SECTION 2.13. Regulation D Compensation. For so long as
any Bank maintains reserves against "Eurocurrency liabilities"
(or any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such
Bank to United States residents), and as a result the cost to
such Bank (or its Euro-Dollar Lending Office) of making or
maintaining its Euro-Dollar Loans is increased, then such Bank
may require the Borrower to pay, contemporaneously with each
payment of interest on the Euro-Dollar Loans, additional interest
on the related Euro-Dollar Loan of such Bank at a rate per annum
up to but not exceeding the amount by which (x) (A) the
applicable London Interbank Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage exceeds (y) the applicable
London Interbank Offered Rate. Any Bank wishing to require
payment of such additional interest (i) shall so notify the
Borrower and the Administrative Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall
be payable to such Bank at the place indicated in such notice
with respect to each Interest Period commencing at least three
Euro-Dollar Business Days after the giving of such notice and
(ii) shall furnish to the Borrower at least five Euro-Dollar
Business Days prior to each date on which interest is payable on
the Euro-Dollar Loans an officer's certificate setting forth the
amount to which such Bank is then entitled under this Section
2.13.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor), for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect
of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents).
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ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall
occur upon receipt by the Agent of the following documents, each
dated the Closing Date unless otherwise indicated, and upon
satisfaction of the other conditions specified below:
(a) the fact that the Agent shall not have notified the
Borrower of a determination by the Required Banks (which
determination shall be made in good faith) that the
representation in Section 4.04(f) as in effect prior to the
Amendment No. 4 Effective Date is not true at and as of the
Closing Date;
(b) evidence satisfactory to the Agent that each of the
Related Transaction Documents (i) shall have been duly executed
and delivered by the parties thereto (or, in the case of the
certificate of designation for the Series D Preferred Stock, duly
executed and acknowledged on behalf of the Guarantor and filed
with the Secretary of State of the State of Nevada) substantially
in the form thereof distributed to the Banks prior to the
execution and delivery of this Agreement and (ii) shall be in
full force and effect on the Closing Date;
(c) (i) evidence satisfactory to the Agent that
$175,000,000 aggregate principal amount of Subordinated Notes (or
such greater amount as the Required Banks shall have approved)
shall have been duly issued pursuant to the Subordinated Note
Indenture; and (ii) a certificate of a Financial Officer of the
Guarantor to the effect that the Guarantor shall have received
the proceeds to be received by it in connection with the sale of
the Subordinated Notes;
(d) (i) evidence satisfactory to the Agent that at least
$120,000,000 liquidation value of the Series D Preferred Stock
shall have been duly issued and sold to NME for cash (or for
credit against amounts payable by the Guarantor to NME on the
Closing Date) equal to the liquidation value thereof; and (ii) a
certificate of a Financial Officer of the Guarantor to the effect
that the Guarantor shall have received the proceeds or credit to
be received by it in connection with the sale of the Series D
Preferred Stock;
(e) evidence satisfactory to the Agent that (i) the
Borrower and NME shall have consummated the purchase and sale of
the Leased Facilities to be Purchased (or, in the case of any
such facility located in the State of Connecticut, the Borrower
and NME shall have entered into escrow arrangements
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which provide for title to such facility to be transferred to the
Borrower after the Closing Date upon receipt of regulatory
approval for such transfer) for an aggregate purchase price not
exceeding $111,800,000, (ii) NME shall have assigned to the
Borrower all of its renewal and/or purchase options under the
leases underlying the "Third Party Leased Facilities" (as defined
in the NME Agreement) and (iii) the Guarantor and NME shall have
amended the NME Guarantee Reimbursement Agreement in the manner
contemplated by the NME Agreement;
(f) evidence satisfactory to the Agent that arrangements
satisfactory to it shall have been made for (i) the repayment in
full on or before the Closing Date of all Debt owed by the
Guarantor or any of its Subsidiaries to NME (and the release of
any Liens securing such Debt) and (ii) the repayment or
repurchase in full on or before the Closing Date of any
outstanding commercial paper issued by THC Facilities Corp. under
the Guarantor's existing commercial paper program (and the
release of any Liens created in connection therewith);
(g) the fact that duly executed and acknowledged
Mortgages, duly executed counterparts of the Borrower Security
Agreement and the Guarantor Pledge Agreement, and all stock
certificates, promissory notes and other documents and
certificates to be delivered pursuant thereto on the Closing Date
(including appropriately completed and duly executed Uniform
Commercial Code financing statements required thereby) shall have
been delivered to the Collateral Agent;
(h) evidence satisfactory to the Agent that arrangements
satisfactory to it shall have been made for recording the
Mortgages and filing the Uniform Commercial Code financing
statements referred to in paragraph (g) above on or promptly
after the Closing Date;
(i) evidence satisfactory to the Agent that arrangements
satisfactory to it shall have been made for (i) the release of
all Liens (other than the Liens created pursuant to the
Collateral Documents and Permitted Encumbrances) on Collateral
and (ii) the delivery to the Agent of (A) appropriately completed
and duly executed Uniform Commercial Code termination statements
in proper form for filing with each Uniform Commercial Code
filing officer in each jurisdiction in which any financing
statement with respect to any such Lien has been filed and (B)
duly executed releases or reconveyances of mortgages or deeds of
trust in proper form for recording with each recording office in
each jurisdiction in which any such Lien has been recorded;
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(j) copies of file search reports from the Uniform
Commercial Code filing officer in each jurisdiction (i) in which
any Mortgaged Facility is located or (ii) in which the chief
executive office of the Guarantor or the Borrower is located,
setting forth the results of Uniform Commercial Code file
searches conducted in the name of the Guarantor or the Borrower,
as the case may be;
(k) evidence satisfactory to the Agent of the insurance
coverage required by Section 5.04;
(l) duly executed Notes for the account of each Bank,
each dated on or before the Closing Date, complying with the
provisions of Section 2.03;
(m) the fact that all fees, expenses and other amounts
payable on or before the Closing Date to the Agents and the Banks
in connection with this Agreement shall have been paid in full;
(n) an opinion of Richard P. Adcock, the General Counsel
of the Borrower and the Guarantor, substantially to the effect
set forth in Exhibit B hereto;
(o) an opinion of Davis Polk & Wardwell, special counsel
for the Agent and the Administrative Agent, substantially to the
effect set forth in Exhibit C hereto;
(p) opinions of local counsel for the Collateral Agent
in each jurisdiction where any Mortgaged Facility is located,
substantially in the respective forms thereof distributed to the
Banks prior to the execution of this Agreement;
(q) (i) with respect to each of the Mortgaged
Facilities, (A) title reports with respect thereto issued by the
Title Insurer and dated no more than 45 days prior to the Closing
Date showing no Liens except Permitted Encumbrances with respect
thereto and (B) appraisals with respect thereto prepared by
Tellatin, Louis & Andreas, Inc., complying with all applicable
bank regulatory requirements; and (ii) with respect to each of
the Mortgaged Facilities identified with an asterisk on Schedule
VI hereto, policies of title insurance (or irrevocable
commitments therefor with all conditions marked satisfied, dated
and recertified as of the Closing Date, to issue such policies),
on forms issued by the American Land Title Association and
otherwise in form and substance reasonably satisfactory to the
Agent and issued by the Title Insurer, with all premiums,
expenses and fees paid or caused to be paid by the Borrower,
insuring (or committing to insure) the perfection, enforceability
and first priority of the Liens created under the Mortgage with
respect to each of such
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Mortgaged Facilities, in such amounts as the Agent shall request,
subject only to the standard exception therein with respect to
any state of facts which would be disclosed by an accurate survey
or personal inspection and to other Permitted Encumbrances with
respect to such Mortgaged Facility, containing only those
endorsements or affirmative assurances which are available
without additional cost;
(r) a certificate signed by a Financial Officer of each
of the Obligors to the effect set forth in Sections 3.02(e) and
(f) and Sections 3.01(b) and (e);
(s) each opinion required to be delivered by any Person
pursuant to the Related Transaction Documents, with a letter from
each Person delivering any such opinion authorizing reliance
thereon by the Agents and the Banks; and
(t) all documents the Agent may reasonably request
relating to the existence of each Obligor, the corporate
authority for and the validity of the Financing Documents and the
Related Transaction Documents and any other matters relevant
hereto, all in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Obligors, the Banks, the LC
Issuing Banks, the Administrative Agent and the Collateral Agent
of the Closing Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.02. Credit Events. The obligation (i) of each
Bank to make a Loan on the occasion of each Borrowing, (ii) of
each LC Issuing Bank to issue a Letter of Credit hereunder upon
request therefor by the Borrower and of each Bank to purchase a
participation therein and (iii) of each LC Issuing Bank to extend
the expiry date of a Letter of Credit issued by it hereunder upon
request therefor by the Borrower, are each subject to the
satisfaction of such of the following conditions as shall not
have been expressly waived by the Required Banks:
(a) the fact that the Amendment No. 4 Effective Date
shall have occurred on or before November 15, 1994;
(b) receipt by the Administrative Agent of the notice
required by Section 2.02(a), 2.06(d) or 2.06(e), as the case may
be;
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(c) in the case of the issuance of an IRB Letter of
Credit, the fact that, after giving effect thereto, the aggregate
original face amount of all IRB Letters of Credit issued
hereunder shall not exceed the aggregate amount of the IRB
Backstop Commitments;
(d) in the case of the issuance of a Revolver Letter of
Credit, the fact that, after giving effect thereto, the aggregate
amount of the LC Liabilities in respect of all Revolver Letters
of Credit shall not exceed $20,000,000;
(e) the fact that, immediately before and after such
Credit Event, no Default shall have occurred and be continuing;
(f) the fact that each of the representations and
warranties made by the Obligors in or pursuant to the Financing
Documents (except, in the case of any Credit Event after the
Closing Date, the representations and warranties set forth in
Sections 4.11, 4.18, 4.20(c), 4.21 and 4.22) shall be true on and
as of the date of such Credit Event; and
(g) receipt by the Agent and the Administrative Agent of
such certificates and opinions of counsel as the Required Banks
may reasonably request to confirm the satisfaction of the
foregoing conditions.
Each Credit Event under this Agreement shall be deemed to be a
representation and warranty by the Obligors on the date of such
Credit Event as to the facts specified in Sections 3.02(e) and
(f).
SECTION 3.03. Effectiveness of Amendment No. 4.
Amendment No. 4 shall become effective upon receipt by the Agent
of the following documents, each dated the Amendment No. 4
Effective Date unless otherwise indicated, and upon satisfaction
of the other conditions specified below:
(a) counterparts of Amendment No. 4 signed by each of
the parties listed on the signature pages thereof (or, in the
case of any such party as to which an executed counterpart shall
not have been received, receipt by the Agent in form satisfactory
to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart thereof by such party);
(b) the fact that the Agent shall not have notified the
Borrower of a determination by the Required Banks (which
determination shall be made in good faith) that the
representation in Section 4.04(f), as amended by Amendment No. 4,
is not true at and as of the Amendment No. 4 Effective Date;
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(c) the fact that, with respect to each Mortgage that
sets forth the Final Maturity Date, a duly executed and
acknowledged amendment (a "Mortgage Amendment"), setting forth
the Final Maturity Date as extended by Amendment No. 4, shall
have been delivered to the Collateral Agent;
(d) evidence satisfactory to the Agent that arrangements
satisfactory to it shall have been made for recording the
Mortgage Amendments on or promptly after the Amendment No. 4
Effective Date;
(e) the fact that all reasonable fees, expenses and
other amounts payable on or before the Amendment No. 4 Effective
Date to the Agents and the Banks in connection with this
Agreement shall have been paid in full;
(f) an opinion of Richard P. Adcock, the General Counsel
of the Borrower and the Guarantor, substantially to the effect
set forth in Exhibit I hereto;
(g) an opinion of Davis Polk & Wardwell, special counsel
for the Agent and the Administrative Agent, substantially to the
effect set forth in Exhibit J hereto;
(h) a certificate signed by a Financial Officer of each
of the Obligors to the effect (after giving effect to Amendment
No. 4) set forth in Sections 3.02(e) and (f); and
(i) all documents the Agent may reasonably request
relating to the existence of each Obligor, the corporate
authority for and the validity of Amendment No. 4 and any other
matters relevant hereto, all in form and substance satisfactory
to the Agent.
The Agent shall promptly notify the Obligors, the Banks, the LC
Issuing Banks, the Administrative Agent and the Collateral Agent
of the Amendment No. 4 Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantor jointly and severally
represent and warrant to the Agents, the Banks and the LC Issuing
Banks that:
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SECTION 4.01. Corporate Existence and Power. The
Guarantor and each of its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate
powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and as proposed to be conducted.
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention. The execution and delivery by each Obligor of
each of the Financing Documents to which it is a party and the
performance by such Obligor of its obligations thereunder are
within the corporate power of such Obligor, have been duly
authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental body,
agency or official (except such as shall have been made at or
prior to the time required by the Financing Documents and shall
be in full force and effect on and after the date when made to
the extent required by the Financing Documents) and do not
contravene, or constitute a default under, any provision of
applicable law or regulation or of the Charter Documents of such
Obligor or any of its Subsidiaries or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such
Obligor or any of its Subsidiaries or result in or require the
imposition of any Lien (other than the Liens created by the
Collateral Documents) on any asset of such Obligor or any of its
Subsidiaries.
SECTION 4.03. Binding Effect; Liens of Collateral
Documents. This Agreement constitutes a valid and binding
agreement of each Obligor, and the other Financing Documents,
when executed and delivered as contemplated by this Agreement,
will constitute valid and binding obligations of each Obligor
that is a party thereto, in each case enforceable in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and by general
equitable principles. The Collateral Documents create valid
security interests in, and first mortgage Liens on, the
Collateral purported to be covered thereby, which security
interests and mortgage Liens are and will remain perfected
security interests and duly recorded mortgage Liens, prior to all
other Liens except Liens permitted by the Collateral Documents.
SECTION 4.04. Financial Information. (a) The
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as of May 31, 1994 and the related consolidated
statements of operations, cash flows and changes in stockholders'
equity for the Fiscal Year then ended, reported on by KPMG Peat
Marwick and set forth in the Guarantor's 1994 Form 10-K, a copy
of which has been delivered to each of the Banks, fairly present,
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in conformity with generally accepted accounting principles, the
consolidated financial position of the Guarantor and its
Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such Fiscal Year.
(b) The unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as of May 31, 1994 and the related
unaudited consolidated statements of operations, cash flows and
changes in stockholders' equity for the Fiscal Year then ended
(together with the footnotes thereto), copies of which have been
delivered to each of the Banks, fairly present, on a basis
consistent with the financial statements referred to in Section
4.04(a), the consolidated financial position of the Borrower and
its Subsidiaries as of such date and their consolidated results
of operations and cash flows for such Fiscal Year.
(c) The unaudited consolidated balance sheet of Medisave
and its Subsidiaries as of May 31, 1994 and the related unaudited
consolidated statements of operations, cash flows and changes in
stockholders' equity for the Fiscal Year then ended, copies of
which have been delivered to each of the Banks, fairly present,
on a basis consistent with the financial statements referred to
in Section 4.04(a), the consolidated financial position of
Medisave and its Subsidiaries as of such date and their
consolidated results of operations and cash flows for such Fiscal
Year.
(d) The unaudited balance sheets of Northwest Health
Care, Inc., Pasatiempo Development Corp. and Hillhaven Properties
Ltd. as of May 31, 1994 and the related unaudited statements of
operations for the Fiscal Year then ended, copies of which have
been delivered to each of the Banks, fairly present, on a basis
consistent with the financial statements referred to in Section
4.04(a), the financial position of each such Subsidiary of the
Borrower as of such date and its results of operations for such
Fiscal Year.
(e) The unaudited consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as of August 31, 1994
and the related unaudited consolidated statements of operations,
cash flows and changes in stockholders' equity for the three
months then ended, set forth in the Guarantor's Form 10-Q for the
quarter then ended, a copy of which has been delivered to each of
the Banks, fairly present, on a basis consistent with the
financial statements referred to in paragraph (a) of this
Section, the consolidated financial position of the Guarantor and
its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such three
month period (subject to normal year-end adjustments).
(f) Since August 31, 1994 no event has occurred and no
condition has come into existence which has had, or is reasonably
likely to have, a Material Adverse Effect.
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SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower
or the Guarantor threatened against or affecting, the Guarantor
or any Subsidiary before any court or arbitrator or any
governmental body, agency or official (i) in which there is a
reasonable possibility of an adverse decision which could have a
Material Adverse Effect or (ii) which in any manner questions the
validity of any Financing Document or Related Transaction
Document.
SECTION 4.06. Compliance with ERISA. Each member of the
ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.07. Taxes. The Guarantor and its Subsidiaries
have filed all United States Federal income tax returns that are
required to be filed by them and have paid all taxes due pursuant
to such returns or pursuant to any assessment received by any of
them, except such taxes, if any, as are being contested in good
faith and as to which reserves have been provided. The charges,
accruals and reserves on the books of the Guarantor and its
Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Guarantor, adequate.
SECTION 4.08. Compliance with Laws. The Guarantor and
its Subsidiaries are in compliance in all material respects with
all applicable laws, rules and regulations, other than such laws,
rules or regulations (i) the validity or applicability of which
the Guarantor or such Subsidiary is contesting in good faith or
(ii) the failure to comply with which could not, in the
aggregate, have a Material Adverse Effect.
SECTION 4.09. Investment Company Act. Neither the
Guarantor nor any of its Subsidiaries is an "investment company",
or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
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SECTION 4.10. Public Utility Holding Company Act.
Neither the Guarantor nor any of its Subsidiaries is a "holding
company", or an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Outstanding Debt. Schedule III hereto
lists, as of August 31, 1994, the aggregate principal or face
amount of all outstanding Debt of the Guarantor and its
Subsidiaries (excluding Debt identified in paragraph (c) or (d)
of Section 5.11) and the scheduled annual amortization of such
Debt through the Final Maturity Date. The aggregate principal or
face amount of all Debt incurred by the Guarantor and its
Subsidiaries between August 31, 1994 and the Amendment No. 4
Effective Date of the types identified in Schedule III hereto
does not exceed $15,000,000.
SECTION 4.12. No Defaults. Neither the Guarantor nor
any of its Subsidiaries is in violation of, or in default under,
any term or provision of any charter, by-law, mortgage,
indenture, agreement, instrument, statute, rule, regulation,
judgment, decree, order, writ or injunction applicable to it,
except for such violations or defaults as could not, in the
aggregate, have a Material Adverse Effect.
SECTION 4.13. Ownership of Property, Liens. The
Guarantor and its Subsidiaries have good and marketable title to
and are in lawful possession of, or have valid leasehold
interests in, or have the right to use pursuant to valid and
enforceable agreements or arrangements, all of their respective
properties and other assets (real or personal, tangible,
intangible or mixed), except where the failure to have or possess
the same with respect to such properties or other assets could
not, in the aggregate, have a Material Adverse Effect. None of
such properties or other assets is subject to any Lien except
Permitted Liens. All of such properties and other assets are in
good working order and condition, ordinary wear and tear
excepted.
SECTION 4.14. Intellectual Property. The Guarantor and
each of its Subsidiaries owns or possesses or holds under valid
non-cancellable licenses all patents, trademarks, service marks,
tradenames, copyrights, licenses and other intellectual property
rights that are necessary for the operation of their respective
properties and businesses, and neither the Guarantor nor any of
its Subsidiaries is in violation of any provision thereof in any
respect that could, in the aggregate, have a Material Adverse
Effect. The Guarantor and its Subsidiaries conduct their
business without infringement or claim of infringement of any
material license, patent, trademark, trade name, service mark,
copyright, trade secret or any other intellectual property right
of others and there is no infringement or claim of infringement
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by others of any license, patent, trademark, trade name, service
mark, copyright, trade secret or other intellectual property
right of the Guarantor and its Subsidiaries that could, in the
aggregate, have a Material Adverse Effect.
SECTION 4.15. No Burdensome Restrictions. No contract,
lease, agreement or other instrument to which the Guarantor or
any of its Subsidiaries is a party or by which any of its
property is bound or affected and no corporate restriction,
judgment, decree or order has had or is reasonably expected to
have a Material Adverse Effect.
SECTION 4.16. Labor Matters. There are no strikes or
other labor disputes pending or, to the best knowledge of the
Borrower and the Guarantor, threatened, against the Guarantor or
any of its Subsidiaries. Hours worked and payments made to the
employees of the Guarantor and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable
law dealing with such matters, except for such violations as
could not, in the aggregate, have a Material Adverse Effect. All
payments due from the Guarantor or any of its Subsidiaries, or
for which any claim may be made against any of them, on account
of wages and employee health and welfare insurance and other
benefits have been paid or accrued, as the case may be, as a
liability on their books, except where the failure to do so could
not, in the aggregate, have a Material Adverse Effect.
SECTION 4.17. Full Disclosure. All information
heretofore furnished by the Guarantor or any of its Subsidiaries
to the Agent for inclusion in the Information Memorandum or to
any of the Agents or any Bank for purposes of or in connection
with this Agreement or any transaction contemplated hereby was,
and all such information hereafter furnished by the Guarantor or
any of its Subsidiaries to any of the Agents or any Bank will be,
true and accurate in every material respect or based on
reasonable estimates on the date as of which such information is
or was stated or certified. The Borrower and the Guarantor have
disclosed to the Banks in writing any and all facts which are
known to them and which have had or could reasonably be expected
to have a Material Adverse Effect.
SECTION 4.18. Representations in Other Documents True
and Correct. Each of the representations and warranties of the
Guarantor and its Subsidiaries contained in the Related
Transaction Documents is true and correct.
SECTION 4.19. Use of Proceeds and Letters of Credit.
The proceeds of the Term Loans made on the Closing Date have been
used (i) to repay a portion of the outstanding Debt of the
Borrower and its Subsidiaries, (ii) to pay a portion of the
purchase price of the Leased Facilities, (iii) to fund a loan
from the Borrower to PIP Funding the proceeds of which were used
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by PIP Funding to repay outstanding Debt and (iv) to pay fees and
expenses in connection therewith. The proceeds of the Term Loans
made after the Amendment No. 4 Effective Date will be used to
repay a portion of the outstanding Debt of the Borrower and its
Subsidiaries and for general corporate purposes. The proceeds of
the Revolver Loans, and the Revolver Letters of Credit, will be
used for working capital and general corporate purposes and, to
the extent permitted by Sections 5.11(k) and 5.21(iv), may also
be used to repay outstanding Debt of the Borrower and its
Subsidiaries. The IRB Letters of Credit will be used to provide
credit support for Designated IRB Debt. None of such proceeds or
Letters of Credit will be used in violation of any applicable law
or regulation and, without limiting the generality of the
foregoing, no use of any such proceeds or Letters of Credit for
general corporate purposes will include any use thereof, directly
or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the
meaning of Regulation U.
SECTION 4.20. Environmental Matters. (a) The Guarantor
and its Subsidiaries have from time to time reviewed the effect
of Environmental Laws on the business, operations and properties
of the Guarantor and its Subsidiaries, in the course of which
they have identified and evaluated associated liabilities and
costs. On the basis of such reviews, the Obligors have
reasonably concluded that such associated liabilities and costs
are unlikely to have a Material Adverse Effect.
(b) Except to the extent that the Environmental
Liabilities of the Guarantor and its Subsidiaries, taken as a
whole, that relate to or could result from the matters referred
to in this Section 4.20(b) would not exceed $1,000,000 for any
one occurrence, no material notice, notification, demand, request
for information, citation, summons, complaint or order with
respect to Hazardous Substances or any violation of Environmental
Laws is in existence or, to the knowledge of the Obligors,
proposed, threatened or anticipated with respect to or in
connection with the operation of any properties now or previously
owned, leased or operated by the Guarantor or any of its
Subsidiaries.
(c) As of the Amendment No. 4 Effective Date, except to
the extent that the Environmental Liabilities of the Guarantor
and its Subsidiaries, taken as a whole, that relate to or could
result from the matters referred to in this Section 4.20(c) with
respect to any Mortgaged Facility would not exceed $250,000 for
any one Mortgaged Facility:
(i) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been assessed
and no investigation or review is pending or, to the
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knowledge of the Obligors, threatened by any governmental or
other entity with respect to any (A) alleged violation by the
Guarantor or any of its Subsidiaries of any Environmental Law
involving such Mortgaged Facility, (B) alleged failure by the
Guarantor or any of its Subsidiaries to have any environmental
permit, certificate, license, approval, registration or
authorization required in connection with the conduct of its
business at such Mortgaged Facility, (C) Regulated Activity
conducted at such Mortgaged Facility or (D) Release of
Hazardous Substances at or in connection with such Mortgaged
Facility;
(ii) other than generation of Hazardous Substances in
compliance with all applicable Environmental Laws, no Regulated
Activity has occurred at or on any Mortgaged Facility;
(iii) no polychlorinated biphenyls, radioactive material,
urea formaldehyde, lead, asbestos, asbestos-containing material
or underground storage tank (active or abandoned) is or has been
present at any Mortgaged Facility;
(iv) no Hazardous Substance has been Released (and no
written notification of such Release has been filed) or is
present (whether or not in a reportable or threshold planning
quantity) at, on or under any Mortgaged Facility;
(v) no Mortgaged Facility is listed or, to the knowledge
of the Obligors, proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or foreign list of sites
requiring investigation on clean-up; and
(vi) there are no Liens under Environmental Laws on any
Mortgaged Facility, no government actions have been taken or are
in process which could subject any Mortgaged Property to such
Liens and neither the Guarantor nor any of its Subsidiaries would
be required to place any notice or restriction relating to
Hazardous Substances in any deed to any Mortgaged Facility.
(d) Since September 1, 1990, no environmental
investigation, study, audit, test, review or other analysis has
been conducted of which the Obligors have knowledge in relation
to any Mortgaged Facility which has not been delivered to the
Banks.
(e) For purposes of this Section 4.20, the terms
"Guarantor" and "Subsidiary" include any entity which is, in
whole or in part, a predecessor of the Guarantor or any of its
Subsidiaries.
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SECTION 4.21. Solvency, Etc. (a) As of the Closing
Date and after giving effect to the transactions contemplated by
the Financing Documents and the Related Transaction Documents:
(i) the aggregate value of the assets of each Obligor exceeded
its liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities), (ii) each Obligor had sufficient
cash flow to enable it to pay its debts as they mature and (iii)
no Obligor had unreasonably small capital.
(b) As of the Amendment No. 4 Effective Date and after
giving effect to the transactions contemplated by Amendment No.
4: (i) the aggregate value of the assets of each Obligor will
exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (ii) each Obligor will
have sufficient cash flow to enable it to pay its debts as they
mature and (iii) no Obligor will have unreasonably small capital.
SECTION 4.22. Certain Matters at Amendment No. 4
Effective Date. At and as of the Amendment No. 4 Effective Date:
(a) The Guarantor has no Subsidiaries except those
listed in Schedule VII hereto.
(b) Neither the Guarantor nor the Borrower has any
Investment in any Person which is not a Subsidiary, other than
(i) Temporary Cash Investments, (ii) Investments in Non-
Consolidated Partnerships, (iii) Investments listed in Schedule
VII hereto and (iv) other Investments not exceeding $1,000,000 in
any one case.
(c) All of the authorized capital stock of the Borrower
is owned beneficially and of record by the Guarantor, subject to
no Lien. There are no other Equity Securities of the Borrower.
ARTICLE V
COVENANTS
The Borrower and the Guarantor jointly and severally
agree that, so long as any Bank has any Commitment or Outstanding
LC Exposure hereunder or any amount payable under any Note
remains unpaid:
SECTION 5.01. Information. The Obligors will deliver to
each of the Banks:
(a) as soon as available and in any event within 90 days
after the end of each Fiscal Year, (i) a consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries as of
the end of such Fiscal Year, and the related consolidated
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statements of operations, cash flows and changes in stockholders'
equity for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by KPMG Peat Marwick or other independent public
accountants of nationally recognized standing, which report (x)
shall state that such financial statements present fairly, in all
material respects, the consolidated financial position of the
Guarantor and its Consolidated Subsidiaries as of the date of
such financial statements and the consolidated results of their
operations and cash flows for the period covered by such
financial statements in conformity with generally accepted
accounting principles and (y) shall not contain any
Qualification, (ii) an unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such Fiscal
Year and the related unaudited consolidated statements of
operations, cash flows and changes in stockholders' equity for
such Fiscal Year (together with the footnotes thereto), setting
forth in each case in comparative form (commencing with the
delivery of financial statements for the Fiscal Year ending May
31, 1994) the figures for the previous Fiscal Year, (iii) an
unaudited consolidated balance sheet of Medisave and its
Subsidiaries as of the end of such Fiscal Year and the related
unaudited consolidated statements of operations, cash flows and
changes in stockholders' equity for such Fiscal Year (together
with the footnotes thereto), setting forth in each case in
comparative form (commencing with the delivery of financial
statements for the Fiscal Year ending May 31, 1994) the figures
for the previous Fiscal Year, (iv) unaudited balance sheets of
Northwest Health Care, Inc., Pasatiempo Development Corp. and
Hillhaven Properties Ltd. as of the end of such Fiscal Year and
the related unaudited statements of operations for such Fiscal
Year, and (v) a certificate of a Financial Officer as to fairness
of presentation and consistency of such financial statements;
(b) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year, (i) an unaudited consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries and the related
consolidated statements of operations for such Fiscal Quarter and
for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter and of cash flows for the portion of the Fiscal
Year ended at the end of such Fiscal Quarter, setting forth in
each case in comparative form the unaudited consolidated
statements of operations and cash flows for the corresponding
Fiscal Quarter and the corresponding portion of the previous
Fiscal Year, all prepared in accordance with Rule 10-01 of
Regulation S-X of the General Rules and Regulations under the
Securities Act of 1933, or any successor rule that sets forth the
manner in which interim financial statements
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shall be prepared, (ii) an unaudited consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of such Fiscal
Quarter and the related unaudited consolidated statements of
operations for such Fiscal Quarter and for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter and of cash
flows for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in comparative form
(commencing with the delivery of financial statements for the
first Fiscal Quarter of the Fiscal Year ending May 31, 1995) the
unaudited consolidated statements of operations and cash flows
for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, (iii) an unaudited
consolidated balance sheet of Medisave and its Subsidiaries as of
the end of such Fiscal Quarter and the related unaudited
consolidated statements of operations for such Fiscal Quarter and
for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter and of cash flows for the portion of the Fiscal
Year ended at the end of such Fiscal Quarter, setting forth in
each case in comparative form (commencing with the delivery of
financial statements for the first Fiscal Quarter of the Fiscal
Year ending May 31, 1995) the unaudited consolidated statements
of operations and cash flows for the corresponding Fiscal Quarter
and the corresponding portion of the previous Fiscal Year, (iv)
unaudited balance sheets of Northwest Health Care, Inc.,
Pasatiempo Development Corp. and Hillhaven Properties Ltd. as of
the end of such Fiscal Quarter and the related unaudited
statements of operations for such Fiscal Quarter and for the
portion of the Fiscal Year ended at the end of such Fiscal
Quarter, setting forth in each case in comparative form
(commencing with the delivery of financial statements for the
first Fiscal Quarter of the Fiscal Year ending May 31, 1995) the
unaudited statement of operations for the corresponding Fiscal
Quarter and the corresponding portion of the previous Fiscal
Year, and (v) a certificate (subject to normal year-end audit
adjustments) of a Financial Officer as to fairness of
presentation and consistency of such financial statements;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.01(a) and (b), a certificate
of a Financial Officer, substantially in the form of Exhibit H
hereto, (i) setting forth in reasonable detail such calculations
as are required to establish whether the Obligors were in
compliance with the requirements of Sections 5.11 through 5.16,
and of Sections 5.22 through 5.25, on the date of such financial
statements, (ii) stating whether any Default exists on the date
of such certificate and, if any Default then exists, setting
forth the details thereof and the action that the Obligors are
taking or propose to take with respect thereto, (iii) stating
whether, since the date of the most recent financial statements
delivered pursuant to Section
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5.01(a) or (b), an event has occurred or condition arisen which
has had a Material Adverse Effect which is not reflected in the
financial statements delivered simultaneously therewith and, if
so, the nature of such Material Adverse Effect, and (iv) stating
whether, since the date of the most recent financial statements
previously delivered pursuant to Section 5.01(a) or (b), there
has been a change in the generally accepted accounting principles
applied in preparing the financial statements then being
delivered from those applied in preparing the most recent audited
financial statements previously so delivered which is material to
the financial statements then being delivered;
(d) simultaneously with the delivery of each set of
annual financial statements referred to in Section 5.01(a)(i), a
letter from the firm of independent public accountants that
reported on such statements stating (i) whether anything has come
to their attention in the course of their normal audit procedures
to cause them to believe that any Default existed on the date of
such statements and (ii) whether in their opinion the
calculations of compliance with the requirements of Sections 5.22
through 5.25 set forth in the Financial Officer's certificate
delivered simultaneously therewith pursuant to Section 5.01(c),
to the extent derived from data contained in the accounting
records of the Guarantor and its Consolidated Subsidiaries, have
been determined in accordance with the relevant provisions of
this Agreement;
(e) within five Domestic Business Days after any
Executive Officer obtains knowledge of any Default, if such
Default is then continuing, a certificate of a Financial Officer
setting forth the details thereof and the action that the
Obligors are taking or propose to take with respect thereto;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
annual, quarterly or current reports that the Guarantor or any of
its Subsidiaries shall have filed with the Securities and
Exchange Commission;
(g) promptly after any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that
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any Multiemployer Plan is in reorganization, is insolvent or has
been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of a Financial Officer
setting forth details as to such occurrence and the action, if
any, which the Guarantor or applicable member of the ERISA Group
is required or proposes to take;
(h) as soon as reasonably practicable after any
Executive Officer obtains knowledge of the commencement of an
action, suit or proceeding against the Guarantor or any of its
Subsidiaries before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable
possibility of an adverse decision which could have a Material
Adverse Effect or which in any manner questions the validity of
any Financing Document or Related Transaction Document, a
certificate of a Financial Officer setting forth the nature of
such action, suit or proceeding and such additional information
as may be reasonably requested by any Bank;
(i) promptly upon the receipt by the Guarantor from its
independent public accountants of any management letter which
indicates a material weakness in the reporting practices of the
Guarantor or any of its Subsidiaries, a description of such
material weakness and any action being taken with respect
thereto;
(j) promptly upon their becoming available, copies of
(i) all financial statements, reports, notices and proxy
statements sent or made available generally by the Guarantor to
its security holders, and (ii) all press releases and other
statements made available generally by the Guarantor or any of
its Subsidiaries to the public concerning material developments
in the business of the Guarantor and its Subsidiaries;
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(k) promptly upon receipt or filing thereof, copies of
any material reports or notices related to taxes and any other
material reports or notices received by the Guarantor or any of
its Subsidiaries from, or filed by the Guarantor or any of its
Subsidiaries with, any Federal, state or local governmental
agency or body regulating the activities of the Guarantor or any
of its Subsidiaries;
(l) (i) promptly after the Board of Directors of the
Guarantor shall have approved the same, copies of the Guarantor's
annual operating and capital expenditure budgets and cash flow
forecast for each Fiscal Year and (ii) promptly upon any material
revision thereof, copies of such budget or cash flow forecast as
so revised;
(m) prompt notice of the receipt of any complaint,
order, citation, notice or other written communication from any
Person with respect to (i) the existence or alleged existence of
a violation of any applicable Environmental Law at or on, or of
any Environmental Liability arising with respect to, any
Mortgaged Facility, (ii) any Release on any Mortgaged Facility or
any part thereof in a quantity that is reportable under any
applicable Environmental Law, and (iii) any pending or threatened
proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law with
respect to any Mortgaged Facility, in each case which could
reasonably be expected to result in liability or expenses in
excess of $250,000;
(n) prompt notice of (i) the receipt by the Guarantor of
notice that any holder of Permitted Preferred Stock elects to
require the Guarantor to redeem such Permitted Preferred Stock
following the occurrence of a "Designated Event" with respect
thereto, and the earliest date upon which the Guarantor is or may
be required to redeem such Permitted Preferred Stock, and
(ii) the receipt by the Guarantor of notice that any holder of a
Convertible Subordinated Debenture or a Subordinated Note elects
to require the Guarantor to redeem such Debt, and the earliest
date upon which the Guarantor is or may be required to redeem
such Debt; and
(o) from time to time such additional information
regarding the financial position, results of operations or
business of the Guarantor or any of its Subsidiaries as any Bank
may reasonably request through the Agent.
SECTION 5.02. Payment of Obligations. The Guarantor
will, and will cause each of its Subsidiaries to, pay and
discharge, as the same shall become due and payable, (i) all
material claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, in any such
case, if unpaid, might by law give rise to a Lien upon any of its
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property or assets, and (ii) all material taxes, assessments and
governmental charges or levies upon it or its property or assets,
except where any of the items in clause (i) or (ii) above may be
contested in good faith by appropriate proceedings, and the
Guarantor or such Subsidiary, as the case may be, shall have set
aside on its books, in accordance with generally accepted
accounting principles, appropriate reserves, if any, for the
accrual of any such items.
SECTION 5.03. Maintenance of Property. The Guarantor
will keep, and will cause each of its Subsidiaries to keep, all
property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
SECTION 5.04. Insurance. The Guarantor will maintain,
and will cause each of its Subsidiaries to maintain, insurance in
responsible companies in such amounts and against such risks as
is usually carried by owners of similar businesses and properties
in the same general areas in which the Guarantor and its
Subsidiaries operate, provided that in any event the Guarantor
will maintain, and will cause each of its Subsidiaries to
maintain, (i) physical damage insurance on all real and personal
property on an all risks basis (including the perils of flood and
quake, so long as such insurance is available on a commercially
reasonable basis), covering the repair and replacement cost of
all such property and consequential loss coverage for business
interruption and extra expense, covering such risks, for such
amounts not less than those, and with deductible amounts not
greater than those, listed in Part A of Schedule X hereto, (ii)
professional and general liability insurance (including
products/completed operations liability coverage) in amounts not
less than those listed in part B of Schedule X hereto and (iii)
such other insurance coverage in such amounts and with respect to
such risks as the Required Banks may reasonably request. The
Guarantor and its Subsidiaries may use a captive insurance
company Subsidiary of the Guarantor to insure their professional
and general liability exposure, provided that excess insurance
and reinsurance are carried in such amounts as are customary with
owners of similar businesses, and said excess insurance and
reinsurance are placed with companies having not less than an
A.M. Best rating "A" or "A- XI" or with other insurers of equal
or better quality. The foregoing shall not prohibit the
Guarantor from maintaining insurance coverage with X.L. Insurance
Company, Ltd., in amounts, and with deductibles, not exceeding
those in effect on the Closing Date and covering such risks as
are covered by X.L. Insurance Company, Ltd. under policies in
effect on the Closing Date. The Guarantor will deliver to the
Banks (A) on the Closing Date a certificate from the Guarantor's
insurance broker dated such date showing the amount of coverage
as of such date, and certifying that, in the opinion of such
broker, such amounts are adequate, reasonable and customary for
companies of established repute engaged in the same or a similar
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business, (B) within five Domestic Business Days of each
anniversary of the Closing Date, a certificate from the
Guarantor's insurance broker dated the date of delivery showing
the amount of coverage as of such date, (C) upon request of any
Bank through the Agent from time to time full information as to
the insurance carried, (D) within five days of receipt of notice
from any insurer a copy of any notice of cancellation, nonrenewal
or material change in coverage from that existing on September 1,
1993 and (E) forthwith, notice of any cancellation, nonrenewal or
material reduction of coverage by the Guarantor or any of its
Subsidiaries.
SECTION 5.05. Compliance with Law. The Guarantor will
comply, and will cause each of its Subsidiaries to comply, in all
material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including Environmental Laws and ERISA and the rules and
regulations thereunder), except where (i) the necessity of
compliance therewith is contested in good faith by appropriate
proceedings or (ii) failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records.
The Guarantor will keep, and will cause each of its Subsidiaries
to keep, proper books of record and account in which full, true
and correct entries in conformity with generally accepted
accounting principles shall be made of all dealings and
transactions in relation to its business and activities. The
Guarantor, upon reasonable request by any Bank, will permit, and
will cause each of its Subsidiaries to permit, representatives of
such Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts and
copies from any of their respective books and records and to
discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public
accountants, all at such reasonable times and as often as may
reasonably be desired.
SECTION 5.07. Maintenance of Existence, Rights, Etc.
The Guarantor will preserve, renew and keep in full force and
effect, and will cause each of its Subsidiaries to preserve,
renew and keep in full force and effect, their respective
corporate existences and their respective rights, privileges,
licenses and franchises necessary or desirable in the normal
conduct of business; provided that nothing in this Section 5.07
shall prohibit (i) any merger or consolidation permitted by
Section 5.13(a) or (ii) the termination of the corporate
existence of any Subsidiary of the Guarantor if (A) the Guarantor
determines that such termination is in the best interest of the
Guarantor and (B) such termination is not adverse in any material
respect to the Banks.
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SECTION 5.08. Lines of Business. Neither the Guarantor
nor any of its Subsidiaries will engage to any substantial extent
in any line or lines of business activity other than those in
which they were engaged on May 31, 1994, as described in the
Guarantor's 1994 Form 10-K, and other substantially similar lines
of business activity.
SECTION 5.09. Fiscal Year. The Guarantor will not
change its Fiscal Year from the twelve months ending May 31.
SECTION 5.10. Maintenance of Equity Securities of
Subsidiaries. Each of the Guarantor and the Borrower will at all
times maintain direct or indirect ownership of 100% of the Equity
Securities of each of its Subsidiaries, except for (i)
Subsidiaries existing on the Effective Date the Equity Securities
of which are not directly or indirectly owned in their entirety
by the Guarantor or the Borrower on the Effective Date and (ii)
any Subsidiary the entire Investment in which is disposed of by
the Guarantor or the Borrower in accordance with Section 5.13.
SECTION 5.11. Limitation on Debt. The Guarantor will
not, and will not permit any of its Subsidiaries to, incur or at
any time be liable with respect to any Debt, except:
(a) Debt outstanding under this Agreement;
(b) Debt outstanding on the Amendment No. 4 Effective
Date which either (i) is identified in Schedule III hereto or
(ii) is of a type identified in Schedule III hereto and was
incurred after August 31, 1994 and before the Amendment No. 4
Effective Date, provided that the aggregate principal or face
amount of all such Debt described in this clause (ii) does not
exceed $15,000,000;
(c) Subordinated Notes and Convertible Subordinated
Debentures outstanding on the Closing Date;
(d) PIP Convertible Debentures outstanding on the
Closing Date;
(e) Debt of Hillhaven Funding in respect of commercial
paper and/or bank loans in aggregate principal amount at any time
outstanding not to exceed $40,000,000;
(f) Debt arising in respect of letters of credit issued
to provide credit support for industrial revenue bonds or similar
instruments which constitute Debt of the Guarantor or any of its
Consolidated Subsidiaries, provided that such industrial revenue
bonds or similar instruments are otherwise permitted under this
Section 5.11;
(g) Debt secured by a Lien permitted pursuant to
paragraphs (c) through (f) of Section 5.12;
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(h) Debt of the partnership that currently owns the San
Marcos, California retirement housing facility which is assumed
or Guaranteed by the Borrower in connection with any acquisition
by the Borrower after the Closing Date of additional partnership
interests in such partnership, provided that, immediately after
giving effect to such acquisition, the aggregate outstanding
principal amount of all Debt of such partnership for which the
Borrower is directly or contingently liable does not exceed
$13,500,000;
(i) Debt of the partnership that owns the Carrollwood
Care Center in Tampa, Florida which is assumed or Guaranteed by
the Borrower in connection with any acquisition by the Borrower
after the Closing Date of additional partnership interests in
such partnership, provided that, immediately after giving effect
to such acquisition, the aggregate outstanding principal amount
of all Debt of such partnership for which the Borrower is
directly or contingently liable does not exceed $3,200,000; and
Debt of the partnership that owns the Bay Point Nursing Pavilion
in St. Petersburg, Florida which is assumed or Guaranteed by the
Borrower in connection with any acquisition by the Borrower after
the Closing Date of the ownership interest in such health care
facility, provided that, immediately after giving effect to such
acquisition, the aggregate outstanding principal amount of all
Debt relating to such facility for which the Borrower is directly
or contingently liable does not exceed $3,500,000;
(j) Permitted Intercompany Debt;
(k) Debt incurred by the Guarantor or any of its
Subsidiaries after the Closing Date in exchange for or to repay,
prepay, repurchase, redeem, defease, retire or refinance
("refinance") (A) any Debt of the Guarantor or such Subsidiary,
as the case may be, permitted by paragraph (b), (h) or (i) above
or this paragraph (k) or (B) subordinated Debt of the Guarantor
outstanding on August 31, 1994 not exceeding $20,000,000 in
aggregate principal amount; provided that (i) the principal
amount of the Debt so incurred shall not exceed the unpaid
principal amount of the Debt so exchanged or refinanced, (ii) the
Debt so incurred has an effective carrying cost which is less
than the carrying cost of the Debt so exchanged or refinanced and
(iii) the aggregate principal amount of the Debt so incurred that
is required to be repaid, on a cumulative basis, through any date
(a "date of determination") prior to the Final Maturity Date
shall not exceed the aggregate principal amount of the Debt so
exchanged or refinanced that would have been required to have
been repaid, on a cumulative basis, after the date of the
relevant
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exchange or refinancing and on or before the same date of
determination and provided further that the subordinated Debt
referred to in clause (B) above may be refinanced with Debt
described in the first proviso to this clause (k) or with the
proceeds of Loans under this Agreement or with any combination of
the foregoing;
(l) Guarantees by the Borrower (but not by any
Subsidiary of the Borrower) of Debt of other Persons in an
aggregate principal amount at any time outstanding not to exceed
$2,000,000;
(m) Debt issued entirely for cash; provided that neither
the Guarantor nor any of its Subsidiaries shall be obligated to
repay any principal thereof or to redeem, retire, purchase or
otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for the redemption,
retirement, purchase or other acquisition of any portion thereof
prior to one year after the Final Maturity Date; and
(n) Debt evidenced by bonds issued by the Guarantor or
any of its Subsidiaries to tenants of residential units at New
Pond Village in Walpole, Massachusetts or The Greens at Hanover
in Nashua, New Hampshire evidencing the obligation to repay at
the end of their tenancies amounts paid by them at the beginning
of their tenancies, provided that the aggregate outstanding
principal amount of all such bonds (including any such bonds
outstanding on the Closing Date and referred to in paragraph (b)
above) does not exceed $45,000,000.
SECTION 5.12. Negative Pledge. The Guarantor will not,
and will not permit any of its Subsidiaries to, create, assume or
suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) Liens existing on the Effective Date securing Debt
outstanding on the Effective Date and identified in Schedule III
hereto;
(b) Liens created pursuant to the Collateral Documents;
(c) any Lien existing on any asset prior to the
acquisition thereof by the Guarantor or such Subsidiary and not
created in contemplation of such acquisition;
(d) any Lien existing on any asset of any Person at the
time such Person becomes a Subsidiary of the Guarantor and not
created in contemplation of such event;
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(e) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring or constructing such asset, provided that (i) the
transaction giving rise to such financing is permitted by
Sections 5.15 and 5.16 and (ii) such Lien attaches to such asset
concurrently with or within 180 days after the acquisition or
completion of construction thereof and attaches to no asset other
than such asset so financed;
(f) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by
any of the foregoing paragraphs of this Section 5.12, provided
that the principal amount of such Debt is not increased and such
Debt is not secured by any additional assets;
(g) Permitted Encumbrances;
(h) Liens arising in the ordinary course of business
(other than Liens of the types described in the definition of
"Permitted Encumbrances") which (A) do not secure Debt, (B) if
applicable to any of the Collateral, rank junior to the Liens
created pursuant to the Collateral Documents, (C) do not secure
any obligation in an amount exceeding $5,000,000 and (D) do not
in the aggregate materially detract from the value of the assets
of the Guarantor and its Subsidiaries, taken as a whole, or
materially impair the use thereof in the operation of their
business;
(i) Liens on Medicaid accounts receivable purchased by
Hillhaven Funding securing Debt permitted by Section 5.11(e);
(j) Liens on health care facilities, nursing centers and
retirement housing facilities having an aggregate fair market
value (as determined in good faith by a Financial Officer) not
exceeding $5,000,000 to provide additional security for the Debt
referred to in Section 5.11(h) (which Debt is presently secured
by a Lien on the San Marcos, California retirement housing
facility); and
(k) Liens on assets (other than Collateral) not
otherwise permitted under paragraphs (a) through (j) of this
Section 5.12 securing Debt in an aggregate principal amount at
any time outstanding not to exceed $20,000,000.
SECTION 5.13. Consolidations, Mergers and Asset Sales.
(a) The Guarantor will not, and will not permit any of its
Subsidiaries to, consolidate or merge with or into, or sell,
lease or otherwise dispose of all or substantially all of its
assets to, any other Person, except that (i) the Borrower may
merge with any Person (other than the Guarantor) if the Borrower
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is the surviving corporation and if, immediately after such
merger (and giving effect thereto), no Default shall have
occurred and be continuing, and (ii) any Subsidiary of the
Guarantor (other than the Borrower, Medisave and their respective
Subsidiaries) may merge or consolidate with or into, or transfer
all or substantially all of its assets to, any Person if
immediately after such transaction (and giving effect thereto) no
Default shall have occurred and be continuing and either (A) the
surviving corporation or transferee is the Borrower or a
Subsidiary of the Borrower or (B) such merger, consolidation or
transfer of all or substantially all assets is in conjunction
with a disposition by the Guarantor of its entire Investment in
such Subsidiary which is otherwise permitted under Section
5.13(b) and the other provisions of the Financing Documents.
(b) The Guarantor will not, and will not permit any of
its Subsidiaries to, make any Asset Sale in any Fiscal Year
unless (i) the consideration therefor is at least equal to the
fair market value of the related asset (as determined in good
faith by a Financial Officer or, if such value exceeds
$5,000,000, by the Board of Directors of the Guarantor or a duly
constituted committee thereof) and (ii) immediately after giving
effect thereto, (A) the aggregate fair market value of the assets
disposed of in all Asset Sales (excluding exchanges of assets)
after August 31, 1994 would not exceed 12.5% of the book value of
the net plant, property and equipment of the Guarantor and its
Subsidiaries as reflected on their books immediately prior to
such Asset Sale, and (B) the aggregate fair market value of all
assets disposed of in all Asset Sales (including exchanges of
assets) after August 31, 1994 would not exceed 15% of the book
value of the total net plant, property and equipment of the
Guarantor and its Subsidiaries as reflected on their books
immediately prior to such Asset Sale; and provided further that
(x) at least 10% of the consideration for any Asset Sale (other
than Asset Sales where the underlying asset is disposed of
pursuant to a lease) shall consist of cash payable at closing and
(y) the remaining consideration for any such Asset Sale shall
consist solely of instruments obligating the transferee (or an
affiliate) to make cash payments at a subsequent date or dates.
(c) Notwithstanding the foregoing provisions of this
Section 5.13, the Borrower will not dispose of any Mortgaged
Facility (pursuant to an Asset Sale or otherwise) unless it
substitutes one or more health care facilities for such Mortgaged
Facility in accordance with Section 10.08.
SECTION 5.14. Restricted Payments. The Guarantor will
not, and will not permit any of its Subsidiaries to, declare or
make any Restricted Payment, except:
(a) dividends paid by the Guarantor to the holders of
its Series C Preferred Stock pursuant to the applicable
provisions of the Guarantor's Charter Documents;
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(b) dividends paid to the Guarantor by any of its
Subsidiaries (other than the Borrower, Medisave and Hillhaven
Funding);
(c) dividends paid by the Borrower to the Guarantor to
the extent required (after taking into account other funds
reasonably available for the purpose) to finance (i) the payment
of dividends on the Guarantor's Series C Preferred Stock
permitted by paragraph (a) above or (ii) the payment of interest
on the Subordinated Notes, the Convertible Subordinated
Debentures or the PIP Convertible Debentures in accordance with
the agreements or instruments evidencing or governing such Debt;
(d) repurchases of PIP Options from the holders thereof
in accordance with the terms of the PIP Options, provided that
the aggregate amount of Restricted Payments for all such
repurchases does not exceed $5,000,000;
(e) odd-lot repurchases of the Guarantor's common stock
in connection with one (but not more than one) reverse stock
split, provided that each new share of common stock is issued for
not more than five outstanding shares in connection therewith;
(f) redemption of up to $63,300,000 aggregate
liquidation value of the Series C Preferred Stock or the Series D
Preferred Stock held by NME upon the exercise by NME of the
outstanding warrants to purchase 30,000,000 shares of the
Guarantor's common stock;
(g) dividends paid by Medisave to the Guarantor, so long
as immediately after giving effect to the payment of any such
dividend, the sum of (i) the aggregate amount of such dividends
declared or paid after May 31, 1993 and (ii) the aggregate
outstanding principal amount of Debt of the Guarantor owing to
Medisave and permitted to be outstanding pursuant to paragraph
(d) of the definition of "Permitted Intercompany Debt" would not
exceed the consolidated net income (if positive) of Medisave and
its Subsidiaries for the period (treated as one accounting
period) beginning on June 1, 1993 and ending at the end of the
most recent Fiscal Quarter ending before such proposed dividend
is declared;
(h) dividends paid by Hillhaven Funding to the Guarantor
so long as, immediately after such dividend is paid, Hillhaven
Funding owes no outstanding Debt to the Guarantor or any of its
Subsidiaries; and
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(i) dividends paid by the Borrower to the Guarantor to
the extent required (after taking into account other funds
reasonably available for the purpose) to finance the payment of
(i) reasonable and necessary administrative costs and expenses of
the Guarantor or (ii) amounts payable by the Guarantor pursuant
to the Affiliate Agreements, including NME Guarantee Fees;
provided that in no event shall the Guarantor or any of its
Subsidiaries declare or make any Restricted Payment (except
Restricted Payments permitted by paragraph (b), (g), (h) or (i)
above) if, immediately before or after giving effect thereto, any
Default shall have occurred and be continuing. Nothing in this
Section 5.14 shall prohibit any Restricted Payment from being
made within 45 days after the date on which the Guarantor or any
of its Subsidiaries declared such Restricted Payment if such
declaration was not prohibited by this Section 5.14 when made.
SECTION 5.15. Limitation on Investments and Asset
Acquisitions. The Guarantor will not, and will not permit any of
its Subsidiaries to, make, acquire or hold any Investment or make
any Asset Acquisition, except:
(a) Investments existing on the Amendment No. 4
Effective Date in Subsidiaries and Non-Consolidated Partnerships
existing on the Amendment No. 4 Effective Date, and other
Investments existing on the Amendment No. 4 Effective Date, in
each case as identified on Schedule VII hereto;
(b) Investments by the Guarantor in the Borrower;
(c) Investments constituting Permitted Intercompany
Debt;
(d) Investments and Asset Acquisitions by the Borrower
pursuant to which (I) the Borrower (A) has acquired the Leased
Facilities from NME on the terms and conditions contemplated by
the NME Agreement, (B) is constructing (for a total cost not to
exceed $7,600,000) a 120-bed health care facility in Fort Myers,
Florida, (C) shall replace and expand by 50 beds (for a total
cost not to exceed $2,800,000) the Borrower's health care
facility in Goldsboro, North Carolina and (D) has exercised an
option to acquire (for a total cost not to exceed $4,800,000 less
any Debt assumed or Guaranteed by the Borrower pursuant to
Section 5.11(i) in connection with such acquisition) the
ownership interest in the Bay Point Nursing Pavilion in
St. Petersburg, Florida from the owners of such facility,
provided that any acquisition costs in excess of the limits set
forth in clauses (B), (C) and (D) have been or may
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be incurred to the extent permitted by Section 5.15(l) and (II)
the Guarantor or any of its Subsidiaries shall contribute to
MediLife Pharmacy Network, a joint venture with Lifecare, up to
$5,000,000 of pharmacy-related assets in exchange for a 50%
interest in such joint venture;
(e) Investments constituting Debt that is permitted to
be assumed or Guaranteed by the Borrower pursuant to
paragraph (h) or (i) of Section 5.11;
(f) payments made by the Guarantor or any of its
Subsidiaries pursuant to Guarantees of Debt of other Persons;
(g) Temporary Cash Investments;
(h) subject to the limitations of Section 5.21,
Investments maintained to satisfy sinking fund or reserve
requirements in respect of outstanding Debt of the Guarantor or
any of its Consolidated Subsidiaries which is otherwise permitted
pursuant to Section 5.11;
(i) Sold Asset Notes and other instruments received as
consideration for Asset Sales made on or after the Closing Date,
subject to the limitations of Section 5.13(b);
(j) loans made to an officer or employee of the
Guarantor or any of its Subsidiaries to enable such Person to
exercise, or to pay income taxes arising in connection with the
exercise of, PIP Options, stock options or similar incentive
awards, provided that the aggregate principal amount of such
loans at any time outstanding does not exceed $10,000,000;
(k) Asset Acquisitions in which at least 95% of the
consideration given by the Guarantor or any of its Subsidiaries
consists of common stock of the Guarantor (or options to purchase
such common stock) or net cash proceeds received by the Guarantor
after August 31, 1994 from the issuance or sale of common stock
of the Guarantor; provided that the aggregate number of shares of
common stock of the Guarantor issued to finance Asset
Acquisitions (or issuable upon the exercise of such options)
shall not exceed 25% of the total number of shares of common
stock of the Guarantor outstanding immediately after any such
Asset Acquisition is consummated (adjusted to include shares
issuable upon the exercise of such options); and
(l) subject to the limitations of Sections 5.08 and
5.16, any other Investment or Asset Acquisition by the Borrower
or Medisave if, immediately after such Investment or Asset
Acquisition is made, the aggregate amount of all Investments and
Asset Acquisitions made on or after the
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Closing Date pursuant to paragraph (e) above and this paragraph
(l) does not exceed $20,000,000; provided that, for purposes of
calculating such aggregate amount, an Investment of less than
$1,000,000 shall be excluded (unless it constitutes part of a
transaction involving Investments aggregating $1,000,000 or
more).
Without limiting the generality of the foregoing provisions of
this Section 5.15, the Borrower will not, and will not permit any
of its Subsidiaries to, dispose of or otherwise transfer to any
other Person any health care facility, nursing center or
retirement housing facility, or any interest therein, or any
accounts receivable attributable thereto, whether owned on the
Effective Date or thereafter acquired, except that (i) the
Borrower or any of its Subsidiaries may dispose of any health
care facility, nursing center or retirement housing facility (or
any interest therein) in accordance with Section 5.13(b),
(ii) the Borrower or any of its Subsidiaries may sell Medicaid
accounts receivable to Hillhaven Funding in connection with its
commercial paper program and (iii) any Subsidiary of the Borrower
may transfer any health care facility, nursing center, or
retirement housing center, or any interest therein, or any
accounts receivable attributable thereto, to the Borrower.
SECTION 5.16. Capital Expenditures. Consolidated
Capital Expenditures will not exceed $60,000,000 for any Fiscal
Year ending on or after May 31, 1995.
SECTION 5.17. Transactions with Affiliates. The
Guarantor will not, and will not permit any of its Subsidiaries
to, directly or indirectly, pay any funds to or for the account
of, make any Investment in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate
in, or effect any transaction in connection with any joint
enterprise or other joint arrangement with, any Affiliate;
provided that the foregoing provisions of this Section 5.17 shall
not prohibit:
(a) the Guarantor or any of its Subsidiaries from
declaring or paying any lawful dividend permitted by Section
5.14;
(b) the Guarantor or any of its Subsidiaries from making
sales to or purchases from any Affiliate and, in connection
therewith, extending credit or making payments, or from making
payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary
course of business and on terms and conditions at least as
favorable to the Guarantor or such Subsidiary as the terms and
conditions which would apply in a similar transaction with a
Person not an Affiliate;
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(c) the Guarantor or any of its Subsidiaries from (i)
making payments of principal, interest and premium on any Debt of
the Guarantor or such Subsidiary held by an Affiliate if the
terms of such Debt are substantially as favorable to the
Guarantor or such Subsidiary as the terms which could have been
obtained at the time of the creation of such Debt from a lender
which was not an Affiliate or (ii) repaying on the Closing Date
all Debt owing by it to NME;
(d) the Guarantor or any of its Subsidiaries from
participating in, or effecting any transaction in connection
with, any joint enterprise or other joint arrangement with any
Affiliate if the Guarantor or such Subsidiary participates in the
ordinary course of its business and on a basis no less
advantageous than the basis on which such Affiliate participates;
(e) the Guarantor or any of its Subsidiaries from
entering into or adopting any executive or employee incentive or
compensation plan, contract or other arrangement (including any
loans or extensions of credit in connection therewith), or any
arrangement to terminate any of the foregoing, if such plan,
contract, or arrangement is approved either by the shareholders
of the Guarantor (in accordance with such voting requirements as
may be applicable) or by the Board of Directors of the Guarantor
(or a duly constituted committee thereof) at a meeting at which a
quorum of disinterested directors is present;
(f) the Guarantor or any of its Subsidiaries from making
any loan, guarantee or other accommodation in accordance with the
Guarantor's policies and practices concerning employee relocation
in the ordinary course of its business;
(g) performance of the Affiliate Agreements; or
(h) the Investment by the Guarantor or any of its
Subsidiaries in MediLife Pharmacy Network as permitted by Section
5.15(d)(II).
SECTION 5.18. Limitation on Restrictions Affecting
Subsidiaries. The Guarantor will not, and will not permit any of
its Subsidiaries to, enter into, or suffer to exist, any
agreement which prohibits or limits the ability of any such
Subsidiary to (i) pay dividends or make other distributions or
pay any Debt owed to the Guarantor, the Borrower or any
Subsidiary of the Borrower, (ii) make loans or advances to the
Guarantor, the Borrower or any Subsidiary of the Borrower or
(iii) create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or
hereafter acquired, to secure the obligations of the Obligors
under any Financing Document; provided that the foregoing shall
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not prohibit any such prohibition or limitation contained in
(A) any Financing Document, (B) the Liquidity Agreement referred
to in Section 10.10, (C) the NME Guarantee Reimbursement
Agreement, insofar as the provisions thereof in effect on the
Closing Date limit grants to other Persons of Liens on assets of
any Subsidiary of the Guarantor, (D) the reimbursement and other
agreements relating to existing letters of credit issued to
support outstanding industrial revenue bonds the proceeds of
which were used by the Borrower and its Subsidiaries to acquire
the Valley Gardens Health Care Center located in Stockton,
California and the Meridian House retirement housing facility
located in Lantana, Florida, insofar as the provisions thereof in
effect on the Closing Date prohibit distributions to partners of
the partnerships which own such facilities unless certain cash
flow tests have been satisfied, (E) any mortgage note or loan
agreement, insofar as the provisions thereof limit grants of
junior liens on the asset securing such mortgage note or loan
agreement, (F) any agreement relating to industrial revenue bonds
and similar instruments for which the Borrower or any of its
Subsidiaries is liable, insofar as the provisions thereof limit
grants to other Persons of Liens on the related health care
facility or on any such bonds held by the remarketing agent with
respect thereto (or, in cases where the obligor thereon is a
partnership, on any other assets of such partnership) or (G) any
operating lease or capital lease, insofar as the provisions
thereof limit grants of a security interest in, or other
assignments of, the related leasehold interest to any other
Person.
SECTION 5.19. Preferred Stock. (a) The Guarantor will
not, and will not permit any of its Subsidiaries to, issue or
permit to be outstanding any preferred stock other than Permitted
Preferred Stock.
(b) The Guarantor will not, and will not permit any of
its Subsidiaries to, amend its Charter Documents (i) to in any
way modify the rights and preferences of holders of the Permitted
Preferred Stock or (ii) in any other manner which could adversely
affect the rights of the Banks under the Financing Documents or
their ability to enforce the same; provided that the foregoing
shall not prohibit the Guarantor from amending its Charter
Documents after the Closing Date to conform the redemption
provisions applicable to the Series C Preferred Stock to those
applicable to the Series D Preferred Stock on the Closing Date.
(c) The Guarantor will not, and will not permit any of
its Subsidiaries to, redeem, purchase or otherwise acquire any
Permitted Preferred Stock from the holder thereof following the
occurrence of a "Designated Event" with respect thereto on a date
which is less than 30 days after the Agent receives notice that
such holder elects to require the Guarantor to redeem such
Permitted Preferred Stock.
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SECTION 5.20. No Modification of Certain Documents
Without Consent. (a) The Guarantor will not, and will not
permit any of its Subsidiaries to, consent to or solicit any
amendment or supplement to, or any waiver or other modification
of, any Affiliate Agreement if the effect thereof would be to
increase the amount, or to accelerate the date of payment, of any
obligation of the Guarantor or any of its Subsidiaries
thereunder.
(b) The Guarantor will not, and will not permit any of
its Subsidiaries to, consent to or solicit any amendment or
supplement to, or any waiver or other modification of, any
agreement or instrument evidencing or governing the Subordinated
Notes or the Convertible Subordinated Debentures if the effect
thereof would be adverse in any respect to the Banks.
SECTION 5.21. Limitation on Prepayments of Debt. The
Guarantor will not, and will not permit any of its Subsidiaries
to, directly or indirectly, redeem, retire, purchase or otherwise
acquire for value, or set apart any money for a sinking,
defeasance or other analogous fund for the redemption,
retirement, purchase or other acquisition of, or make any
voluntary payment or prepayment of the principal of, any Debt of
the Guarantor or any of its Subsidiaries more than two Domestic
Business Days prior to the originally scheduled due date thereof,
except for (i) any prepayment of Debt outstanding hereunder,
(ii) any prepayment of Debt being refinanced pursuant to
Section 5.11(k), (iii) any redemption of Subordinated Notes or
Convertible Subordinated Debentures in accordance with the
subordination provisions contained in the agreement or instrument
evidencing or governing such Debt and (iv) other prepayments of
Debt of the Guarantor and its Subsidiaries not exceeding
$40,000,000 in aggregate principal amount.
SECTION 5.22. Fixed Charge Coverage. At the end of each
Fiscal Quarter ending during each period set forth below, the
Fixed Charge Ratio for the four consecutive Fiscal Quarters then
ended will not be less than the ratio set forth below opposite
such period:
Period Ratio
June 1, 1994 through
November 30, 1994 1.70 to 1
December 1, 1994 through
November 30, 1995 1.80 to 1
December 1, 1995 through
May 31, 1996 1.90 to 1
On and after
June 1, 1996 2.00 to 1
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SECTION 5.23. Cash Flow Coverage. At the end of each
Fiscal Quarter ending during each period set forth below, the
Cash Flow Ratio will not be less than the ratio set forth below
opposite such period:
Period Ratio
June 1, 1994 through
May 31, 1995 0.120 to 1
June 1, 1995 through
May 31, 1996 0.150 to 1
June 1, 1996 through
May 31, 1997 0.175 to 1
On and after
June 1, 1997 0.200 to 1
SECTION 5.24. Leverage Ratio. The ratio at any date
of (x) Consolidated Debt for Borrowed Money at such date (after
giving effect to any repayment, prepayment or borrowing on such
date) to (y) Consolidated Tangible Net Worth at the end of the
then most recently completed Fiscal Quarter (adjusted to reflect
any increase therein from the issuance or sale of Equity
Securities of the Guarantor or any of its Subsidiaries and any
decrease therein from the declaration of any dividends by the
Guarantor) will at no time during any period set forth below
exceed the ratio set forth below opposite such period:
Period Ratio
June 1, 1994 through
May 31, 1995 2.30 to 1
June 1, 1995 through
November 30, 1995 2.00 to 1
December 1, 1995 through
May 31, 1996 1.80 to 1
On and after
June 1, 1996 1.25 to 1
SECTION 5.25. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than the
Minimum Compliance Level. The "Minimum Compliance Level" means,
at any date (the "date of determination"), an amount equal to the
sum of (i) $230,000,000 plus (ii) for each Fiscal Quarter ended
after May 31, 1993 and on or prior to the date of determination
for which Consolidated Net Income (less any cash dividends
declared on the Guarantor's Series C Preferred Stock during such
Fiscal Quarter) is a positive number, an amount equal to 75% of
such positive number plus (iii) an amount equal to 85% of the
amount by which Consolidated Tangible Net Worth shall have been
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increased after May 31, 1993 and on or prior to the date of
determination from the issuance or sale of any Equity Securities
of the Guarantor or any of its Subsidiaries (excluding Series D
Preferred Stock issued on the Closing Date). The Minimum
Compliance Level shall not be reduced if Consolidated Net Income
for any Fiscal Quarter (less any cash dividends declared on the
Guarantor's Series C Preferred Stock during such Fiscal Quarter)
is a negative number.
SECTION 5.26. Replacement of Real Estate Collateral Due
to Environmental Liabilities. If, after the Closing Date, an
Executive Officer of the Guarantor or the Borrower obtains
knowledge that the representations and warranties made as of the
Closing Date pursuant to Section 4.20(c) could not be made as of
such date with respect to any Mortgaged Facility, the Obligors
will (i) promptly notify the Agents thereof and (ii) cause one or
more additional health care facilities to be substituted for such
Mortgaged Facility in accordance with Section 10.08 within 75
days after such notice.
SECTION 5.27. Further Assurances. (a) The Guarantor
will, and will cause each of its Subsidiaries to, at its sole
cost and expense, do, execute, acknowledge and deliver all such
further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Collateral Agent
shall from time to time request, which may be necessary or
desirable in the reasonable judgment of the Collateral Agent from
time to time to assure, perfect, convey, assign, transfer and
confirm unto the Collateral Agent the property and rights
conveyed or assigned pursuant to the Collateral Documents, or
which the Guarantor or such Subsidiary may be or may hereafter
become bound to convey or assign to the Collateral Agent or which
may facilitate the performance of the terms of the Collateral
Documents or the filing, registering or recording of the
Collateral Documents.
(b) All costs and expenses in connection with the
security interests and Liens created by the Collateral Documents,
including reasonable legal fees and other reasonable costs and
expenses in connection with the granting, perfecting and
maintenance of such security interests and Liens, the
preparation, execution, delivery, recordation or filing of
documents and any other acts in connection with the grant of such
security interests and Liens as the Collateral Agent may
reasonably request, shall be paid by the Borrower promptly when
due.
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ARTICLE VI
DEFAULTS
SECTION 6.01. Defaults. If one or more of the following
events ("Events of Default") shall have occurred and be
continuing:
(a) any principal of any Loan or any Reimbursement
Obligation shall not be paid when due, or any interest, fees or
other amount payable hereunder shall not be paid within three
Domestic Business Days after the due date thereof; or
(b) any Obligor shall fail to observe or perform any
covenant contained in Section 5.01(e) or Sections 5.11 through
5.26, inclusive; or
(c) any Obligor shall fail to observe or perform any of
its covenants or agreements contained in the Financing Documents
(other than those covered by paragraph (a) or (b) above) for 15
days after written notice thereof has been given to the Obligors
by the Agent at the request of any Bank; or
(d) any representation, warranty, certification or
statement made by any Obligor in any Financing Document or in any
certificate, financial statement or other document delivered
pursuant thereto shall prove to have been incorrect in any
material respect when made; or
(e) the Guarantor or any of its Subsidiaries shall fail
to make any payment in respect of any Material Debt when due; or
(f) any event or condition shall occur that (i) results
in the acceleration of the maturity of any Financial
Accommodation of the Guarantor or any of its Subsidiaries or the
cancellation by one or more banks or other financial institutions
of commitments to extend credit to the Guarantor or any of its
Subsidiaries, or (ii) enables (or, with the giving of notice or
lapse of time or both, would enable) the holder or holders of
such Financial Accommodation or any Person acting on behalf of
such holder or holders to accelerate the maturity thereof, or
(iii) enables (or, with the giving of notice or lapse of time or
both, would enable) one or more banks or other financial
institutions to cancel commitments to extend credit to the
Guarantor or any of its Subsidiaries, and the aggregate amount of
all such Financial Accommodations and commitments to extend
credit referred to in clauses (i) through (iii) above equals or
exceeds $10,000,000; or
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(g) the Guarantor or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize
any of the foregoing; or
(h) an involuntary case or other proceeding shall be
commenced against the Guarantor or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against the Guarantor or any Subsidiary under the Federal
bankruptcy laws as now or hereafter in effect; or
(i) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $1,000,000; or
(j) one or more Enforceable Judgments for the payment of
money aggregating in excess of $5,000,000 shall be rendered
against the Guarantor and its Subsidiaries (net of any portion
thereof covered by insurance as to which the insurance carrier
has acknowledged its responsibility); or
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(k) any person or group of persons (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) other than NME shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities
and Exchange Commission under said Act) of 25% or more of the
outstanding shares of common stock of the Guarantor; or NME or a
group of persons (within the aforesaid meaning) which includes
NME shall have acquired beneficial ownership (within the
aforesaid meaning) of 35% or more of the outstanding shares of
common stock of the Guarantor; or, during any period of 24
consecutive calendar months, individuals who were members of the
Board of Directors of the Guarantor on the first day of such
period shall cease to constitute a majority of such Board of
Directors; or the Guarantor shall cease to directly own 100% of
the issued and outstanding capital stock of the Borrower; or
(l) the Lien created by any of the Collateral Documents
shall at any time fail to constitute a valid and perfected Lien
on all of the Collateral purported to be subject to such Lien,
subject to no prior or equal Lien except Liens permitted by the
Collateral Documents, or any Obligor shall so assert in writing;
or
(m) any provision of Article IX shall cease to be in
full force and effect with respect to the Guarantor, or the
Guarantor or any Person acting on behalf of the Guarantor shall
so assert in writing; or
(n) any event or condition constituting a "Designated
Event" with respect to any Permitted Preferred Stock shall occur
which gives any holder of such Permitted Preferred Stock the
right to require the Guarantor to redeem, repurchase or otherwise
acquire such Permitted Preferred Stock;
(o) a "Change in Control" (as defined in the
Subordinated Note Indenture or the Convertible Subordinated
Debenture Indenture) shall occur;
then, and in every such event, the Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the
Commitments, by notice to the Borrower terminate the Commitments
and they shall thereupon terminate, (ii) if requested by Banks
having more than 50% of the aggregate amount of the Outstanding
LC Exposures, by notice to each LC Issuing Bank instruct such LC
Issuing Bank not to extend the expiry date of any Letter of
Credit, whereupon such LC Issuing Bank shall promptly deliver
notice to that effect to the Borrower, and (iii) if requested by
Banks holding Notes evidencing more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare
the Notes (together with accrued interest thereon) to be, and the
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Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Obligor; provided that in the
case of an Event of Default specified in Section 6.01(g) or (h)
with respect to any Obligor, without any notice to any Obligor or
any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by each Obligor.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Obligors under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
SECTION 6.03. Cash Cover. Each Obligor agrees, in
addition to the provisions of Section 6.01, that upon the
occurrence and during the continuance of any Event of Default, it
shall, if requested by the Agent upon instruction from Banks
having more than 50% of the aggregate amount of the Outstanding
LC Exposures, pay (and, in the case of any of the Events of
Default specified in Section 6.01(g) or (h) with respect to any
Obligor, forthwith, without any demand or the taking of any other
action by the Agent or any Bank, it shall pay) to the Collateral
Agent an amount in immediately available funds equal to the then
aggregate amount available for drawing under Letters of Credit
outstanding at such time to be held as security therefor for the
benefit of the Banks and the LC Issuing Banks in accordance with
the Collateral Documents.
ARTICLE VII
THE AGENTS
SECTION 7.01. Appointment and Authorization. (a) Each
Bank irrevocably appoints the Agent to act as its agent in
connection herewith and authorizes the Agent to take such action
as agent on such Bank's behalf and to exercise such powers under
the Financing Documents as are delegated to the Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
(b) Each Bank irrevocably appoints the Administrative
Agent to act as its agent in connection herewith and authorizes
the Administrative Agent to take such action as agent on such
Bank's behalf and to exercise such powers under the Financing
Documents as are delegated to the Administrative Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
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(c) Each of the Banks, the LC Issuing Banks, the Agent
and the Administrative Agent authorizes the Collateral Agent to
execute or accept the Collateral Documents and irrevocably
appoints and authorizes the Collateral Agent to take such action
as agent on its behalf and to exercise such powers under the
Collateral Documents as are delegated to the Collateral Agent by
the terms thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Each of Morgan,
Chemical and Morgan Delaware shall have the same rights and
powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not one of the
Agents. Each of Morgan, Chemical and Morgan Delaware and their
respective affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Guarantor
or any of its Subsidiaries or Affiliates as if it were not one of
the Agents.
SECTION 7.03. Action by Agents. The obligations of each
of the Agents under the Financing Documents are only those
expressly set forth therein with respect to it. Without limiting
the generality of the foregoing, none of the Agents shall be
required to take any action with respect to any Default, except
as expressly provided in Article VI and the Collateral Documents.
SECTION 7.04. Consultation with Experts. Each of the
Agents may consult with legal counsel (who may be counsel for an
Obligor), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. None of the Agents
or their respective affiliates or their respective directors,
officers, agents or employees shall be liable for any action
taken or not taken by it in connection with the Financing
Documents (A) with the consent or at the request of the Required
Banks or (B) in the absence of its own gross negligence or
willful misconduct. None of the Agents or their respective
affiliates or their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or
any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of any Obligor under any
Financing Document; (iii) the satisfaction of any condition
specified in Article III, except receipt of items required to be
delivered to it; (iv) the validity, effectiveness or genuineness
of any Financing Document or any other instrument or writing
furnished in connection therewith; or (v) the existence,
genuineness or value of any of the Collateral or the validity,
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perfection, priority or enforceability of the security interests
in or Liens on any of the Collateral. None of the Agents shall
incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be
a bank wire, telex, facsimile copy or similar writing) believed
by it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. Indemnification. The Banks shall, ratably
in accordance with their respective Credit Exposures, indemnify
each of the Agents, its affiliates and their respective
directors, officers, agents and employees (to the extent not
reimbursed by any Obligor) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by such indemnitees
thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agents
or any other Bank, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance
upon the Agents or any other Bank, and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
any action under the Financing Documents.
SECTION 7.08. Agents' Fees. The Borrower shall pay fees
to each of the Agents in the amounts agreed to by the Borrower
and such Agent.
SECTION 7.09. Successor Agents. Each of the Agents may
resign at any time (a "Retiring Agent") by giving notice thereof
to the Banks, the other Agents and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor for the Retiring Agent (a "Successor Agent"). If no
Successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days
after the Retiring Agent gives notice of resignation, then the
Retiring Agent may, on behalf of the Banks, appoint a Successor
Agent, which shall be a Bank or a commercial bank organized or
licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of its appointment as a
Successor Agent, such Successor Agent shall thereupon succeed to
and become vested with all the rights and duties of the Retiring
Agent, and the Retiring Agent shall be discharged from its duties
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and obligations hereunder. After any Retiring Agent resigns as
agent hereunder, the provisions of this Article VII shall inure
to its benefit as to any actions taken or omitted to be taken by
it while it was one of the Agents.
SECTION 7.10. Collateral Agent. (a) As to any matters
not expressly provided for in the Collateral Documents (including
the timing and methods of realization upon the Collateral), the
Collateral Agent shall act or refrain from acting in accordance
with written instructions from the Required Banks or, in the
absence of such instructions, in accordance with its discretion;
provided that the Collateral Agent shall not be obligated to take
any action if the Collateral Agent believes that such action is
or may be contrary to any applicable law or might cause the
Collateral Agent to incur any loss or liability for which it has
not been indemnified to its satisfaction.
(b) The Collateral Agent shall not be responsible for
the existence, genuineness or value of any of the Collateral or
for the validity, perfection, priority or enforceability of the
security interests in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on
its part under the Collateral Documents. The Collateral Agent
shall have no duty to ascertain or inquire as to the performance
or observance of any of the terms of the Collateral Documents by
any Obligor.
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Group of Euro-Dollar Loans:
(a) the Administrative Agent is advised by the Reference
Banks that deposits in dollars (in the applicable amounts) are
not being offered to the Reference Banks in the London interbank
market for such Interest Period, or
(b) Banks holding Notes evidencing 50% or more of the
aggregate outstanding principal amount of the Loans advise the
Administrative Agent that the London Interbank Offered Rate as
determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to
such suspension no longer exist, (i) the obligations of the Banks
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to make Euro-Dollar Loans or to convert outstanding Domestic
Loans into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Domestic
Loan on the last day of the then current Interest Period
applicable thereto. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before
the date of any Euro-Dollar Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow
on such date, such Borrowing shall instead be made as a Domestic
Borrowing.
SECTION 8.02. Illegality. If, on or after October 15,
1994, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request
or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and
the Administrative Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, or to convert outstanding Domestic Loans
into Euro-Dollar Loans, shall be suspended. Before giving any
notice to the Administrative Agent pursuant to this Section 8.02,
such Bank shall designate a different Euro-Dollar Lending Office
if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Domestic Loan either (i) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank
may lawfully continue to maintain and fund such Loan to such day
or (ii) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a)
If, on or after October 15, 1994, the adoption of any applicable
law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency, shall impose, modify or deem
applicable any reserve, special deposit, insurance assessment or
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similar requirement (including any such requirement imposed by
the Board of Governors of the Federal Reserve System but
excluding any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits with
or for the account of, or credit extended by, any Bank (or its
Euro-Dollar Lending Office) or shall impose on any Bank (or its
Euro-Dollar Lending Office) or the London interbank market any
other condition affecting its Euro-Dollar Loans, its Notes or its
obligation to make Euro-Dollar Loans, and the result of any of
the foregoing is to increase the cost to such Bank (or its
Euro-Dollar Lending Office) of making or maintaining its
Euro-Dollar Loans, or to reduce the amount of any sum received or
receivable by such Bank (or its Euro-Dollar Lending Office) under
this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Administrative
Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased
cost or reduction; provided that the Borrower shall not be liable
to any Bank in respect of any such increased cost or reduction
with respect to any period of time more than six months prior to
the date of the notice required by the first sentence of Section
8.03(c).
(b) If any Bank shall have determined that, after
October 15, 1994, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such
Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by
such Bank (with a copy to the Administrative Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction; provided
that the Borrower shall not be liable to any Bank in respect of
any such reduction with respect to any period of time more than
six months prior to the date of the notice required by the first
sentence of Section 8.03(c).
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge,
occurring after October 15, 1994, which will entitle such Bank to
compensation pursuant to this Section 8.03 and will designate a
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different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section 8.03 and setting forth the
additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and
attribution methods.
(d) If any Bank (a "Selling Bank") has demanded
compensation under this Section 8.03, the Borrower shall have the
right, with the assistance of the Agent, to seek one or more
banks or other institutions (collectively, the "Purchasing
Banks") willing to purchase the Notes of the Selling Bank and its
participation in any outstanding Reimbursement Obligations and to
assume the Selling Bank's Commitments and its participation in
the LC Liabilities on the terms specified in this Section
8.03(d); provided that any such purchase and assumption by a
Purchasing Bank that is not already a Bank shall be subject to
the consent of the Agent, the Administrative Agent and each LC
Issuing Bank. The Selling Bank shall be obligated to sell its
Notes and its participation in any outstanding Reimbursement
Obligations to such Purchasing Bank or Banks (which may include
one or more of the Banks) within 15 days after receiving notice
from the Borrower requiring it to do so, at an aggregate price
equal to the outstanding principal amount thereof plus unpaid
interest accrued thereon up to but excluding the date of sale.
In connection with any such sale, and as a condition thereof, the
Borrower shall pay to the Selling Bank all commitment fees
accrued for its account hereunder to but excluding the date of
such sale, plus, if demanded by the Selling Bank at least two
Domestic Business Days prior to such sale, (i) the amount of any
compensation which would be due to the Selling Bank under Section
2.11 if the Borrower had prepaid the outstanding Euro-Dollar
Loans of the Selling Bank on the date of such sale and (ii) any
additional compensation accrued for its account under this
Section 8.03 to but excluding said date. Upon such sale, the
Purchasing Bank or Banks shall assume the Selling Bank's
Commitments and its participation in LC Liabilities, and the
Selling Bank shall be released from its obligations hereunder to
a corresponding extent. If any Purchasing Bank is not already
one of the Banks, the Selling Bank, as assignor, such Purchasing
Bank, as assignee, the Administrative Agent, the Agent and each
LC Issuing Bank shall enter into an appropriate assignment and
assumption agreement, whereupon such Purchasing Bank shall be a
Bank party to this Agreement, shall be deemed to be an Assignee
hereunder and shall have all the rights and obligations of a Bank
with Commitments equal to its ratable share of the Commitments of
the Selling Bank and with a participation in the LC Liabilities
equal to its ratable share of the Selling Bank's participation in
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the LC Liabilities. Upon the consummation of any sale pursuant
to this Section 8.03(d), the Selling Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if
required, each Purchasing Bank receives new Notes.
SECTION 8.04. Taxes. (a) Any and all payments by an
Obligor to or for the account of any Bank, any LC Issuing Bank,
the Administrative Agent or the Agent hereunder or under any
other Financing Document shall be made 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, excluding, in the case of each
Bank, each LC Issuing Bank, the Administrative Agent and the
Agent, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which it is
organized or any political subdivision thereof and, in the case
of each Bank, taxes imposed on its income, and franchise or
similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If an Obligor shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any other Financing Document to any
Bank, any LC Issuing Bank, the Administrative Agent or the Agent,
(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 8.04)
such Bank, such LC Issuing Bank, the Administrative Agent or the
Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such
Obligor shall make such deductions, (iii) such Obligor shall pay
the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, and (iv) such
Obligor shall furnish to the Administrative Agent, at its address
specified in or pursuant to Section 10.01, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, each Obligor agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, or charges or similar levies which arise from any
payment made hereunder or under any other Financing Document or
from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Financing Document (hereinafter
referred to as "Other Taxes").
(c) Each Obligor agrees to indemnify each Bank, each LC
Issuing Bank, the Administrative Agent and the Agent for the full
amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank, such LC Issuing Bank,
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the Administrative Agent or the Agent (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 15 days from the date such Bank, such LC
Issuing Bank, the Administrative Agent or the Agent (as the case
may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Bank
listed on the signature pages hereof and on the date on which it
becomes a Bank in the case of each other Bank, and from time to
time thereafter if requested in writing by the Borrower (but only
so long as such Bank remains lawfully able to do so), shall
provide the Borrower with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is entitled
to benefits under an income tax treaty to which the United States
is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a
trade or business in the United States. If the form provided by
a Bank at the time such Bank first becomes a party to this
Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has
failed to provide the Borrower with the appropriate form pursuant
to Section 8.04(d) (other than if such failure is due to a change
in treaty, law or regulation occurring subsequent to the date on
which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a)
with respect to Taxes imposed by the United States; provided that
should a Bank, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because
of its failure to deliver a form required hereunder, the Obligors
shall take such steps as the Bank shall reasonably request to
assist the Bank to recover such Taxes.
(f) If an Obligor is required to pay additional amounts
to or for the account of any Bank pursuant to this Section 8.04,
then such Bank will change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the sole
judgment of such Bank, is not otherwise disadvantageous to such
Bank.
(g) Without prejudice to the survival of any other
agreement of the Obligors hereunder, the agreements and
obligations of the Obligors contained in this Section 8.04 shall
survive the payment in full of the principal of and interest on
the Notes and the Reimbursement Obligations.
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SECTION 8.05. Domestic Loans Substituted for Affected
Euro-Dollar Loans. If (x) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (y) any Bank has demanded compensation under Section 8.03
or 8.04 with respect to its Euro-Dollar Loans and the Borrower
shall, by at least five Euro-Dollar Business Days' prior notice
to such Bank through the Administrative Agent, have elected that
the provisions of this Section 8.05 shall apply to such Bank,
then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank
as (or continued as or converted into) Euro-Dollar Loans shall
instead be Domestic Loans (on which interest and principal shall
be payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid
(or converted to a Domestic Loan), all payments of principal
which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Domestic Loan shall be converted into a Euro-Dollar Loan on
the first day of the next succeeding Interest Period applicable
to the related Euro-Dollar Loans of the other Banks.
ARTICLE IX
GUARANTEE BY THE GUARANTOR
OF THE OBLIGATIONS OF THE BORROWER
SECTION 9.01. The Guarantee. The Guarantor
unconditionally and irrevocably guarantees the full and punctual
payment of all present and future indebtedness and other
obligations of the Borrower evidenced by or arising out of any
Financing Document, including the full and punctual payment of
principal of and interest on the Notes and the full and punctual
payment of all other sums now or hereafter owed by the Borrower
under any Financing Document as and when the same shall become
due and payable, whether at maturity or by declaration or
otherwise, according to the terms hereof and thereof (including
any interest which accrues on any of the foregoing obligations
after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the
Borrower, whether or not allowed or allowable as a claim in any
such proceeding). If the Borrower fails punctually to pay the
indebtedness and other obligations guaranteed by the Guarantor
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hereby, the Guarantor unconditionally agrees to cause such
payment to be made punctually as and when the same shall become
due and payable, whether at maturity or by declaration or
otherwise, and as if such payment were made by the Borrower.
SECTION 9.02. Guarantee Unconditional. The obligations
of the Guarantor under this Article IX shall be unconditional and
absolute and, without limiting the generality of the foregoing,
shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower
under any Financing Document by operation of law or otherwise;
(b) any modification, amendment or waiver of or
supplement to any Financing Document;
(c) any release, impairment, non-perfection or
invalidity of any direct or indirect security, or of any
guarantee or other liability of any third party, for any
obligation of the Borrower under any Financing Document;
(d) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower
or its assets, or any resulting release or discharge of any
obligation of the Borrower contained in any Financing Document;
(e) the existence of any claim, set-off or other rights
which the Guarantor may have at any time against the Borrower,
any of the Agents, any Bank, any LC Issuing Bank or any other
Person, whether or not arising in connection with this Agreement,
provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or
against the Borrower for any reason of any Financing Document, or
any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower of the principal of or
interest on any Note or any other amount payable by it under any
Financing Document; or
(g) any other act or omission to act or delay of any
kind by the Borrower, any of the Agents, any Bank, any LC Issuing
Bank or any other Person or any other circumstance whatsoever
that might, but for the provisions of this paragraph, constitute
a legal or equitable discharge of the obligations of the
Guarantor under this Article IX.
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SECTION 9.03. Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances. The Guarantor's
obligations under this Article IX shall remain in full force and
effect until the Credit Exposure of each Bank shall have been
reduced to zero and all amounts payable by the Borrower under the
Financing Documents shall have been paid in full. If at any time
any payment of the principal of or interest on any Note or any
other amount payable by the Borrower under any Financing Document
is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantor's obligations under this Article IX with
respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such
time.
SECTION 9.04. Waiver. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice
not provided for herein, as well as any requirement that at any
time any action be taken by any Person against the Borrower or
any other Person or against any security.
SECTION 9.05. Subrogation. The Guarantor irrevocably
waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder
to be subrogated to the rights of the payee against the Borrower
with respect to such payment or against any direct or indirect
security therefor, or otherwise to be reimbursed, indemnified or
exonerated by or for the account of the Borrower in respect
thereof.
SECTION 9.06. Stay of Acceleration. If acceleration of
the time for payment of any amount payable by the Borrower under
any Financing Document is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, all such amounts otherwise
subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Agent made at the request of the requisite number
of Banks specified in Section 6.01.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. Unless otherwise specified
herein, all notices, requests and other communications to any
party under any Financing Document shall be in writing (including
bank wire, telex, facsimile copy or similar writing) and shall be
given to such party at its address or telex or facsimile number
set forth on the signature pages hereof or such other address or
telex or facsimile number as such party may hereafter specify for
the purpose by notice to the Agents and the Obligors. Each such
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notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex
number specified in this Section 10.01 and the appropriate
answerback is received, (ii) if given by mail, ten days after
such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any
other means, when delivered at the address specified in this
Section 10.01, provided that notices to the Agent or the
Administrative Agent under Article II or VIII shall not be
effective until received.
SECTION 10.02. No Waiver; Benefits of Mortgages. (a)
No failure or delay by the Agents, the Banks or the LC Issuing
Banks, or any of them, in exercising any right, power or
privilege under any Financing Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies
provided in the Financing Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) Notwithstanding any other provision of any
Financing Document, if, without the consent of the Required
Banks, any Bank institutes or otherwise joins in any action, suit
or other proceeding to collect any amount owing to it under any
Financing Document or exercises any other remedy with respect
thereto and, as a consequence of such action, the Mortgages
relating to Mortgaged Facilities in any state shall, but for the
provisions of this Section 10.02(b), become unenforceable, such
Bank shall not be entitled to share in the benefit of such
Mortgages in such state.
SECTION 10.03. Expenses; Indemnification. (a) The
Borrower shall pay on demand (i) all reasonable out-of-pocket
expenses of the Agent and the Administrative Agent (including
reasonable fees and disbursements of Davis Polk & Wardwell,
special counsel for the Agent and the Administrative Agent, and
such local and other counsel as may be retained by the Agent on
behalf of the Banks, the LC Issuing Banks and the Agents) in
connection with the preparation and administration of the
Financing Documents, any waiver, consent or amendment of any
provision thereof, or any Default or alleged Default hereunder,
and (ii) if any Event of Default occurs, all out-of-pocket
expenses incurred by any of the Agents, any Bank or any LC
Issuing Bank, including fees and disbursements of counsel
(including internal charges reasonably allocated to services
performed by in-house counsel), in connection with such Event of
Default and collection and other enforcement proceedings
resulting therefrom.
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(b) The Borrower shall indemnify each of the Agents,
each Bank and each LC Issuing Bank, their respective affiliates
and the respective directors, officers, agents and employees of
the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including the reasonable
fees and disbursements of counsel for any Indemnitee in
connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitee shall be designated a
party thereto, and any Environmental Liabilities) which may be
incurred by any Indemnitee relating to or arising out of the
Financing Documents or any actual or proposed use of the proceeds
of the Loans hereunder; provided that no Indemnitee shall have
the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of
competent jurisdiction.
SECTION 10.04. Sharing of Set-Offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive (i) payment of a proportion of
the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note of the same
Class held by such other Bank or (ii) payment of a proportion of
its participation in the LC Liabilities of any Class which is
greater than the proportion received by any other Bank in respect
of its participation in the LC Liabilities of the same Class, the
Bank receiving such proportionately greater payment shall
purchase such participations in the Notes or the LC Liabilities
(as the case may be) of the other Banks, and such other
adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held
by the Banks shall be shared by the Banks pro rata and all such
payments with respect to the LC Liabilities shall be shared pro
rata by the Banks participating therein; provided that nothing in
this Section 10.04 shall impair the right of any Bank to exercise
any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of
the Borrower or the Guarantor, as the case may be, other than
indebtedness under the Notes or the LC Liabilities. The Borrower
and the Guarantor agree, to the fullest extent they may
effectively do so under applicable law, that any holder of a
participation in a Note or the LC Liabilities, whether or not
acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect
to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower or the
Guarantor, as the case may be, in the amount of such
participation.
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SECTION 10.05. Amendments and Waivers. (a) Any
provision of this Agreement or the Notes may be amended or waived
if, but only if, such amendment or waiver is in writing and is
signed by the Borrower, the Guarantor and the Required Banks
(and, if the rights or duties of any of the Agents or the LC
Issuing Banks are affected thereby, by it); provided that no such
amendment or waiver shall, unless signed by all the Banks, (i)
increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal of
or rate of interest on any Loan or Reimbursement Obligation or
any fees hereunder, (iii) postpone the date fixed for any
scheduled payment of principal of or interest on any Loan, any
Reimbursement Obligation or any fees hereunder or for any
termination or reduction of the Commitments of any Class pursuant
to Section 2.09, (iv) amend Article IX or release the Guarantor
from its obligations thereunder or (v) change the percentage of
the Commitments, the Credit Exposures or the Outstanding LC
Exposures or of the aggregate unpaid principal amount of the
Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section 10.05
or any other provision of this Agreement; and provided further
that no amendment or waiver of Section 10.08 shall be effective
unless it is approved by a 90% vote of the Banks (calculated as
provided in Section 10.05(b)).
(b) Any provision of any Collateral Document may be
amended or waived if, but only if, such amendment or waiver is in
writing and is signed or otherwise approved in writing by the
Borrower, the Guarantor and the Required Banks (and, if the
rights or duties of any of the Agents are affected thereby, by
it); provided that no such amendment or waiver shall permit the
Collateral Agent to release any Collateral (except Collateral
released in accordance with Section 10.08) unless approved in
writing by Banks having at least 90% of the aggregate amount of
the Credit Exposures (said 90% to be calculated net of any
participating interests as to which such Banks are not permitted
to vote pursuant to directions given in accordance with
Section 10.06(b)).
SECTION 10.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks
or other institutions (each a "Participant") participating
interests in its Commitments or any or all of its Loans or its
participations in the LC Liabilities. In the event of any grant
by a Bank of a participating interest to a Participant, whether
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or not upon notice to the Obligors and the Agents, such Bank
shall remain responsible for the performance of its obligations
hereunder, and the Obligors and the Agents shall continue to deal
solely and directly with such Bank in connection with such Bank's
rights and obligations under the Financing Documents. Any
agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain
the sole right and responsibility to enforce the obligations of
the Obligors hereunder, including the right to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide
that (A) such Bank will not agree to any modification, amendment
or waiver of this Agreement described in clause (i), (ii), (iii)
or (iv) of Section 10.05(a) without the consent of the
Participant and (B) such Bank will agree to vote the
Participant's participating interest with respect to the matters
specified in the proviso to Section 10.05(b) as the Participant
may direct. The Obligors agree that each Participant shall, to
the extent provided in its participation agreement, be entitled
to the benefits of Section 2.06(j) and Article VIII with respect
to its participating interest. An assignment or other transfer
which is not permitted by Section 10.06(c) or (d) shall be given
effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this Section
10.06(b).
(c) Any Bank may at any time assign to one or more banks
or other institutions (each an "Assignee") all, or a ratable
portion (equivalent to initial Commitments of not less than
$10,000,000) of all, of its rights and obligations under this
Agreement and the Notes, and such Assignee shall assume such
rights and obligations, upon notice to the Borrower and with (and
subject to) the consent of the Agent, the Administrative Agent
and each LC Issuing Bank; provided that (i) if an Assignee is an
affiliate of such transferor Bank and is itself a bank, no such
consent shall be required and (ii) any such assignment may be
made to an existing Bank without regard to the foregoing minimum
assignment amount. Upon execution and delivery of an appropriate
instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment or Commitments as set
forth in such instrument of assumption, and the transferor Bank
shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment
pursuant to this Section 10.06(c), the transferor Bank, the Agent
and the Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the Assignee. In connection
with any such assignment, the transferor Bank shall pay to the
Administrative Agent an administrative fee for processing such
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assignment in the amount of $3,000. If the Assignee is not
incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the
Administrative Agent certification as to exemption from deduction
or withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Notes to a Federal
Reserve Bank. No such assignment shall release the transferor
Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment
under Section 8.03 or 8.04 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or
8.04 requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
SECTION 10.07. Margin Stock. Each of the Banks
represents to the Agent and each of the other Banks that it in
good faith is not relying upon any "margin stock" (as defined in
Regulation U) as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 10.08. Substitution of Real Estate Collateral.
If the Borrower (i) is required to substitute one or more
additional health care facilities for a Mortgaged Facility
pursuant to Section 5.26 (an "Environmental-Related
Substitution") or pursuant to the related Mortgage (a "Major
Loss-Related Substitution") or (ii) otherwise elects to
substitute one or more additional health care facilities for such
Mortgaged Facility (an "Optional Substitution"), in each case the
Borrower may obtain the release of the Lien on such Mortgaged
Facility upon satisfaction of the following conditions:
(a) the fact that no Default shall have occurred and be
continuing immediately after giving effect to such substitution
and release;
(b) receipt by the Collateral Agent of a certificate
from a Financial Officer (i) identifying the Mortgaged Facility
to be released as Collateral (the "Released Property"),
(ii) identifying one or more health care facilities to be added
as Collateral (the "Additional Properties"), (iii) attaching
thereto a proposed amended version of Schedule VI hereto
reflecting the substitution of the Additional Properties for the
Released Property and (iv) to the effect set forth in paragraph
(a) above;
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(c) receipt by the Collateral Agent of appraisals,
prepared by Tellatin, Louis & Andreas, Inc. or other appraisers
reasonably acceptable to the Required Banks, using methods and
approaches substantially similar to those used by Tellatin, Louis
& Andreas, Inc. in preparing the appraisals of the initial
Mortgaged Facilities in connection with the closing hereunder or
as otherwise approved by the Required Banks, of the Released
Property and each of the Additional Properties, which appraisals
shall (i) be dated not more than 180 days prior to the date of
substitution and (ii) comply with any applicable bank regulatory
requirements; and the fact that the Borrower shall have paid or
made arrangements reasonably satisfactory to the Collateral Agent
to pay such appraisers all reasonable fees and expenses in
connection with the preparation of such appraisals;
(d) receipt by the Collateral Agent of a duly executed
Mortgage granting a first priority, perfected Lien on each
Additional Property subject only to Permitted Encumbrances, in
each case in form and substance reasonably satisfactory to the
Collateral Agent;
(e) receipt by the Collateral Agent of copies of file
search reports from the Uniform Commercial Code filing officer in
each jurisdiction where any such Additional Property is located,
setting forth the results of Uniform Commercial Code file
searches conducted in the name of the Borrower and any relevant
predecessor entity;
(f) receipt by the Collateral Agent of a title report
with respect to each Additional Property, issued by a title
insurance company reasonably satisfactory to the Collateral
Agent, dated not more than 45 days prior to the date of
substitution and showing no Liens except Permitted Encumbrances,
and, in the case of any Additional Property with an appraised
value of at least $5,000,000 (as determined pursuant to paragraph
(c) above), receipt by the Collateral Agent of a title policy (or
irrevocable commitment therefor) insuring the Liens created under
the Mortgage with respect to such Additional Property in an
amount equal to the appraised value thereof and otherwise
comparable to the policies (or irrevocable commitments therefor)
delivered pursuant to Section 3.01;
(g) receipt by the Collateral Agent of evidence
reasonably satisfactory to it that all action (including the
filing of appropriately completed and duly executed Uniform
Commercial Code financing statements and the recording of a
Mortgage in the appropriate filing and recording offices) has
been taken as may be necessary or desirable to establish
a perfected, first priority Lien in favor of the Collateral Agent
for the benefit of the Banks on each Additional Property;
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(h) receipt by the Collateral Agent of all documents it
may reasonably request relating to the corporate authority of the
Borrower for entering into the Mortgage on any Additional
Property, and all other matters relevant thereto, all in form and
substance reasonably satisfactory to the Collateral Agent;
(i) the fact that the aggregate value of the Additional
Properties (as determined pursuant to paragraph (c) above) is
equal to or greater than:
(A) in the case of any Environmental-Related
Substitution, the value of the Released Property (as
determined pursuant to paragraph (c) above) before
deducting Environmental Liabilities associated with such
Released Property;
(B) in the case of any Major Loss-Related
Substitution, the sum of (x) the value of the Released
Property (as determined pursuant to paragraph (c) above
after giving effect to the related Casualty Event) and
(y) the Casualty Proceeds received or expected to be
received by the Borrower in connection with the related
Casualty Event (as determined in good faith by a
Financial Officer and set forth in a certificate
delivered to the Collateral Agent); or
(C) in the case of any Optional Substitution, (x)
the value of the Released Property (as determined
pursuant to paragraph (c) above), less (y) to the extent
such Released Property is being disposed of concurrently
with such substitution pursuant to a permitted Asset Sale
under Section 5.13(b), the Net Cash Proceeds from such
Asset Sale (as set forth in a certificate of a Financial
Officer delivered to the Collateral Agent); and
(j) receipt by the Collateral Agent of opinions of
counsel in form and substance reasonably satisfactory to the
Collateral Agent.
Upon satisfaction of the foregoing conditions, the Collateral
Agent shall notify the other parties hereto of the substitution
of Mortgaged Facilities effected thereby and the Agent shall
amend Schedule VI hereto accordingly.
SECTION 10.09. Failure of Bank to Satisfy Minimum Rating
Condition. If at any time any Bank fails to satisfy the Minimum
Rating Condition, such Bank (a "Non-Complying Bank") shall
(i) promptly notify the Borrower, the Agent, the Administrative
Agent and the LC Issuing Banks thereof and (ii) seek one or more
Eligible Banks to purchase its Notes and its participation in any
outstanding Reimbursement Obligations and to assume its
Commitments and its participation in the LC Liabilities. If a
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Non-Complying Bank shall have failed to effect such a sale and
assumption within 60 days after it first fails to satisfy the
Minimum Rating Condition, then, for so long as such failure
continues, such Non-Complying Bank shall cause Eligible
Collateral to be pledged, or letters of credit to be issued by
one or more Eligible Banks, in favor of each of the LC Issuing
Banks, in each case in an amount at least equal from time to time
to the aggregate amount of such Non-Complying Bank's Applicable
Percentage of the LC Liabilities then outstanding in respect of
Letters of Credit issued by such LC Issuing Bank and otherwise on
terms satisfactory to such LC Issuing Bank.
For purposes of this Section 10.09:
(i) the "Minimum Rating Condition" is satisfied by a
Bank at any time if (A) the issuer rating of such Bank or its
Parent is then at least "C" by Thompson BankWatch, Inc. (or its
successors) (or, in the case of any Bank organized under the laws
of any jurisdiction outside the United States, the individual
rating of the Bank or its Parent is then at least "C" by IBCA
Limited (or its successors)) or (B) long-term unsecured public
debt of such Bank or its Parent is then rated at least "BBB" by
S&P and at least "Baa2" by Moody's;
(ii) "Eligible Bank" means any bank or other financial
institution whose (or whose Parent's) long-term unsecured public
debt is rated at least "A-" by S&P or at least "A3" by Moody's;
and
(iii) "Eligible Collateral" means (A) cash, (B) direct
obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency
thereof, and (C) debt securities of an issuer incorporated under
the laws of the United States of America or any state thereof
which are rated at least "A" by S&P or "A1" by Moody's, in each
case (except in the case of cash) maturing not more than one year
after such obligation or security is pledged pursuant to this
Section 10.09.
SECTION 10.10. Pledge of Hillhaven Funding Collateral.
(a) For the purposes of this Section 10.10, the following terms
have the following meanings:
"Commercial Paper Notes" means commercial paper
notes issued by Hillhaven Funding.
"Hillhaven Funding Collateral" means the Hillhaven
Funding Intercompany Accounts and the Hillhaven Funding Stock.
"Hillhaven Funding Intercompany Accounts" means all
intercompany notes and accounts payable owing by Hillhaven
Funding to the Borrower or the Guarantor.
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"Hillhaven Funding Stock" means all shares of
capital stock of Hillhaven Funding owned by the Guarantor.
"Liquidity Agreement" means (i) the Amended and
Restated Liquidity Agreement dated as of April 29, 1994 among
Hillhaven Funding, Bank of America National Trust and Savings
Association and Seattle-First National Bank, as the same may
be amended from time to time, or (ii) any agreement which
replaces or refinances the agreement referred to in clause
(i).
"Master Sale and Servicing Agreement" means the
Amended and Restated Master Sale and Servicing Agreement dated
as of April 29, 1994 among Hillhaven Funding, First Healthcare
Corporation, Northwest Health Care, Inc., Pasatiempo
Development Corp. and The Hillhaven Corporation, as the same
may be amended from time to time.
"Rating Agencies" means S&P and Moody's.
(b) Each of the Banks, the LC Issuing Banks and the
Agents agrees that:
(i) it will not, prior to the date which is one year and
one day following the payment of the last maturing Commercial
Paper Notes issued or to be issued, (A) institute or join any
other Person in instituting a case against Hillhaven Funding
under any federal or state bankruptcy, insolvency or similar
law, (B) seek or join any other Person in seeking the
appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of Hillhaven
Funding or any substantial part of its property or (C) seek or
join any other Person in seeking an order for the winding up
or liquidation of the affairs of Hillhaven Funding;
(ii) its claims against Hillhaven Funding shall be
limited to its share (determined as provided in the Collateral
Documents) of the lesser of the net proceeds of the Hillhaven
Funding Collateral and the amount of the available assets of
Hillhaven Funding, as applicable, and shall be unenforceable
against Hillhaven Funding to the extent such claims would
otherwise exceed such amount;
(iii) it has no security interest in, and no direct rights
with respect to, any asset of Hillhaven Funding, including any
"Purchased Receivables" (as defined in the Master Sale and
Servicing Agreement);
(iv) it acknowledges that the Hillhaven Funding
Intercompany Accounts are and shall be subordinated, to the
extent provided in the "Hillhaven Note" and the "Purchase
Money Note" (as defined in the Master Sale and Servicing
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Agreement), to the prior payment in full of all Commercial
Paper Notes issued or to be issued and all indebtedness
arising under, and all other amounts payable pursuant to, the
Liquidity Agreement;
(v) it will not, prior to the date on which all
Commercial Paper Notes issued or to be issued have been repaid
and the Liquidity Agreement has been terminated and all
amounts due and payable thereunder by Hillhaven Funding have
been paid, take any action to foreclose or otherwise realize
upon any Hillhaven Funding Collateral; and
(vi) it will not, prior to the date referred to in clause
(i) above, direct the Collateral Agent to (and the Collateral
Agent will not) sell or otherwise transfer any interest in any
Hillhaven Funding Collateral to any other Person unless such
Person shall have executed and delivered to the Obligors (with
copies to the Rating Agencies) an agreement of such Person to
the same effect as the agreements set forth in this
Section 10.10(b).
(c) The provisions of Section 10.10(b) are for the
express benefit of, and are enforceable by, the holders from time
to time of the Commercial Paper Notes (or any paying agent or
similar Person acting on their behalf) and the parties to the
Liquidity Agreement. No provision of Section 10.10(b) or of this
Section 10.10(c) may be amended or waived unless the Guarantor
shall have notified the Agent that such amendment or waiver would
not cause either Rating Agency to lower or withdraw its rating of
the Commercial Paper Notes.
SECTION 10.11. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be governed by
and construed in accordance with the laws of the State of New
York. Each of the Obligors hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated
hereby. Each of the Obligors irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient
forum.
SECTION 10.12. Counterparts; Integration; Effectiveness.
This Agreement and any amendment to this Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto were
upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and
<PAGE>
<PAGE>
supersedes any and all prior agreements and understandings, oral
or written, relating to the subject matter hereof. This
Agreement (as originally executed) became effective upon receipt
by the Agent of counterparts hereof signed by each of the parties
hereto (or, in the case of any party as to which an executed
counterpart had not been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof
by such party).
SECTION 10.13. WAIVER OF JURY TRIAL. EACH OF THE
OBLIGORS, THE AGENTS, THE BANKS AND THE LC ISSUING BANKS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER FINANCING DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
10.13.
SECTION 10.14. Confidentiality. Each Bank agrees to
keep any information delivered or made available by the Obligors
to it confidential from anyone other than persons employed or
retained by such Bank who are expected to become engaged in
evaluating, approving, structuring or administering the Loans and
the Letters of Credit; provided that nothing herein shall prevent
any Bank from disclosing such information (i) to any other Bank
or to the Agents, (ii) to any other person if reasonably
incidental to the administration of the Loans or the Letters of
Credit, (iii) upon the order of any court or administrative
agency, (iv) upon the request or demand of any regulatory agency
or authority, (v) which had been publicly disclosed other than as
a result of a disclosure by any of the Agents or the Banks
prohibited by this Agreement, (vi) in connection with any
litigation to which any of the Agents, the Banks or their
respective subsidiaries or Parents may be a party, (vii) to the
extent necessary in connection with the exercise of any remedy
hereunder, (viii) to such Bank's affiliates, legal counsel and
independent auditors and (ix) subject to provisions substantially
similar to those contained in this Section 10.14, to any actual
or proposed Participant or Assignee. Any Bank that discloses
information to others as contemplated by clause (ii) or (viii) of
the foregoing proviso shall inform such other Persons of the
confidential nature of such information and shall instruct them
to keep such information confidential.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 4 to be duly executed by their respective
authorized officers as of the day and year first above written.
FIRST HEALTHCARE CORPORATION
By /s/ Robert K. Schneider
Vice President & Treasurer
1148 Broadway Plaza
Tacoma, Washington 98402
Attention: Treasurer
Facsimile number: 206-756-4890
With a copy to: General Counsel
Facsimile number: 206-756-4845
THE HILLHAVEN CORPORATION
By /s/ Robert K. Schneider
Vice President & Treasurer
1148 Broadway Plaza
Tacoma, Washington 98402
Attention: Treasurer
Facsimile number: 206-756-4890
With a copy to: General Counsel
Facsimile number: 206-756-4845
<PAGE>
<PAGE>
BANKS
Managing Agents:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
Title: Associate
CHEMICAL BANK
By /s/ B. Joseph Lillis
Title: Managing Director
PNC BANK, NATIONAL ASSOCIATION
By /s/ J. Gregory Seibly
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Yvonne C. Dennis
Title: Vice President
SEATTLE-FIRST NATIONAL BANK
By /s/ Thomas P. Rook
Title: Vice President and
Manager
<PAGE>
<PAGE>
BANKS (cont'd)
Co-Agents:
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.,
LOS ANGELES AGENCY
By /s/ Yutaka Kamisawa
Title: Deputy General Manager
THE TORONTO-DOMINION BANK
By /s/ Frederic B. Hawley
Title: Manager
U.S. BANK OF WASHINGTON,
NATIONAL ASSOCIATION
By /s/ Erin M. Keyser
Title: Vice President
THE BANK OF NEW YORK
By /s/ Lisa Y. Brown
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Brad W. De Spain
Title: Vice President
<PAGE>
<PAGE>
BANKS (cont'd)
Participants:
BERLINER HANDELS-UND
FRANKFURTER BANK
By /s/ David Fraenkel
Title: Vice President
By /s/ Joy S. Robin
Title: Assistant Treasurer
BANQUE NATIONALE DE PARIS
By /s/ Rafael C. Lumanlan
Title: Vice President
By /s/ Jennifer Y. Cho
Title: Vice President
FIRST INTERSTATE BANK OF
WASHINGTON, N.A.
By /s/ Jo Surbrugg
Title: Vice President
BANK OF HAWAII
By /s/ Peter S. Ho
Title: Vice President
<PAGE>
<PAGE>
BANKS (cont'd)
THE CHASE MANHATTAN BANK, N.A.
By /s/ Patricia B. Bril
Title: Managing Director
DRESDNER BANK AG,
LOS ANGELES AGENCY/
GRAND CAYMAN BRANCH
By /s/ Kenneth I. Bowman
Title: Vice President
By /s/ Barbara J. Readick
Title: Vice President
FLEET BANK OF MASSACHUSETTS
By /s/ Ginger C. Stolzenthaler
Title: Vice President
THE FUJI BANK, LIMITED,
LOS ANGELES AGENCY
By /s/ Takao Endo
Title: Joint General Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ Toshinari Iyoda
Title: Senior Vice President
<PAGE>
<PAGE>
BANKS (cont'd)
KREDIETBANK N.V.
By /s/ Diane M. Grimmig
Title: Vice President
By /s/ Robert E. Snauffer
Title: Vice President
SWISS BANK CORPORATION,
SAN FRANCISCO BRANCH
By /s/ Jamie Dillion
Title: Director
By /s/ Hans-Ueli Surber
Title: Executive Director
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ John A. Robertson
Title: Senior Vice President
<PAGE>
<PAGE>
AGENTS
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention: Diana Imhof
Telex number: 177615
Facsimile number: 212-648-5014
CHEMICAL BANK,
as Administrative Agent
By /s/ B. Joseph Lillis
Title: Managing Director
270 Park Avenue
New York, New York 10017
Attention: Robert Parker
Facsimile number: 212-270-3279
J.P. MORGAN DELAWARE,
as Collateral Agent
By /s/ Robert J. Henchey
Title: Vice President
902 Market Street
Wilmington, Delaware 19801
Attention: Robert Henchey
Facsimile number: 302-652-7416
<PAGE>
<PAGE>
<TABLE><CAPTION> SCHEDULE I
Outstanding Additional
Term Term Revolver IRB Backstop
Name of Bank Loans<F1>(1) Commitments Commitments Commitments Total
<S> <C> <C> <C> <C> <C>
Morgan Guaranty 10,837,500.00 1,537,500.00 6,375,000.00 5,250,000.00 $ 24,000,000.00
Trust Company
of New York
Chemical Bank 10,837,500.00 1,537,500.00 6,375,000.00 5,250,000.00 $ 24,000,000.00
PNC Bank, 10,837,500.00 1,537,500.00 6,375,000.00 5,250,000.00 $ 24,000,000.00
National
Association
Bank of America 7,676,562.50 1,089,062.50 4,515,625.00 3,718,750.00 $ 17,000,000.00
National Trust
and Savings
Association
Seattle-First 7,676,562.50 1,089,062.50 4,515,625.00 3,718,750.00 $ 17,000,000.00
National Bank
The Long-Term 9,482,812.50 1,345,312.50 5,578,125.00 4,593,750.00 $ 21,000,000.00
Credit Bank of
Japan, Ltd.,
Los Angeles
Agency
The Toronto- 9,482,812.50 1,345,312.50 5,578,125.00 4,593,750.00 $ 21,000,000.00
Dominion Bank
U.S. Bank of 9,482,812.50 1,345,312.50 5,578,125.00 4,593,750.00 $ 21,000,000.00
Washington,
National
Association
<PAGE>
<PAGE>
The Bank of 7,676,562.50 1,089,062.50 4,515,625.00 3,718,750.00 $ 17,000,000.00
New York
Nations Bank of 7,676,562.50 1,089,062.50 4,515,625.00 3,718,750.00 $ 17,000,000.00
Texas, N.A.
Berliner 5,418,750.00 768,750.00 3,187,500.00 2,625,000.00 $ 12,000,000.00
Handels-Und
Frankfurter
Bank
Banque 5,418,750.00 768,750.00 3,187,500.00 2,625,000.00 $ 12,000,000.00
Nationale
de Paris
First 5,418,750.00 768,750.00 3,187,500.00 2,625,000.00 $ 12,000,000.00
Interstate
Bank of
Washington,
N.A.
Bank of 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Hawaii
The Chase 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Manhattan
Bank, N.A.
Dresdner 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Bank AG,
Los Angeles
Agency/Grand
Cayman Branch
Fleet Bank of 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Massachusetts
<PAGE>
<PAGE>
The Fuji Bank, 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Limited,
Los Angeles
Agency
The Industrial 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Bank of Japan,
Limited,
Los Angeles
Agency
Kredietbank, 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
N.V.
Swiss Bank 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
Corporation,
San Francisco
Branch
Wachovia Bank 4,064,062.50 576,562.50 2,390,625.00 1,968,750.00 $ 9,000,000.00
of Georgia,
N.V.
Total $144,500,000.00 $20,500,000.00 $85,000,0900.00 $70,000,000.00 $320,000,000.00
<FN>
<F1>
(1) Lists original Term Loans remaining outstanding.
</FN>
</TABLE>
<PAGE>
<PAGE>
SCHEDULE II
RELATED TRANSACTION DOCUMENTS
1. Letter Agreement dated June 22, 1993 between National
Medical Enterprises, Inc. and The Hillhaven Corporation.
2. Agreement dated as of September 1, 1993 among National
Medical Enterprises, Inc., NME Properties Corp., NME
Properties, Inc., NME Properties West, Inc., The Hillhaven
Corporation and First Healthcare Corporation relating to
the purchase and sale of shares of Series D Preferred Stock
of the Hillhaven Corporation.
3. Certificate of Designation, Preferences and Rights of
Series D Preferred Stock of The Hillhaven Corporation.
4. Indenture dated as of September 2, 1993 between
The Hillhaven Corporation, as issuer, and State Street Bank
and Trust Company, as trustee (including the form of The
Hillhaven Corporation's 10-1/8% Senior Subordinated Notes
due 2001).
5. Purchase Agreement dated as of August 26, 1993 between The
Hillhaven Corporation and the several Underwriters referred
to therein relating to the purchase and sale of The
Hillhaven Corporation's 10-1/8% Senior Subordinated Notes
due 2001.
<PAGE>
<PAGE>
SCHEDULE III
CERTAIN EXISTING DEBT
The following schedule lists (i) the aggregate amount at August
31, 1994 of certain items of Debt of the Guarantor and its
Consolidated Subsidiaries, and certain items of Debt of others
that is Guaranteed by the Guarantor and its Consolidated
Subsidiaries, by category of Debt, (ii) the amortization payments
required in respect of such Debt during each Fiscal Year through
the Final Maturity Date and (iii) the balance of such Debt due
after the Final Maturity Date. It is not intended to reflect all
the outstanding Debt of the Guarantor and its Consolidated
Subsidiaries as of the Effective Date.
<PAGE>
<PAGE>
<TABLE><CAPTION> 6/1/99
08/31/94 Remainder thru
Type of Debt Balance FY 95 FY 96 FY 97 FY 98 FY 99 10/31/99 Thereafter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt of the
Guarantor
and its
Consolidated
Subsidiaries:
Industrial 127,424,572 1,874,498 2,349,667 2,472,667 2,605,667 3,441,667 769,833 113,910,573
revenue bonds
Mortgages 51,278,377 569,450 2,261,292 3,505,614 1,486,316 233,142 99,929 43,131,634
Other notes 27,510,653 6,623,082 1,810,256 6,983,392 1,305,301 2,309,470 292,842 8,186,310
Capitalized 1,923,048 126,432 189,028 215,793 243,805 271,817 113,257 762,916
leases
Credit 173,000,000 30,000,000 43,750,000 45,000,000 30,000,000 24,250,000 0 0
agreement<F1>
Debt of Others
Guaranteed
by the
Guarantor
and its
Consolidated
Subsidiaries:
<PAGE>
<PAGE>
Industrial
revenue
bonds 25,575,420 240,000 275,000 285,000 305,000 360,000 150,000 23,960,420
Mortgage note 1,418,750 41,250 45,000 45,000 1,287,500 0 0 0
(#995 Starr
Farm)
Other notes 3,941,667 215,000 215,000 215,000 3,296,667 0 0 0
(#983 Clark
House)
Other notes 1,694,033 16,411 23,877 26,378 29,140 32,191 14,388 1,551,648
(#918 Sarasota)
<FN>
<F1>
Repayment terms per the Credit Agreement prior to Amendment No. 4.
</FN>
</TABLE>
<PAGE>
<PAGE>
SCHEDULE IV
AFFILIATE AGREEMENTS
1. Guarantee Reimbursement Agreement dated as of
January 31, 1990, as amended, between National Medical
Enterprises, Inc. and The Hillhaven Corporation.
2. Management Agreements dated as of January 31, 1990
between National Medical Enterprises, Inc. and
The Hillhaven Corporation relating to the following
facilities:
Fac. No. Facility Name
902 Alvarado Convalescent, San Diego, California
974 J.D. French Center, Los Alamitos, California
169 Menorah House, Palm Beach, Florida
815 Del Ray Beach, Del Ray Beach, Florida
978 Northshore Living Center, Slidell, Louisiana
993 Brookhaven Nursing Center, Carrollton, Texas
990 Jo Ellen Smith, New Orleans, Louisiana
3. Tax Sharing Agreement dated as of January 31, 1990
between National Medical Enterprises, Inc. and
The Hillhaven Corporation.
4. Insurance Agreement dated as of January 31, 1990 between
National Medical Enterprises, Inc. and The Hillhaven
Corporation.
5. Warrant and Registration Rights Agreement dated
as of January 31, 1990 among National Medical
Enterprises, Inc., The Hillhaven Corporation and
Manufacturers Hanover Trust Company of California,
as Warrant Agent.
<PAGE>
<PAGE>
SCHEDULE V
LC ISSUING BANKS
Maximum Outstanding Maximum Face
Face Amount of Amount of
Revolver IRB Backstop
Name of Bank Letters of Credit Letters of Credit
PNC Bank,
National Association -0- $74,000,000
Swiss Bank Corporation -0- $26,000,000
Seattle-First
National Bank $20,000,000 -0-
<PAGE>
<PAGE>
SCHEDULE VI
MORTGAGED FACILITIES
(Note: Asterisks in this schedule indicate facilities with
respect to which title insurance policies are being obtained.
See Section 3.01(q) of the Credit Agreement.)
Fac. No. Facility Name and Location
742 Bells Lodge Nursing Home
4202 North 20th Avenue
Maricopa County
Phoenix, Arizona 85015-5199
743* Desert Life Health Care Center
1919 West Medical Street
Pima County
Tucson, Arizona 85704-1199
851* Villa Campana Health Care Center
6651 Carondelet Drive East
Pima County
Tucson, Arizona 85710-2118
859* Castle Garden Care Center
401 Malley Drive
Adams County
Northglenn, Colorado 80233-2095
286* Columbia Nursing Plaza
621 West Columbia
Vanderburgh County
Evansville, Indiana 47710-1619
779 Westview Manor Health Care Center
1510 Clinic Drive
Lawrence County
Bedford, Indiana 47421-3597
780* Columbus Convalescent Center
2100 Midway
Bartholomew County
Columbus, Indiana 47201
277 Rosewood Manor Health Care Center
550 High Street, P.O. Box 9000
Warren County
Bowling Green, Kentucky 42102-9000
278 Oakview Manor Health Care Center
Route #1, Box 125
Marshall County
Calvert City, Kentucky 42029-9720
<PAGE>
<PAGE>
280* Winchester Manor Health Care Center
200 White Drive
Clark County
Winchester, Kentucky 40391-5047
281 Riverside Manor Health Care Center
Highway 136, Box 39
McLean County
Calhoun, Kentucky 42327-0039
282 Maple Manor Health Care Center
515 Greene Drive
Muhlenberg County
Greenville, Kentucky 42345-0528
783* Lexington Manor Healthcare Center
353 Waller Avenue
Fayette County
Lexington, Kentucky 40504-2974
784 Northfield Manor Health Care Facility
6000 Hunting Road
Jefferson County
Louisville, Kentucky 40222-6308
785 Hillcrest Health Care Center
3740 Old Hartford Road
Daviess County
Owensboro, Kentucky 42301-5696
787 Woodland Terrace Health Care Facility
1117 Woodland Drive
Hardin County
Elizabethtown, Kentucky 42701-2749
544 Augusta Convalescent Center
187 Eastern Avenue
Kennebec County
Augusta, Maine 04330-5999
545 Bangor Convalescent Center
516 Mt. Hope Avenue
Penobscot County
Bangor, Maine 04401-4282
546 Winship Green Nursing Center
Winship Street
Sagadahoc County
Bath, Maine 04530
549 Kennebunk Nursing Home
158 Ross Road
York County
Kennebunk, Maine 04043-1599
<PAGE>
<PAGE>
550 Norway Convalescent Center
Marion Avenue
Oxford County
Norway, Maine 04268
552 Shore Village
201 Camden Street
Knox County
Rockland, Maine 04841-2599
554 Westgate Manor
750 Union Street
Penobscot County
Bangor, Maine 04401-3197
558 Fieldcrest Manor Nursing Home
126 Depot Street
Lincoln County
Waldoboro, Maine 04572
327 Laurel Ridge Rehabilitation & Nursing Center
174 Forest Hill Street
Suffolk County
Boston, Massachusetts 02130
506 Presentation Manor Nursing Home
10 Bellamy Street
Suffolk County
Brighton, Massachusetts 02135-1599
523* Star of David Nursing & Rehabilitation Center
1100 VFW Parkway
Suffolk County
West Roxbury, Massachusetts 02132
526* Brittany Convalescent Home
168 West Central Street
Middlesex County (South District)
Natick, Massachusetts 01760-4196
527* Briarwood Healthcare Nursing Center
150 Lincoln
Norfolk County
Needham, Massachusetts 02192
528* Westridge Healthcare Center
121 Northboro Road
Middlesex County (South District)
Marlborough, Massachusetts 01752-1899
529* Bolton Manor Nursing Home
400 Bolton Street
Middlesex County (South District)
Marlborough, Massachusetts 01752-3991
<PAGE>
<PAGE>
530 Woodridge House Nursing & Rehabilitation Center
596 Summer Street
Plymouth County
Brockton, Massachusetts 02402-4298
532 Hillcrest Nursing Home
94 Summer Street
Worcester County (Northern District)
Fitchburg, Massachusetts 01420-5791
534 Country Gardens Nursing Home
2045 Grand Army Highway
Bristol County
Swansea, Massachusetts 02777-3997
537* Quincy Rehabilitation & Nursing Center
11 McGrath Highway
Norfolk County
Quincy, Massachusetts 02159-5311
538 West Roxbury Manor Nursing Home
5060 Washington Street
Suffolk County
West Roxbury, Massachusetts 02132-4299
539* Newton & Wellesley Alzheimer Center
694 Worcester Street
Norfolk County
Wellesley, Massachusetts 02181-2837
582 Colony House Healthcare Nursing Home
277 Washington Street
Plymouth County
Abington, Massachusetts 02351-0566
583 Embassy House Skilled Nursing
& Rehabilitation Center
2 Beaumont Street
Plymouth County
Brockton, Massachusetts 02402-3367
584 Franklin House Healthcare Nursing Home
130 Chestnut Street
Norfolk County
Franklin, Massachusetts 02038-1229
585 Great Barrington Healthcare Nursing Home
148 Maple Avenue
Berkshire County
Great Barrington, Massachusetts 01230-1998
587 River Terrace Healthcare Nursing Home
1657 North Main Street
Worcester County
Lancaster, Massachusetts 01523-2405
<PAGE>
<PAGE>
588 Walden House Healthcare Nursing Home
785 Main Street
Middlesex County (South District)
Concord, Massachusetts 01742-3399
433 Parkview Acres Convalescent Center
200 Oregon Street
Beaverhead County
Dillon, Montana 59725-3699
136 Hillhaven-LaSalle Nursing Center
411 South LaSalle Street
Durham County
Durham, North Carolina 27705-3799
137 Hillhaven-Sunnybrook Convalescent Center
25 Sunnybrook Road
Wake County
Raleigh, North Carolina 27610-1894
138 Hillhaven Rehabilitation &
Convalescent Center
91 Victoria Road
Buncombe County
Asheville, North Carolina 28801-4491
143* Hillhaven Convalescent Center
616 Wade Avenue
Wake County
Raleigh, North Carolina 27605-1237
146 Hillhaven-Rose Manor Convalescent Center
4230 North Roxboro Road
Durham County
Durham, North Carolina 27704
188 Hillhaven Rehabilitation & Convalescent Center
2006 South 16th Street
New Hanover County
Wilmington, North Carolina 28401-6613
190* Winston Salem Convalescent Center
1900 West 1st Street
Forsyth County
Winston-Salem, North Carolina 27104-4286
191 Silas Creek Manor
3350 Silas Creek Parkway
Forsyth County
Winston-Salem, North Carolina 27103-3096
704 Guardian Care of Roanoke Rapids
305 Fourteenth Street
Halifax County
Roanoke Rapids, North Carolina 27870-4497
<PAGE>
<PAGE>
706 Guardian Care of Henderson
280 South Beckford Drive
Vance County
Henderson, North Carolina 27536-1616
707* Guardian Care of Monroe
1212 Sunset Drive
Union County
Monroe, North Carolina 28110-1189
708 Guardian Care of Goldsboro
501 Forest Hill Drive
Wayne County
Goldsboro, North Carolina 27530-1899
710 Guardian Care of New Bern
836 Hospital Drive
Craven County
New Bern, North Carolina 28560-3445
711 Guardian Care of Kinston
907 Cunningham Road
Lenoir County
Kinston, North Carolina 28501
713 Guardian Care of Zebulon
509 West Gannon Avenue
Wake County
Zebulon, North Carolina 27597-1157
716 Guardian Care of Farmville
Route 1 Box 96
Pitt County
Farmville, North Carolina 27828
724 Hillhaven Health Care of Gastonia
416 North Highland Street
Gaston County
Gastonia, North Carolina 28052-2199
806* Hillhaven Rehabilitation & Health Care Center
1602 East Franklin Street
Orange County
Chapel Hill, North Carolina 27514-2861
571* Logan Health Care Center
300 Arlington Road
Hocking County
Logan, Ohio 43138
802* Hillhaven Convalescent Center
145 Olive Street
Summit County
Akron, Ohio 44310-3297
<PAGE>
<PAGE>
140 Wasatch Care Center
3430 Harrison Blvd.
Weber County
Ogden, Utah 84403-1299
655 Hillhaven: A Health & Rehab Center
41 South Ninth East
Salt Lake County
Salt Lake City, Utah 84102-1395
690 Wasatch Valley Rehabilitation
2200 East 3300 South
Salt Lake County
Salt Lake City, Utah 84109-2692
114 Arden Rehabilitation and Healthcare Center
16357 Aurora Avenue North
King County
Seattle, Washington 98133-5693
127 Northwest Continuum Care Center
128 Beacon Hill
Cowlitz County
Longview, Washington 98632
158 Bellingham Care Center
1200 Birchwood Avenue
Whatcom County
Bellingham, Washington 98225-1398
168* Lakewood Health Care Center
11411 Bridgeport Way
Pierce County
Tacoma, Washington 98498
185 Heritage Hillhaven Health Center
3605 Y Street
Clark County
Vancouver, Washington 98663-2699
461 Edmonds Rehabilitation & Healthcare Center
21008 76th Avenue West
Snohomish County
Edmonds, Washington 98020-6807
765 Eastview Medical & Rehabilitation Center
729 Park Street
Langlade County
Antigo, Wisconsin 54409-2798
767 Colony Oaks Care Center
601 Briarcliff Drive
Outagamie County
Appleton, Wisconsin 54915-2999
<PAGE>
<PAGE>
769 North Ridge Care Center
1445 North 7th Street
Manitowoc County
Manitowoc, Wisconsin 54220-2090
771 Kennedy Park Medical & Rehabilitation Center
6001 Alderson Street
Marathon County
Schofield, Wisconsin 54476-3699
772 Family Heritage Medical & Rehabilitation Center
130 Strawberry Lane
Wood County
Wisconsin Rapids, Wisconsin 54494-2197
773* Mount Carmel Care Center
677 East State Street
Racine County
Burlington, Wisconsin 53105-1699
774* Mount Carmel Health & Rehabilitation Center
5700 West Layton Avenue
Milwaukee County
Milwaukee, Wisconsin 53220-4099
775 Sheridan Nursing Home
8400 Sheridan Road
Kenosha County
Kenosha, Wisconsin 53140-6393
776* Woodstock Health & Rehabilitation Center
3415 Sheridan Road
Kenosha County
Kenosha, Wisconsin 53140-1995
<PAGE>
<PAGE>
SCHEDULE VII
SUBSIDIARIES AND INVESTMENTS
Consolidated Corporate Subsidiaries:
First Healthcare Corporation
Hillhaven Home Care, Inc.
CIC Risk Management Corporation
Hillhaven of Central Florida, Inc.
Northwest Health Care, Inc.
Pasatiempo Development Corp.
Professional Medical Enterprises, Inc.
Hillhaven Properties, Ltd.
Brim-Olive Grove, Inc.
Fairview Living Centers, Inc.
Twenty-Nine Hundred Corporation
Brim of Massachusetts, Inc.
Hillhaven Funding Corporation
Medisave Pharmacies, Inc.
Medi-Save of Florida, Inc.
Ricketts Drug, Incorporated (51% of capital stock)
Medisave of Tennessee, Inc.
RPA, Inc.
Hillhaven PIP Funding I, Inc.
Cornerstone Insurance Company
Consolidated Partnership Subsidiaries:
Stockton Health Care Center Limited Partnership
Windsor Woods Nursing Home Partnership
New Pond Village Associates
Tucson Retirement Center Limited Partnership
Castle Gardens Retirement Center Limited Partnership
Lantana Partners, Ltd.
Twenty-Nine Hundred Associates, Ltd.
Topeka Retirement Center, Ltd.
Sandy Retirement Center Limited Partnership
Medisave-CSSI Partnership
<PAGE>
<PAGE>
Non-Consolidated Partnerships:
Hillhaven Community Health Partnership
Hillhaven - MSC Partnership
St. George Nursing Home Limited Partnership
Bartlesville Nursing Home Partnership
Carrollwood Care Center
Foothill Nursing Company Partnership
San Marcos Nursing Home Partnership
Fox Hill Village Partnership
Starr Farm Partnership
San Marcos Retirement Village
Woodhaven Partners, Ltd.
Hillcrest Retirement Center, Ltd.
Mayfair Retirement Center Limited Partnership
Other Investments:
Evergreen Pharmaceuticals, Inc. (30% of capital stock)
Ledgewood Health Care Corporation (50% of capital
stock)
American X-Rays, Inc. (50% of capital stock)
Limited partnership investment in securitized portfolio
of notes receivable secured by nursing home and
retirement center properties
Miscellaneous notes receivable (see following pages)
<PAGE>
<PAGE>
SCHEDULE VIII
Sold Asset Notes
Held by the Guarantor:
Original
Principal 8/31/94
Payor Amount Maturity Balance
Tri-State Assoc. 3,600,000 09/01/06 3,416,465
Peter C. Kern 3,450,000 06/30/96 3,129,203
Cal-Iowa Assoc. 2,948,000 05/30/06 2,700,115
Peter C. Kern 2,465,000 06/30/08 2,237,200
Cal-Iowa Assoc. 2,295,000 05/30/06 2,122,605
Tri-State Assoc. 2,120,000 08/01/06 2,004,446
Tri-State Assoc. 2,050,000 09/01/06 1,962,659
Tri-State Assoc. 1,760,000 09/01/06 1,674,831
M V Assoc. 1,300,000 10/01/05 1,197,508
Texville 1,224,000 11/30/07 1,002,223
Others 3,268,012 -- 2,712,664
Sold Asset Notes
Held by the Borrower:
Original
Principal 8/31/94
Payor Amount Maturity Balance
Meadowbrook $7,760,700 08/01/99 $7,551,423
Meadowbrook 4,131,000 08/01/99 4,083,364
Meadowbrook 4,050,000 08/01/99 4,002,965
Hstn. Nrsing. Assc. 3,870,755 04/01/00 3,616,756
Meadowbrook 3,591,000 08/01/99 3,549,296
Hstn. Nrsing. Assc. 3,692,725 04/01/00 3,450,464
Hstn. Nrsing. Assc. 3,331,746 04/01/00 3,113,176
Hstn. Nrsing. Assc. 2,984,549 04/01/00 2,788,655
Meadowbrook 2,700,000 08/01/99 2,668,643
Dirksen/Sprng. Rlty. 2,424,400 05/01/99 2,393,528
Meadowbrook 2,340,000 08/01/99 2,312,821
Tri-State Assoc. 2,300,000 11/25/06 2,278,242
Mid-Valley 2,250,000 10/01/05 2,250,000
Odessa Assoc. 2,250,000 11/25/01 2,190,762
Cal-Iowa Assoc. 1,970,000 05/30/06 1,798,612
Tri-State Assoc. 1,900,000 11/25/01 1,707,999
MWT Associates 1,835,000 12/01/05 1,748,906
Meadowbrook 1,602,122 08/01/99 1,598,466
Meadowbrook 1,597,500 08/01/99 1,578,947
Adams House 1,584,000 05/01/99 1,567,549
Peter C. Kern 1,650,000 04/30/96 1,491,510
Nev-Cal Assoc., LP 1,520,000 04/01/03 1,508,753
Odessa Assoc. 1,440,000 11/25/01 1,400,441
Meadowbrook 1,404,000 08/01/99 1,387,694
Peter C. Kern 1,475,000 04/30/96 1,333,320
Tri-State Assoc. 1,350,000 01/01/03 1,103,712
Sunbelt 3 1,440,000 11/30/07 1,123,778
Nev-Cal Assoc., LP 1,140,000 04/01/03 1,131,564
Others 5,991,178 -- 5,177,495
<PAGE>
<PAGE>
SCHEDULE IX
DESIGNATED IRB DEBT
Bank Providing
Letter of Credit Letter of
or Other Support Credit
Facility No./Name Facility Amount
1. 979 Valley Gardens Bank Cal $ 3,778,616
2. 981 Foothills Bank Cal 4,448,846
3. 7138 Meridian House Bank Cal 7,018,938
15,246,401
4. 922 Windsor Woods Kredietbank 3,675,000
5. 955 Heritage Village Kredietbank 3,130,000
6. 7137 Woodhaven Kredietbank 9,975,000
7. 7165 Hearthstone Kredietbank 8,805,734
25,585,734
8. 7100 Campana del Rio Swiss Bank 11,103,425
9. 7105 Kachina Pointe Swiss Bank 5,474,246
10. 7125 Castle Gardens Swiss Bank 5,164,384
11. 7185 Crosslands (Sandy, UT) Swiss Bank 6,093,973
27,836,028
TOTAL $ 68,668,163
<PAGE>
<PAGE>
SCHEDULE X
INSURANCE REQUIREMENTS
Part A (Physical Damage Insurance)
Minimum Coverage Maximum Allowable Deductible
$100.0 million $250,000 per claim, except
($50.0 million flood claims ($150,000 per
for California claim within 100-year flood
locations) zone and $250,000 per claim
outside 100-year flood zone)
and earthquake claims for
California locations ($2.0
million per claim)
Part B (General and Professional Liability Insurance)
Insured Party Minimum Coverage
Skilled Nursing $25.0 million per claim
Facilities and and annual aggregate
Retirement Housing (primary coverage)
Units
Medisave Pharmacies $25.0 million per claim
and annual aggregate
(primary coverage)
Non-Consolidated $10.0 million per claim
Partnerships and and annual aggregate
Joint Ventures (primary coverage)
<PAGE>
<PAGE>
EXHIBIT A-1
TERM NOTE
New York, New York
, 19
For value received, FIRST HEALTHCARE CORPORATION, a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of all Term Loans made by the Bank to
the Borrower pursuant to the Credit Agreement referred to below
on the maturity date provided for in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount
of each such Term Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at
the office of Chemical Bank, 270 Park Avenue, New York, New York.
All Term Loans made by the Bank, and all repayments of
the principal thereof, shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing
information with respect to each such Term Loan then outstanding
may be endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower under any Financing Document.
This note is one of the Notes referred to in the Credit
Agreement dated as of September 1, 1993 among the Borrower, The
Hillhaven Corporation, as Guarantor, the Banks referred to
therein, the LC Issuing Banks referred to therein, Morgan
Guaranty Trust Company of New York, as Agent, Chemical Bank, as
Administrative Agent, and J.P. Morgan Delaware, as Collateral
Agent (as the same may be amended from time to time, the "Credit
<PAGE>
<PAGE>
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
FIRST HEALTHCARE CORPORATION
By____________________________
Vice President and Treasurer
<PAGE>
<PAGE>
Term Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
<PAGE>
<PAGE>
EXHIBIT A-2
REVOLVER NOTE
New York, New York
, 19
For value received, FIRST HEALTHCARE CORPORATION, a
Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of all Revolver Loans made by the
Bank to the Borrower pursuant to the Credit Agreement referred to
below on the maturity date provided for in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of each such Revolver Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at
the office of Chemical Bank, 270 Park Avenue, New York, New York.
All Revolver Loans made by the Bank, and all repayments
of the principal thereof, shall be recorded by the Bank and, if
the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing
information with respect to each such Revolver Loan then
outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and
made a part hereof; provided that the failure of the Bank to make
any such recordation or endorsement shall not affect the
obligations of the Borrower under any Financing Document.
This note is one of the Notes referred to in the Credit
Agreement dated as of September 1, 1993 among the Borrower, The
Hillhaven Corporation, as Guarantor, the Banks referred to
therein, the LC Issuing Banks referred to therein, Morgan
Guaranty Trust Company of New York, as Agent, Chemical Bank, as
Administrative Agent, and J.P. Morgan Delaware, as Collateral
Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
FIRST HEALTHCARE CORPORATION
By____________________________
Vice President and Treasurer
<PAGE>
<PAGE>
Revolver Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_________________________________________________________________
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
<PAGE>
<PAGE>
EXHIBIT B
FORM OF OPINION OF THE GENERAL COUNSEL
OF THE BORROWER AND THE GUARANTOR
[Closing Date]
To the Banks, the LC Issuing
Banks and the Agents
referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the General Counsel of First Healthcare Corporation,
a Delaware corporation (the "Borrower"), and of The Hillhaven
Corporation, a Nevada corporation (the "Guarantor" and, together
with the Borrower, the "Obligors"), and have acted as such in
connection with (i) the Credit Agreement dated as of September 1,
1993 among the Borrower, the Guarantor, the Banks referred to
therein, the LC Issuing Banks referred to therein, Morgan
Guaranty Trust Company of New York, as Agent, Chemical Bank, as
Administrative Agent, and J.P. Morgan Delaware, as Collateral
Agent (the "Credit Agreement"), (ii) the Security Agreement dated
as of September 1, 1993 between the Borrower and the Collateral
Agent (the "Borrower Security Agreement"), (iii) the Pledge
Agreement dated as of September 1, 1993 between the Guarantor and
the Collateral Agent (the "Guarantor Pledge Agreement") and (iv)
each of the mortgages and deeds of trust dated as of September 1,
1993 relating to the Mortgaged Facilities listed in Schedule VI
to the Credit Agreement (the "Mortgages" and, together with the
Credit Agreement and the Notes issued thereunder, the Borrower
Security Agreement and the Guarantor Pledge Agreement, the
"Transaction Documents"). This opinion is being rendered to you
pursuant to Section 3.01(n) of the Credit Agreement. Terms
defined in the Credit Agreement are used herein as therein
defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Credit Agreement
and the Notes issued thereunder, the Borrower Security Agreement,
the Guarantor Pledge Agreement and the form of Mortgage attached
as an exhibit to the Credit Agreement, and such other documents,
corporate records, certificates of public officials and other
instruments, and have conducted such other investigations of fact
and law, as I have deemed necessary or advisable for purposes of
this opinion.
<PAGE>
<PAGE>
Upon the basis of the foregoing, I am of the opinion
that:
1. The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware, and the Guarantor is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Nevada.
2. Each Obligor (i) has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and
as proposed to be conducted and (ii) is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements) and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to
so qualify or obtain such licenses and approvals would have a
Material Adverse Effect.
3. The execution and delivery by each Obligor of each of
the Transaction Documents to which it is a party and the
performance by such Obligor of its obligations thereunder (i) are
within the corporate power of such Obligor, (ii) have been duly
authorized by all necessary corporate action, (iii) require no
action by or in respect of, or filing with, any governmental
body, agency or official (except (A) such actions or filings as
have been taken or made prior to the Closing Date and are in full
force and effect on the Closing Date and (B) such filings of
Uniform Commercial Code financing statements and such recordings
of Mortgages as are to be made on or after the Closing Date as
contemplated by Section 3.01(h) of the Credit Agreement), (iv) do
not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Charter Documents of such
Obligor or any of its Subsidiaries or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such
Obligor or any of its Subsidiaries and (v) do not result in or
require the imposition of any Lien (other than the Liens created
by the Collateral Documents) on any asset of such Obligor or any
of its Subsidiaries.
4. Each of the Credit Agreement, the Borrower Security
Agreement and the Guarantor Pledge Agreement constitutes a valid
and binding agreement of each Obligor which is a party thereto,
and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable in accordance with its terms,
except that (i) the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (ii) insofar as
provisions contained in the Credit Agreement, the Borrower
Security Agreement and the Guarantor Pledge Agreement provide for
indemnification, the enforcement thereof may be limited by public
policy considerations.
<PAGE>
<PAGE>
5. There is no action, suit or proceeding pending
against, or to my knowledge threatened against or affecting, the
Guarantor or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official (i) in
which there is a reasonable possibility of an adverse decision
which could have a Material Adverse Effect or (ii) which in any
manner questions the validity of any Transaction Document or any
Related Transaction Document.
6. Each of Northwest Health Care, Inc., Pasatiempo
Development Corp., Hillhaven Properties, Ltd. and Medisave
Pharmacies, Inc. (collectively, the "Pledged Subsidiaries") is a
corporation validly existing and in good standing under the laws
of its jurisdiction of incorporation, and each Pledged Subsidiary
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted and as proposed to be conducted.
7. Each of the Borrower Security Agreement and the
Guarantor Pledge Agreement (collectively, the "Security
Documents") creates a valid security interest (a "Security
Interest") in favor of the Collateral Agent, for the benefit of
the holders of the Secured Obligations referred to in such
Security Document, in all of the right, title and interest of the
Obligor which is a party thereto in and to the Collateral
referred to in such Security Document.
8. Upon the filing of UCC-1 financing statements in the
forms attached hereto with [the Department of Licensing of the
State of Washington], the Security Interest in the Collateral
referred to in each Security Document and in each Mortgage will
be perfected to the extent that (i) the Uniform Commercial Code
of the State of Washington (the "Washington UCC") governs the
perfection and the effect of perfection or non-perfection of such
Security Interest and (ii) security interests in such Collateral
may be perfected by filing under the Washington UCC, and no
further filing or recording of any document or instrument (other
than the filing of continuation statements) or other action will
be required under the Washington UCC to perfect and to maintain
the perfection of such Security Interest, except that (A) the
continuation of such perfected Security Interest is limited to
the extent set forth in RCW 62A.9-103(3)(e) and RCW 62A.9-306 of
the Washington UCC and (B) I express no opinion as to the
priority of such perfected Security Interest.
9. Insofar as the Washington UCC is applicable thereto,
the Security Interests validly secure the payment of all future
Loans made by the Banks to the Borrower and all future Letters of
Credit issued by the LC Issuing Banks for the account of the
Borrower, whether or not at the time such Loans are made or such
Letters of Credit are issued an Event of Default or other event
has relieved or may relieve the Banks or the LC Issuing Banks
from their obligations to make such Loans or to issue such
Letters of Credit.
<PAGE>
<PAGE>
I express no opinion as to the applicability (and, if
applicable, the effect) of Section 548 of the United States
Bankruptcy Code or any comparable provision of state law to the
questions addressed above or the conclusions expressed with
respect thereto.
With respect to the opinions expressed in paragraphs 4,
7, 8 and 9 above, I point out that the Credit Agreement, the
Notes, the Borrower Security Agreement and the Guarantor Pledge
Agreement (the "New York Law Documents") contain provisions
stating that such documents are governed by and are to be
construed in accordance with the laws of the State of New York.
I am of the opinion that a Washington state court or a United
States federal court sitting in Washington would give effect to
the provisions in the New York Law Documents providing for New
York law to govern the New York Law Documents and would not
refuse to enforce any of the provisions thereof for public policy
reasons or otherwise. If the New York Law Documents were
governed by the laws of the State of Washington, I would give the
same opinions expressed in paragraphs 4, 7, 8 and 9 above with
respect thereto under Washington law.
I am a member of the bar of the State of California and,
except as stated below, the opinions expressed above are limited
to the laws of the State of Washington and the Federal laws of
the United States of America. I have made no examination of the
effects of the laws of any other jurisdiction upon the issues
covered by such opinions, except that insofar as the foregoing
opinions relate to matters of Delaware or Nevada law, I have
reviewed the relevant provisions of the Delaware General
Corporation Law and the Nevada Private Corporation Law and have
satisfied myself with respect thereto to the extent necessary to
express such opinions. Insofar as the foregoing opinions relate
to matters of Washington law, I have relied upon the opinion of
Brian Rodan, the Associate Counsel of the Borrower and the
Guarantor, a member of my legal staff who is a member of the bar
of the State of Washington.
This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for
any other purpose or relied upon or furnished to any other person
without my prior written consent.
Very truly yours,
<PAGE>
<PAGE>
Forms of UCC-1 Financing Statements
[attach executed UCC-1 financing statements
of the Borrower and the Guarantor that will be filed
with the Department of Licensing
of the State of Washington]
<PAGE>
<PAGE>
EXHIBIT C
FORM OF OPINION OF DAVIS POLK & WARDWELL
[Closing Date]
To the Banks, the LC Issuing
Banks and the Agents
referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have participated in the preparation of (i) the
Credit Agreement dated as of September 1, 1993 among First
Healthcare Corporation, a Delaware corporation (the "Borrower"),
The Hillhaven Corporation, a Nevada corporation (the "Guarantor"
and, together with the Borrower, the "Obligors"), the Banks
referred to therein, the LC Issuing Banks referred to therein,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent (the "Credit Agreement"), (ii) the Security
Agreement dated as of September 1, 1993 between the Borrower and
the Collateral Agent (the "Borrower Security Agreement") and
(iii) the Pledge Agreement dated as of September 1, 1993 between
the Guarantor and the Collateral Agent (the "Guarantor Pledge
Agreement" and, together with the Credit Agreement, the Notes
issued thereunder and the Borrower Security Agreement, the
"Transaction Documents").
We have acted as special counsel for the Agent and the
Administrative Agent for the purpose of rendering this opinion
pursuant to Section 3.01(o) of the Credit Agreement. Terms
defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Transaction
Documents and such other documents, corporate records,
certificates of public officials and other instruments, and have
conducted such other investigations of fact and law, as we have
deemed necessary or advisable for purposes of this opinion.
<PAGE>
<PAGE>
In expressing the opinions below, we have assumed,
without independent investigation, that each of the Obligors has
all corporate powers required for, and has duly authorized by all
requisite corporate action, the execution, delivery and
performance of its obligations under each Transaction Document to
which it is a party. We note that these topics are addressed in
the opinion of Richard P. Adcock, General Counsel of the Borrower
and the Guarantor, dated September 1, 1993 and delivered to you
today.
Upon the basis of the foregoing and subject to the
qualifications set forth below, we are of the opinion that:
1. Each of the Credit Agreement, the Borrower Security
Agreement and the Guarantor Pledge Agreement constitutes a valid
and binding agreement of each Obligor which is a party thereto,
and the Notes delivered on the Closing Date constitute valid and
binding obligations of the Borrower.
2. Upon execution and delivery of the Borrower Security
Agreement and the Guarantor Pledge Agreement (collectively, the
"Security Documents") by the parties thereto, and possession in
New York by the Collateral Agent of (x) the certificates
representing all shares of capital stock of Northwest Health
Care, Inc., Pasatiempo Development Corp. and Hillhaven
Properties, Ltd. pledged under the Borrower Security Agreement on
the Closing Date (the "Borrower Pledged Shares"), (y) the
certificate representing all shares of capital stock of Medisave
Pharmacies, Inc. pledged under the Guarantor Pledge Agreement on
the Closing Date (the "Guarantor Pledged Shares" and, together
with the Borrower Pledged Shares, the "Pledged Shares"), and (z)
all Pledged Notes (as defined in the Borrower Security Agreement)
pledged under the Borrower Security Agreement on the Closing Date
(the "Pledged Notes"):
(a) the Collateral Agent will have a valid security
interest, for the benefit of the holders of the Secured
Obligations referred to in each such Security Document, in all
of the right, title and interest of the Obligors in and to
such Pledged Shares and Pledged Notes to the extent that the
Uniform Commercial Code of the State of New York (the "New
York UCC") governs the creation of a security interest
therein, and
(b) to the extent that the Pledged Shares constitute
"certificated securities" within the meaning of Article 8-103
of the New York UCC and the Pledged Notes constitute
"instruments" within the meaning of Section 9-105 of the New
York UCC, such security interest will be perfected by such
possession.
<PAGE>
<PAGE>
To the extent that any rights evidenced by or referred to in the
Pledged Shares or the Pledged Notes constitute general
intangibles or accounts under the New York UCC, the perfection
and the effect of perfection or non-perfection of the Collateral
Agent's security interest therein are matters governed by the
laws of the State of Washington and addressed by the opinion of
Richard P. Adcock referred to above.
3. No New York governmental registration, recordation or
filing by the Borrower or the Guarantor is required in connection
with the execution or delivery of the Credit Agreement, the
Notes, the Borrower Security Agreement or the Guarantor Pledge
Agreement or is necessary for the validity or enforceability
thereof.
We express no opinion as to (i) the right, title or
interest of either Obligor in or to the Collateral referred to in
the Security Documents, (ii) the priority or, except as stated in
paragraph 2(b) above, the perfection of the security interests
granted or purported to be granted to the Collateral Agent
pursuant to the Security Documents or (iii) the perfection of the
Collateral Agent's security interest in proceeds of the Pledged
Shares or the Pledged Notes. We also express no opinion as to
the applicability (and, if applicable, the effect) of Section 548
of the United States Bankruptcy Code or any comparable provision
of state law to the questions addressed above or the conclusions
expressed with respect thereto.
The opinions expressed in paragraphs 1 and 2 above are
subject to the following qualifications:
(i) the enforceability of the Transaction Documents may
be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles;
(ii) certain provisions of the Security Documents may be
unenforceable in whole or in part under the laws of the State
of New York, but the inclusion of such provisions does not
affect the validity of the Security Documents, and each of the
Security Documents contains adequate provisions for the
practical realization of the rights and benefits intended to
be afforded thereby;
(iii) we express no opinion as to the effect of the law of
any jurisdiction other than the State of New York wherein any
Bank may be located or wherein enforcement of the Credit
Agreement or the Notes issued thereunder may be sought which
limits the rates of interest legally chargeable or
collectable; and
<PAGE>
<PAGE>
(iv) we express no opinion as to the enforceability of
the Security Documents insofar as such enforceability is
governed by laws other than the laws of the State of New York.
In expressing the opinions in paragraph 2 above, we have
assumed that (i) the Collateral Agent and the holders of the
Secured Obligations were without notice, at the time of the
delivery of the Pledged Shares and the Pledged Notes to the
Collateral Agent, of any adverse claim (as such term is used in
Section 8-302 of the New York UCC) with respect to the Pledged
Shares or the Pledged Notes, (ii) each Obligor has title to the
Pledged Shares and the Pledged Notes pledged by it and (iii) any
Secured Obligations arising after the Closing Date will
constitute valid and binding obligations of the Borrower or the
Guarantor, as the case may be.
We are members of the bar of the State of New York and
the foregoing opinion is limited to the laws of the State of New
York and the Federal laws of the United States of America.
This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for
any other purpose or relied upon or furnished to any other person
without our prior written consent.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT D
FORM OF AGREEMENT DESIGNATING
ADDITIONAL LC ISSUING BANK
[Date]
[Name of Additional LC Issuing Bank]
[Address]
Dear Sirs:
Reference is made to the Credit Agreement dated as of
September 1, 1993 among First Healthcare Corporation, as
Borrower, The Hillhaven Corporation, as Guarantor, the Banks
referred to therein, the LC Issuing Banks referred to therein,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement
are used herein as therein defined.
Upon your acceptance of this letter:
(i) you are designated as an additional "LC Issuing
Bank" for purposes of the Credit Agreement;
(ii) you will have acknowledged that you have received a
copy of the Credit Agreement and the other Financing
Documents;
(iii) you will have all the rights of an LC Issuing Bank
under the Financing Documents;
(iv) you agree, for the benefit of all other parties to
the Credit Agreement, that you will have all the obligations
of an LC Issuing Bank under the Financing Documents; and
(v) you agree to issue [Revolver Letters of Credit with
an aggregate face amount not exceeding $__________ at any time
outstanding]] [and] [IRB Letters of Credit with an aggregate
face amount not exceeding $__________] upon our request in
accordance with the Credit Agreement. *
* Specify whether Revolver Letters of Credit and/or IRB Letters
of Credit will be issued by the LC Issuing Bank (and any
applicable face amount limits.)
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Please evidence your agreement with the foregoing by
signing in the space provided below and returning a signed copy
of this letter to us, whereupon it shall become our binding
agreement governed by and construed in accordance with New York
law.
Very truly yours,
FIRST HEALTHCARE CORPORATION
By:_________________________
Name:
Title:
Accepted and agreed:
[NAME OF LC ISSUING BANK]
By:______________________
Name:
Title:
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EXHIBIT E
CONFORMED COPY
[showing changes effected
by Amendment No. 1 dated
as of September 28, 1993]
SECURITY AGREEMENT
AGREEMENT dated as of September 1, 1993 between FIRST
HEALTHCARE CORPORATION, a Delaware corporation (with its
successors, the "Borrower"), and J.P. MORGAN DELAWARE, as
Collateral Agent.
W I T N E S S E T H:
WHEREAS, the Borrower and its parent corporation, The
Hillhaven Corporation, a Nevada corporation (with its successors,
the "Guarantor"), have entered into a Credit Agreement dated as
of September 1, 1993 among the Borrower, the Guarantor, the Banks
referred to therein, the LC Issuing Banks referred to therein,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent (as the same may be amended from time to time,
the "Credit Agreement");
WHEREAS, the Borrower desires to secure its obligations
under the Credit Agreement and certain related documents as
provided in this Agreement; and
WHEREAS, the Borrower may from time to time hereafter
enter into interest rate hedging agreements and may desire to
secure its obligations thereunder as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used
herein, have the following respective meanings:
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"Borrower's Hillhaven Funding Note" means the
subordinated purchase money note, dated July 1, 1990, issued by
Hillhaven Funding to the Borrower pursuant to the Medicaid
Receivables Agreement.
"Cash Distributions" means dividends, interest and other
payments and distributions made upon or with respect to the
Pledged Stock or any other Collateral in cash.
"Casualty" has the meaning set forth in the Mortgages.
"Collateral" has the meaning set forth in Section 3(a).
"Collateral Account" has the meaning set forth in Section
6(a).
"Collateral Agent" means J.P. Morgan Delaware, in its
capacity as Collateral Agent for the Secured Parties, and its
successors in such capacity.
"Condemnation" has the meaning set forth in the
Mortgages.
"Contingent LC Obligation" means, at any time, a
contingent obligation of the Borrower to reimburse the relevant
LC Issuing Bank for drawings under any Letter of Credit.
"Current Asset Collateral" means all
(i) Receivables, (ii) Instruments, (iii) Management Contracts,
(iv) Intercompany Receivables, (v) books and records (including
customer lists, credit files, computer programs, printouts and
other computer materials and records) of the Borrower pertaining
to any of the foregoing and (vi) Proceeds of all or any of the
foregoing, in each case whether now existing or hereafter
acquired or arising.
"Enforcement Notice" means a notice delivered to the
Collateral Agent by the Required Banks (i) stating that an Event
of Default has occurred and is continuing and (ii) directing
the Collateral Agent to exercise one or more rights or remedies
under any Collateral Document.
"Excluded Cash Distributions" means Cash Distributions
received by the Borrower or the Collateral Agent at a time when
no Enforcement Notice directing the Collateral Agent to receive
and retain such Cash Distributions is in effect.
"Excluded Receivable" means (i) any Medicaid Receivable
which has been sold by the Borrower to Hillhaven Funding pursuant
to the Medicaid Receivables Agreement or (ii) any Receivable
which has been originated at an "Excluded Facility" (as defined
in the Medicaid Receivables Agreement).
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"Guarantor" has the meaning set forth in the recitals to
this Agreement.
"Guarantor Pledge Agreement" means the Pledge Agreement
dated as of September 1, 1993 between the Guarantor and the
Collateral Agent, as the same may be amended from time to time.
"Hillhaven Funding" means Hillhaven Funding Corporation,
a Nevada corporation, and its successors.
"Hillhaven Properties" means Hillhaven Properties, Ltd.,
an Oregon corporation, and its successors.
"Initial Shares" means all of the shares of capital stock
of the Issuers outstanding on the date hereof, as listed in
Schedule I hereto.
"Instruments" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of, relating
to, securing or otherwise supporting the payment of, any of the
Receivables, including (but not limited to) promissory notes,
drafts, bills of exchange and trade acceptances, whether now
owned or hereafter acquired by the Borrower.
"Intercompany Notes" means all promissory notes or other
instruments evidencing obligations owed to the Borrower by the
Guarantor or any of its Subsidiaries (including any Subsidiary of
the Borrower) or any Non-Consolidated Partnership, whether now
existing or hereafter arising or acquired.
"Intercompany Receivables" means all obligations owed to
the Borrower by the Guarantor or any of its Subsidiaries
(including any Subsidiary of the Borrower) or any Non-
Consolidated Partnership, including any such obligation which
might be characterized as an account, contract right or general
intangible under the Uniform Commercial Code in effect in any
jurisdiction, whether now existing or hereafter arising.
"Interest Rate Hedging Agreement" means any interest rate
swap agreement, forward rate agreement, interest rate cap
agreement or other interest rate hedging agreement entered into
by the Borrower and any Bank or any Affiliate of a Bank.
"Issuers" means Pasatiempo, Hillhaven Properties and
Northwest Health Care.
"LC Collateral Account" has the meaning set forth in
Section 6(d).
"Liquid Investments" has the meaning set forth in Section
6(c).
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"Management Contracts" means all agreements to which the
Borrower is a party, whether now existing or hereafter arising,
pursuant to which the Borrower provides management and other
services to other Persons in connection with the operation of
health care facilities owned or leased by such other Persons,
including (i) all rights of the Borrower to receive monies due
and to become due to it thereunder or in connection therewith and
(ii) all rights of the Borrower to damages arising out of, or
for, breach or default in respect thereof.
"Medicaid Receivable" means any Receivable with respect
to which the obligor is a state governmental authority (or agent
thereof) obligated to pay, pursuant to federal or state Medicaid
program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.
"Medicaid Receivables Agreement" means the Master Sale
and Servicing Agreement dated as of July 1, 1990, as amended from
time to time, among Hillhaven Funding, the Guarantor, the
Borrower, Pasatiempo and Northwest Health Care.
"Medicare Receivable" means any Receivable with respect
to which the obligor is a federal governmental authority (or
agent thereof) obligated to pay, pursuant to federal Medicare
program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.
"Non-Consolidated Partnership" has the meaning set forth
in the Credit Agreement.
"Northwest Health Care" means Northwest Health Care,
Inc., an Idaho corporation, and its successors.
"Pasatiempo" means Pasatiempo Development Corp., a
California corporation, and its successors.
"Perfection Certificate" means a certificate
substantially in the form of Exhibit A hereto, completed and
supplemented with the schedules and attachments contemplated
thereby to the satisfaction of the Collateral Agent, and duly
executed by the Vice President and Treasurer and the Senior Vice
President, Secretary and General Counsel of the Borrower.
"PIP Funding" means Hillhaven PIP Funding I, Inc., a
Delaware corporation, and its successors.
"PIP Funding Note" means the $61,800,000 promissory note,
dated the Closing Date, issued by PIP Funding to the Borrower to
evidence the loan made by the Borrower to PIP Funding on the
Closing Date to enable PIP Funding to repay its outstanding Debt
on such date.
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"Pledged Notes" means (i) the PIP Funding Note, (ii) the
Intercompany Notes listed in Schedule II hereto, (iii) the
Borrower's Hillhaven Funding Note and (iv) all other Intercompany
Notes required to be pledged to the Collateral Agent from time to
time pursuant to Section 4(b).
"Pledged Securities" means the Pledged Notes and the
Pledged Stock.
"Pledged Stock" means (i) the Initial Shares and (ii) any
other shares of capital stock of any Issuer required to be
pledged to the Collateral Agent from time to time pursuant to
Section 4(b).
"Proceeds" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, collateral, in each
case whether now existing or hereafter arising.
"Receivables" means all "accounts" (as defined in the
UCC) now owned or hereafter acquired by the Borrower and also
means and includes all accounts receivable, contract rights
(including those arising in respect of Management Contracts),
book debts, notes, drafts and other obligations or indebtedness
owing to the Borrower arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services
by it, including any such obligation which might be characterized
as an account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction, and all
monies due to or to become due to the Borrower under all
contracts for the sale, lease or exchange of goods or other
property and/or the performance of services by it (whether or not
yet earned by performance on the part of the Borrower), in each
case whether now in existence or hereafter arising or acquired,
including the right to receive the proceeds of said purchase
orders and contracts and all collateral, security and guarantees
of any kind given by any Person with respect to any of the
foregoing; provided that the term "Receivables" shall not include
(i) the Borrower's right, title and interest in and to Excluded
Receivables, whether now owned or hereafter acquired, (ii) the
Borrower's right, title and interest in and to Sold Asset Notes,
whether now owned or hereafter acquired, or (iii) the Retained
Collection Rights with respect to Medicaid Receivables, Medicare
Receivables and VA Receivables.
"Retained Collection Rights" means, with respect to any
Medicaid Receivable, Medicare Receivable or VA Receivable of the
Borrower, the right of the Borrower to collect and receive from
the obligor thereon payments made in respect of such Receivable
in the absence of a court order requiring such obligor to submit
payments thereon directly to a Person other than the Borrower.
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"Secured Hedging Agreement" means, at any time, any
Interest Rate Hedging Agreement which the Collateral Agent has
theretofore designated as a Secured Hedging Agreement pursuant to
Section 16(a), provided that such designation has not been
withdrawn pursuant to Section 16(b).
"Secured Obligations" means (i) the principal of all
Loans made under, and all Notes issued pursuant to, the Credit
Agreement, (ii) all Reimbursement Obligations arising with
respect to Letters of Credit, (iii) all Contingent LC
Obligations, (iv) all obligations of the Borrower (whether
contingent or non-contingent) under Secured Hedging Agreements,
(v) all other amounts payable by the Borrower under the Financing
Documents, (vi) all interest on the Secured Obligations listed in
the foregoing clauses (i) to (v) inclusive (including any
interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Borrower, whether or not allowed or
allowable as a claim in any such proceeding) and (vii) any
renewals or extensions of any of the foregoing.
"Secured Parties" means the Collateral Agent and all
other holders of any of the Secured Obligations (including all
Persons to whom any of the Secured Obligations may be payable
from time to time).
"Securities Collateral" means (i) the Pledged Securities,
(ii) all of the Borrower's rights and privileges with respect to
the Pledged Securities, (iii) all income and profits thereon and
all interest, dividends and other payments and distributions with
respect thereto and (iv) all Proceeds of the foregoing.
"Security Interests" means the security interests in the
Collateral granted hereunder to secure the Secured Obligations.
"Sold Asset Note" has the meaning set forth in the Credit
Agreement.
"UCC" means the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if, by
reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection of the Security Interests
in any Collateral is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than New York, "UCC" means the
Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
"Unpaid Principal Amount" means, at any time, (i) with
respect to Loans or Reimbursement Obligations, the unpaid
principal amount of such Loans or Reimbursement Obligations, (ii)
with respect to Contingent LC Obligations, an amount equal to the
aggregate amount of Contingent LC Obligations at such time less
the aggregate balance held at such time in the LC Collateral
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Account and (iii) with respect to obligations arising in respect
of Secured Hedging Agreements, the non-contingent portion thereof
at such time, whether arising by termination of the related
Secured Hedging Agreement in accordance with its terms or
otherwise (but excluding any such non-contingent amount
representing interest accrued on overdue payments thereunder).
"VA Receivable" means any Receivable with respect to
which the obligor is the Veterans' Administration or any
successor thereto (or any agent thereof).
SECTION 2. Representations and Warranties
The Borrower represents and warrants as follows:
(a) Title to Collateral. The Borrower has good and
marketable title to all of the Collateral, free and clear of any
Liens other than the Security Interests. The Borrower has taken
all actions necessary under the UCC to perfect its interest in
any Receivables purchased or otherwise acquired by it, as against
its assignors and creditors of its assignors.
(b) Pledged Stock. The Pledged Stock includes all of
the issued and outstanding capital stock of each Issuer. All of
the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no
options to purchase or similar rights of any Person. The
Borrower is not and will not become a party to or otherwise bound
by any agreement, other than this Agreement, which restricts in
any manner the rights of any present or future holder of any of
the Pledged Stock with respect thereto.
(c) Validity of Security Interests. The Security
Interests constitute valid security interests under the UCC
securing the Secured Obligations.
(d) Perfection and Priority of Security Interests.
(i) Securities Collateral. Upon the delivery of the
Pledged Notes and certificates representing the Pledged Stock to
the Collateral Agent in accordance with Section 4, the Collateral
Agent will have perfected security interests in the Securities
Collateral subject to no prior Lien.
(ii) Current Asset Collateral. When amendments to UCC
financing statements substantially in the form of Exhibit A to
Amendment No. 1 hereto shall have been filed in the offices
specified in the Perfection Certificate, the Security Interests
will constitute perfected security interests in the Current Asset
Collateral to the extent that a security interest therein may be
perfected by filing pursuant to the UCC, prior to all other Liens
and rights of others therein.
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(iii) Required Filings. Except for the filing of UCC
financing statements as described in clause (ii) above and
continuation statements with respect thereto, no registration,
recordation or filing with any governmental body, agency or
official is required in connection with the execution or delivery
of this Agreement or necessary for the validity or enforceability
hereof or for the perfection or enforcement of the Security
Interests.
(e) Chief Executive Office. The chief executive office
of the Borrower is located at its address set forth on the
signature pages of the Credit Agreement.
(f) No Limitations on Enforceability; No Prior Filings.
The Borrower has not performed any acts which might prevent the
Collateral Agent from enforcing any of the provisions of this
Agreement or which would limit the Collateral Agent in any such
enforcement. Other than financing statements or other similar or
equivalent documents or instruments with respect to the Security
Interests and other Permitted Liens, no financing statement,
mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file
or of record in any jurisdiction in which such filing or
recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person
(other than the Borrower) asserting any claim thereto or security
interest therein, except that the Collateral Agent or its
designee may have possession of Collateral as contemplated by
this Agreement and the other Collateral Documents.
(g) Management Contracts. No consent of any party
(except the Borrower) to any Management Contract is required, or
purports to be required, in connection with the granting of the
Security Interests therein.
SECTION 3. The Security Interests
(a) Grant of Security Interests. In order to secure the
full and punctual payment of the Secured Obligations in
accordance with the terms thereof, and to secure the performance
of all of the obligations of the Borrower under the Financing
Documents, the Borrower hereby assigns and pledges to and with
the Collateral Agent for the benefit of the Secured Parties, and
grants to the Collateral Agent for the benefit of the Secured
Parties security interests in and to, all of the following
property of the Borrower, whether now owned or existing or
hereafter acquired or arising:
(i) the Securities Collateral;
(ii) the Current Asset Collateral;
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(iii) the Collateral Account, all cash deposited therein
from time to time, the Liquid Investments made pursuant to
Section 6(c) and all Proceeds of such Liquid Investments; and
(iv) the LC Collateral Account, all cash deposited
therein from time to time, the Liquid Investments made
pursuant to Section 6(d) and all Proceeds of such Liquid
Investments.
All of the property described in the foregoing clauses (i) to
(iv), inclusive, and all additional property which may be added
to the collateral hereunder, is collectively referred to herein
as the "Collateral".
(b) No Assumption of Liability. The Security Interests
are granted as security only and shall not subject the Collateral
Agent or any other Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of the Borrower
with respect to any of the Collateral or any transaction in
connection therewith.
SECTION 4. Pledged Securities
(a) Initial Pledged Securities. Contemporaneously with
the execution and delivery of this Agreement, the Borrower is
delivering the Pledged Notes identified in clauses (i) and (ii)
of the definition thereof and certificates representing the
Initial Shares to the Collateral Agent in pledge hereunder.
(b) Additional Pledged Securities. If any Issuer at any
time issues any additional or substitute shares of capital stock
of any class (including by way of any dividend or other
distribution on its then outstanding capital stock), or if the
Guarantor or any of its Subsidiaries (including any Subsidiary of
the Borrower) or any Non-Consolidated Partnership at any time
issues any Intercompany Note to the Borrower, the Borrower will
immediately pledge and deposit with the Collateral Agent the
certificates representing such shares or such Intercompany Note,
as the case may be, as additional security for the Secured
Obligations. All such shares and Intercompany Notes will
constitute additional Pledged Securities and be subject to all
provisions of this Agreement.
(c) Delivery of Pledged Securities. All Pledged Notes
delivered to the Collateral Agent by the Borrower pursuant hereto
shall be indorsed to the order of the Collateral Agent, or
accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax
stamps, all in form and substance reasonably satisfactory to the
Collateral Agent. All certificates representing Pledged Stock
delivered to the Collateral Agent by the Borrower pursuant hereto
shall be in suitable form for transfer by delivery, or shall be
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accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax
stamps, all in form and substance reasonably satisfactory to the
Collateral Agent.
(d) Record Ownership of Pledged Stock. If directed to
do so by the Required Banks at any time, the Collateral Agent
shall cause the Pledged Stock (or any portion thereof specified
in such directions) to be transferred of record into the name of
the Collateral Agent or its nominee. Promptly upon receiving any
such directions, the Collateral Agent will notify the Borrower
thereof and thereafter the Borrower will promptly give to the
Collateral Agent copies of any notices or other communications
received by it with respect to Pledged Stock registered in the
name of the Borrower, and the Collateral Agent will promptly give
to the Borrower copies of any notices and communications received
by the Collateral Agent with respect to Pledged Stock registered
in the name of the Collateral Agent or its nominee. The
Collateral Agent shall pay over to the Borrower all Excluded Cash
Distributions received by the Collateral Agent upon or with
respect to any Pledged Stock held of record in the name of the
Collateral Agent or its nominee.
(e) Right to Receive Distributions on Collateral. The
Collateral Agent shall have the right to receive and retain as
Collateral hereunder all dividends and other payments and
distributions made upon or with respect to the Collateral and the
Borrower shall take all such action as the Collateral Agent may
deem necessary or appropriate to give effect to such right;
provided that the foregoing sentence shall not apply to Excluded
Cash Distributions. All such dividends and other payments and
distributions which are received by the Borrower (except Excluded
Cash Distributions) shall be received in trust for the benefit of
the Secured Parties and shall be segregated from other assets of
the Borrower and shall, promptly upon the Borrower's receipt
thereof, be paid over to the Collateral Agent as Collateral in
the same form as received (with any necessary endorsements or
executed assignments in blank), together with a statement
identifying the source of such Collateral and stating that it is
being delivered to the Collateral Agent to be held as Collateral
under this Agreement. If an Enforcement Notice directing the
Collateral Agent to receive and retain Cash Distributions is
given and later withdrawn pursuant to Section 15, the Collateral
Agent's right to retain Cash Distributions under this Section
4(e) shall cease and the Collateral Agent shall pay over to the
Borrower any Cash Distributions retained by it during the
continuance of such Enforcement Notice.
(f) Right to Vote Pledged Stock. Unless an Enforcement
Notice directing the Collateral Agent to vote the Pledged Stock
is in effect, the Borrower shall have the right, from time to
time, to vote and to give consents, ratifications and waivers
with respect to the Pledged Stock, and the Collateral Agent
shall, upon receiving a written request from the Borrower,
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deliver to the Borrower or as specified in such request such
proxies, powers of attorney, consents, ratifications and waivers
in respect of any of the Pledged Stock which shall have been
registered in the name of the Collateral Agent or its nominee
pursuant to Section 4(d) as shall be specified in such request
and be in form and substance reasonably satisfactory to the
Collateral Agent.
If an Enforcement Notice directing the Collateral Agent
to vote the Pledged Stock is in effect, the Collateral Agent
shall have the right to the extent permitted by law, and the
Borrower shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give
consents, ratifications and waivers, and take any other action
with respect to any or all of the Pledged Stock with the same
force and effect as if the Collateral Agent were the absolute and
sole owner thereof. The Collateral Agent shall have no duty to
take any action under the preceding sentence unless the
Collateral Agent shall have received written instructions to take
such action from the Required Banks.
SECTION 5. Further Assurances; Covenants
(a) Change of Name. The Borrower will not change its
name, identity or corporate structure in any manner unless it
shall have given the Collateral Agent prior notice thereof and
delivered an opinion of counsel with respect thereto in
accordance with Section 5(o).
(b) Place of Business; Transfer of Collateral. The
Borrower will not, and will not permit Northwest Health Care or
Pasatiempo to, change (i) the location of its chief executive
office or chief place of business or (ii) the locations, if any,
in the State of Vermont where it maintains any books and records
relating to any Receivables from the applicable location
described in the Perfection Certificate, unless the Borrower
shall have given the Collateral Agent prior notice thereof and
delivered an opinion of counsel with respect thereto in
accordance with Section 5(o).
(c) Perfection Certificate. On or before the Closing
Date, the Borrower will deliver the Perfection Certificate to the
Collateral Agent. The information set forth therein shall be
correct and complete. Within 60 days after the Closing Date, the
Borrower will furnish to the Collateral Agent file search reports
from the UCC filing offices in the jurisdictions identified in
paragraph 2 of the Perfection Certificate setting forth the
filing information for each filing made with respect to the
Collateral.
(d) Further Assurances. The Borrower will, from time to
time at its expense, execute, deliver, file and record any
statement, assignment, instrument, document, agreement or other
paper and take any other action (including any filings of
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financing or continuation statements under the UCC) that from
time to time may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to create,
preserve, perfect, confirm or validate the Security Interests or
to enable the Collateral Agent and the other Secured Parties to
obtain the full benefits of this Agreement, or to enable the
Collateral Agent to exercise and enforce any of its rights,
powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the
Borrower authorizes the Collateral Agent to execute and file
financing statements or continuation statements without the
Borrower's signature appearing thereon. The Borrower agrees that
a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a
financing statement. The Borrower shall pay the reasonable costs
of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(e) Books and Records. The Borrower shall keep full and
accurate books and records relating to the Current Asset
Collateral, and stamp or otherwise mark such books and records in
such manner as the Required Banks may reasonably request in order
to reflect the Security Interests.
(f) Instruments. The Borrower will immediately deliver
and pledge each Instrument received by it to the Collateral
Agent, appropriately endorsed to the Collateral Agent, provided
that, so long as no Enforcement Notice directing the Collateral
Agent to retain and collect checks and similar Instruments is in
effect, the Borrower may retain for collection in the ordinary
course any checks or similar Instruments received by it in the
ordinary course of business. The Collateral Agent shall,
promptly upon request of the Borrower, make appropriate
arrangements for making any other Instrument pledged by the
Borrower available to it for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent
deemed appropriate by the Collateral Agent, against trust receipt
or like document).
(g) Collections. The Borrower shall use its best
efforts to cause to be collected from its account debtors in
respect of Receivables, as and when due, any and all amounts
owing under or on account of each Receivable (including
Receivables which are delinquent, such Receivables to be
collected in accordance with lawful collection procedures) and
shall apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Receivable.
The Borrower may allow in the ordinary course of business, as
adjustments to amounts owing under its Receivables, an extension
or renewal of the time or times of payment, or settlement for
less than the total unpaid balance, which the Borrower finds
appropriate in accordance with sound business judgment and with
the Borrower's ordinary course of business consistent with its
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historical collection practices, unless an Enforcement Notice is
in effect requiring the Collateral Agent's consent for such
adjustments, extensions, renewals or settlements. The costs and
expenses (including attorneys' fees) of collection, whether
incurred by the Borrower or the Collateral Agent, shall be borne
by the Borrower.
(h) Medicaid Receivables; Medicare Receivables; VA
Receivables. The Borrower shall service and administer its
Medicaid Receivables, Medicare Receivables and VA Receivables and
shall collect payments due under such Receivables in accordance
with its usual and customary servicing policies and procedures
for servicing such Receivables, and shall have full power and
authority, acting alone or through any Person properly designated
by it hereunder, to do any and all things in connection with such
servicing and administration which it may deem necessary or
desirable.
(i) Notice to Account Debtors, Etc. If an Enforcement
Notice requiring such notification is in effect, the Borrower
will promptly notify (and the Borrower hereby authorizes the
Collateral Agent so to notify) each account debtor in respect of
any Receivable or Instrument, and each counterparty under any
Management Contract, that such Collateral has been assigned to
the Collateral Agent hereunder, and that, to the extent permitted
by applicable law, any payments due or to become due in respect
of such Collateral are to be made directly to the Collateral
Agent or its designee.
(j) Sales of Collateral. The Borrower will not sell,
assign or otherwise dispose of, or grant any option with respect
to, any Collateral.
(k) Lock-Box and Concentration Account Arrangements. If
an Event of Default shall have occurred and be continuing, the
Borrower shall, upon the request of the Required Banks through
the Collateral Agent, institute lock-box and concentration
account arrangements satisfactory to the Collateral Agent
pursuant to which, to the extent permitted by applicable law:
(i) all Proceeds pledged to the Collateral Agent shall be paid
into lock-box accounts in the name of the Collateral Agent (which
shall contain no other monies and as to which the relevant banks
shall have waived their respective rights of set-off) and shall
thereafter be paid into a concentration account in the name of
the Collateral Agent (which shall contain no other monies and as
to which the relevant bank shall have waived its right of set-
off); and (ii) the concentration bank shall agree to act upon the
instructions, whenever received, of the Collateral Agent,
pursuant to which amounts in the concentration account would be
paid on a daily basis into the Collateral Account and applied in
accordance with Section 6. The lockbox and concentration account
arrangements provided for herein shall, once instituted, unless
the Required Banks otherwise agree, thereafter at all times be
maintained in place without regard to the existence or cure of
any Event of Default.
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(l) Continuation of Perfected Interest in Purchased
Receivables. The Borrower will take all actions necessary under
the UCC, including the execution and filing of financing
statements and continuation statements, to perfect its interest,
and to maintain such perfected interest, in any Receivables
purchased or otherwise acquired by it, as against its assignors
and creditors of its assignors.
(m) Inspection of Collateral. The Borrower, upon
reasonable request by the Collateral Agent, will permit the
Collateral Agent, at any time and from time to time during normal
business hours, to inspect, audit, check and make abstracts from
the Borrower's books, records and other papers relating to the
Collateral. The cost of any such inspection shall be borne by
the Collateral Agent unless an Event of Default shall have
occurred and be continuing at the time of such inspection, in
which case the Borrower shall pay, or reimburse the Collateral
Agent for, such cost.
(n) Additional Information. The Borrower will, promptly
upon request, provide to the Collateral Agent all information and
evidence it may reasonably request concerning the Collateral to
enable the Collateral Agent to enforce the provisions of this
Agreement.
(o) Opinions. At least ten (but not more than 30) days
before the Borrower takes any action contemplated by Section 5(a)
or (b), the Borrower shall, at its expense, cause to be delivered
to the Secured Parties an opinion of counsel reasonably
satisfactory to the Collateral Agent to the effect that all
financing statements and amendments or supplements thereto,
continuation statements and other documents required to be
recorded or filed in order to perfect and protect the Security
Interests for a period, specified in such opinion, continuing
until a date not earlier than eighteen months from the date of
such opinion, against all creditors of and purchasers from the
Borrower have been filed in each filing office necessary for such
purpose and that all filing fees and taxes, if any, payable in
connection with such filings have been paid in full.
SECTION 6. Collateral Account
(a) Establishment. There is hereby established with the
Collateral Agent a cash collateral account (the "Collateral
Account") in the name and under the control of the Collateral
Agent into which there shall be deposited from time to time the
cash proceeds of the Collateral required to be delivered to the
Collateral Agent pursuant to Section 6(b) or 6(c) and the cash
proceeds of any other collateral required to be delivered to the
Collateral Agent pursuant to any other provision of the Financing
Documents, but not monies received by the Collateral Agent for
deposit in the LC Collateral Account. Any income received by the
Collateral Agent with respect to the balance from time to time
standing to the credit of the Collateral Account or the LC
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Collateral Account, including any interest or capital gains on
Liquid Investments, shall remain, or be deposited, in the
Collateral Account. All right, title and interest in and to the
cash amounts on deposit from time to time in the Collateral
Account and the LC Collateral Account together with any Liquid
Investments from time to time made pursuant to Sections 6(c) and
(d) shall vest in the Collateral Agent, shall constitute part of
the Collateral hereunder and shall not constitute payment of the
Secured Obligations until applied thereto as hereinafter
provided.
(b) Insurance Proceeds and Condemnation Awards. All
Casualty Proceeds received by the Collateral Agent in respect of
any Casualty or Condemnation relating to a Mortgaged Facility
shall be deposited in the Collateral Account and applied by the
Collateral Agent as follows:
(i) if an Enforcement Notice instructing it to do so is
in effect, the Collateral Agent shall retain such Casualty
Proceeds in the Collateral Account or apply such Casualty
Proceeds as specified in Section 10;
(ii) if no Enforcement Notice described in clause (i)
above is in effect, the Collateral Agent shall disburse such
Casualty Proceeds to the Borrower
(A) from time to time upon receipt of a
certificate of a Financial Officer of the Borrower
prepared in good faith and stating that either (x) the
Casualty Proceeds to be so disbursed do not exceed, on
a cumulative basis, the amounts theretofore expended by
the Borrower to restore or replace such Mortgaged
Facility or (y) the restoration or replacement of such
Mortgaged Facility has been completed, provided that no
such certificate shall be required in respect of, and
the Collateral Agent shall promptly disburse to the
Borrower upon its receipt of, Casualty Proceeds
aggregating $100,000 or less with respect to any
Casualty or Condemnation, or
(B) promptly upon request by the Borrower at any
time after one or more health care facilities have been
substituted for such Mortgaged Facility and such
Mortgaged Facility has been released from the Lien of
the relevant Mortgage in accordance with the provisions
thereof.
(c) Investment of Amounts in Collateral Account.
Amounts on deposit in the Collateral Account shall be invested
and re-invested from time to time in such Liquid Investments as
the Borrower shall determine, which Liquid Investments shall be
held in the name and under the control of the Collateral Agent,
provided that, if an Enforcement Notice instructing it to do so
is in effect, the Collateral Agent shall liquidate any such
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Liquid Investments and apply or cause to be applied the proceeds
thereof to pay the Secured Obligations as specified in
Section 10. For this purpose, "Liquid Investments" means
Temporary Cash Investments; provided that (A) each Liquid
Investment shall mature within 30 days after it is acquired by
the Collateral Agent and (B) in order to provide the Collateral
Agent, for the benefit of the Secured Parties, with a perfected
security interest therein, each Liquid Investment shall be
either:
(i) evidenced by negotiable certificates or instruments,
or if non-negotiable then issued in the name of the Collateral
Agent, which (together with any appropriate instruments of
transfer) are delivered to, and held by, the Collateral Agent
or an agent thereof (which shall not be the Borrower or any of
its Affiliates) in the State of New York; or
(ii) in book-entry form and issued by the United States
and subject to pledge under applicable state law and Treasury
regulations and as to which (in the opinion of counsel to the
Collateral Agent) appropriate measures shall have been taken
to perfect the Security Interests therein.
(d) LC Collateral Account. Amounts otherwise
distributable by the Collateral Agent in accordance with Section
10 in respect of any Contingent LC Obligations shall (in lieu of
being distributed in accordance with Section 10) be deposited in
a separate segregated collateral account (the "LC Collateral
Account"). Amounts paid to the Collateral Agent pursuant to
Section 6.03 of the Credit Agreement shall also be deposited in
the LC Collateral Account. The Collateral Agent shall hold all
such amounts in the LC Collateral Account until such time as any
LC Issuing Bank shall have advised the Collateral Agent that all
or any portion of the Contingent LC Obligations arising in
respect of Letters of Credit issued by it have become due and
payable and have not been timely paid by the Borrower, whereupon
the Collateral Agent shall apply the amount so held in the LC
Collateral Account in respect of such Contingent LC Obligations
to pay such due and payable amount; provided that, if the other
Secured Obligations theretofore paid pursuant to clause second of
Section 10 were not paid in full, the Collateral Agent shall
apply the amount so held in the LC Collateral Account in respect
of such Contingent LC Obligations to pay the same percentage of
such due and payable portion as the percentage of such other
Secured Obligations theretofore paid pursuant to clause second of
Section 10. If (i) any LC Issuing Bank shall advise the
Collateral Agent that no portion of the Contingent LC Obligations
arising in respect of Letters of Credit issued by it remains
contingent and (ii) any amount held in the LC Collateral Account
pursuant to this Section 6(d) in respect of such Contingent LC
Obligations remains after payment of all ratable amounts payable
pursuant to the preceding sentence with respect to any portions
thereof that became due and payable, such remaining amount shall
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be applied by the Collateral Agent in the order of priorities set
forth in Section 10. Amounts on deposit in the LC Collateral
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Account shall be invested in such Liquid Investments as the
Borrower shall from time to time determine.
SECTION 7. General Authority
The Borrower irrevocably appoints the Collateral Agent
its true and lawful attorney, with full power of substitution, in
the name of the Borrower, the Collateral Agent, the Banks or
otherwise, for the sole use and benefit of the Collateral Agent
and the other Secured Parties, but at the Borrower's expense, to
the extent permitted by law to exercise, at any time and from
time to time while an Enforcement Notice directing it to do so is
in effect, all or any of the following powers with respect to all
or any of the Collateral:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due
thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and
effectually as if the Collateral Agent were the absolute owner
thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference
thereto;
provided that the Collateral Agent shall give the Borrower not
less than ten Domestic Business Days' prior written notice of the
time and place of any sale or other intended disposition of any
of the Collateral, except any Collateral which is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Borrower agrees
that such notice constitutes "reasonable notification" within the
meaning of Section 9-504(3) of the UCC.
SECTION 8. Remedies upon Enforcement Notice
(a) Upon being instructed to do so in an Enforcement
Notice, the Collateral Agent may exercise on behalf of the
Secured Parties all rights of a secured party under the UCC
(whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, the Collateral Agent may,
without being required to give any notice, except as herein
provided or as may be required by mandatory provisions of law,
(A) withdraw all cash and Liquid Investments in the Collateral
Account and the LC Collateral Account and apply such cash and
Liquid Investments and other cash, if any, then held by it as
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Collateral as specified in Section 10 and (B) if there shall be
no such cash or Liquid Investments or if such cash and Liquid
Investments shall be insufficient to pay all the Secured
Obligations in full, sell the Collateral or any part thereof at
public or private sale (or, with respect to Pledged Securities,
at any broker's board or on any securities exchange) for cash,
upon credit or for future delivery, and at such price or prices
as the Collateral Agent may deem satisfactory. The Collateral
Agent or any other Secured Party may be the purchaser of any or
all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). With respect to
any sale of Pledged Securities, the Collateral Agent is
authorized, in connection with any such sale, if it deems it
advisable so to do, (i) to restrict the prospective bidders on or
purchasers of any of the Pledged Securities to a limited number
of sophisticated investors who will represent and agree that they
are purchasing for their own account for investment and not with
a view to the distribution or sale of any of such Pledged
Securities, (ii) to cause to be placed on certificates for any or
all of the Pledged Securities or on any other securities pledged
hereunder a legend to the effect that such security has not been
registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and (iii)
to impose such other limitations or conditions in connection with
any such sale as the Collateral Agent deems necessary or
advisable in order to comply with said Act or any other law or
with Section 10.10(b) of the Credit Agreement. The Borrower
covenants and agrees that it will execute and deliver such
documents and take such other action as the Collateral Agent
deems necessary or advisable in order that any sale of Collateral
pursuant to the provisions hereof may be made in compliance with
law. Upon any sale of Collateral pursuant to the provisions
hereof, the Collateral Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so
sold. Each purchaser at any such sale shall hold the Collateral
so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of
the Borrower which may be waived, and the Borrower, to the extent
permitted by law, hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any
law now existing or hereafter adopted. The notice (if any) of
such sale required by Section 7 shall (x) in case of a public
sale, state the time and place fixed for such sale, (y) in the
case of a private sale, state the day after which such sale may
be consummated and (z) in the case of a sale at a broker's board
or on a securities exchange, state the board or exchange at which
such sale is to be made and the day on which the Securities
Collateral, or portion thereof so being sold, will first be
offered for sale on such board or exchange. Any such public sale
shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix
in the notice of such sale. At any such sale the Collateral may
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be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not
be obligated to make any such sale pursuant to any such notice.
The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part
of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until
the selling price is paid by the purchaser thereof, but the
Collateral Agent shall not incur any liability in case such
purchaser fails to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may again be
sold upon like notice. Upon being instructed to do so in an
Enforcement Notice, the Collateral Agent, instead of exercising
the power of sale herein conferred upon it, may proceed by a suit
or suits at law or in equity to foreclose the Security Interests
and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
(b) For the purpose of enforcing any and all rights and
remedies under this Agreement, the Collateral Agent may (i)
require the Borrower to, and the Borrower agrees that it will, at
its expense and upon the request of the Collateral Agent,
forthwith assemble all or any part of the Collateral as directed
by the Collateral Agent and make it available at a place
designated by the Collateral Agent which is, in its opinion,
reasonably convenient to the Collateral Agent and the Borrower,
whether at the premises of the Borrower or otherwise, and (ii)
have access to and use the Borrower's books and records relating
to the Collateral.
SECTION 9. Limitation on Duty of Collateral Agent
in Respect of Collateral
Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any
Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights
pertaining thereto. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially
equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any agent or bailee selected by the
Collateral Agent in good faith.
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SECTION 10. Application of Proceeds
Upon being instructed to do so in an Enforcement Notice,
the proceeds of any sale of, or other realization upon, all or
any part of the Collateral and any cash held in the Collateral
Account shall be applied (subject to Section 6(d)) by the
Collateral Agent in the following order of priorities:
first, to pay the expenses of such sale or other
realization, including reasonable compensation to agents and
counsel for the Collateral Agent, and all expenses,
liabilities and advances incurred or made by the Collateral
Agent in connection therewith, and any unpaid fees owing by
the Borrower to the Agents;
second, to the ratable payment of the Unpaid Principal
Amounts of the Secured Obligations;
third, to the ratable payment of accrued but unpaid
interest, commitment fees, letter of credit fees or similar
charges in respect of the Secured Obligations in accordance
with the provisions of the Credit Agreement or the relevant
Secured Hedging Agreement, as the case may be;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been
paid in full; and
finally, to pay to the Borrower or its successors or
assigns, or as a court of competent jurisdiction may direct,
any surplus then remaining from such proceeds.
The Collateral Agent may make distributions hereunder in cash or
in kind or, on a ratable basis, in any combination thereof.
SECTION 11. Reliance on Information
(a) In making the determinations and allocations
required by Section 10, the Collateral Agent may rely upon
information as to the amounts of the Secured Obligations held by
any Secured Party if certified by the Administrative Agent (in
the case of Secured Obligations arising under or in respect of
the Financing Documents) or by the counterparty to any Secured
Hedging Agreement (in the case of Secured Obligations arising
thereunder), and the Collateral Agent shall have no liability to
the Borrower or any of the Secured Parties for actions taken in
reliance upon such information (but nothing herein contained
shall affect any rights the Borrower may have against any Secured
Party for such Secured Party's gross negligence or wilful
misconduct in providing information to the Collateral Agent as to
the amount of Secured Obligations held by it). All distributions
made by the Collateral Agent pursuant to Section 10 shall be
final and the Collateral Agent shall have no duty to inquire as
to the application by the other Secured Parties of any amounts
distributed to them.
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(b) In determining whether any Enforcement Notice shall
have been given or withdrawn by the Required Banks or whether any
other action taken in connection with any Collateral Document has
been taken by the Banks entitled to take such action, the
Collateral Agent may rely upon the Administrative Agent for
information as to whether the Banks taking such action constitute
the Required Banks or are otherwise entitled to take such action,
and the Collateral Agent shall have no liability to the Borrower
or any of the Secured Parties for actions taken in reliance upon
such information.
SECTION 12. Appointment of Co-Agents
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Collateral Agent may appoint
another bank or trust company or one or more other Persons,
either to act as co-agent or co-agents, jointly with the
Collateral Agent, or to act as separate agent or agents on behalf
of the Secured Parties with such power and authority as may be
necessary for the effectual operation of the provisions hereof
and may be specified in the instrument of appointment (which may,
in the discretion of the Collateral Agent, include provisions for
the protection of such co-agent or separate agent similar to the
provisions of Section 9 hereof and Section 7.10 of the Credit
Agreement). References to the Collateral Agent in Section 13
shall be deemed to include any co-agent or separate agent
appointed pursuant to this Section 12.
SECTION 13. Expenses
(a) If the Borrower fails to comply with the provisions
of any Financing Document, such that the value of any Collateral
or the validity, perfection, rank or value of any Security
Interest is thereby materially diminished or potentially
diminished or put at risk, the Collateral Agent (if requested by
the Required Banks) may, but shall not be required to, effect
such compliance on behalf of the Borrower, and the Borrower shall
reimburse the Collateral Agent for the reasonable costs thereof
on demand. All sums so paid or incurred by the Collateral Agent
or any other Secured Party for any of the foregoing and any and
all other sums for which the Borrower may become liable
hereunder, and all costs and expenses (including attorneys' fees,
legal expenses and court costs) reasonably incurred by the
Collateral Agent or any other Secured Party in enforcing or
protecting the Security Interests or any of their rights or
remedies under this Agreement shall be additional Secured
Obligations hereunder.
(b) The Borrower further agrees that it will forthwith
on demand pay to the Collateral Agent (i) the amount of any taxes
which the Collateral Agent may have been required to pay by
reason of the Security Interests or to free any of the Collateral
from any Lien thereon, (ii) the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and
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disbursements of counsel and of any other experts, which the
Collateral Agent may incur in connection with preserving the
value of the Collateral and the validity, perfection, rank and
value of any Security Interests and (iii) the amount of any and
all out-of-pocket expenses, including the fees and disbursements
of counsel and of any other experts, which the Collateral Agent
may incur in connection with the collection, sale or other
disposition of any of the Collateral.
(c) Any amounts payable by the Borrower pursuant to this
Section 13 not paid on demand shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the
sum of 2% plus the rate otherwise applicable to Term Domestic
Loans for such day under the provisions of the Credit Agreement.
SECTION 14. Termination of Security
Interests; Release of Collateral
Upon the repayment in full of all Secured Obligations,
the expiration of all Letters of Credit issued under the Credit
Agreement, the termination of all Commitments under the Credit
Agreement and the termination of all Secured Hedging Agreements,
the Security Interests shall terminate and all rights to the
Collateral shall revert to the Borrower. At any time and from
time to time prior to such termination of the Security Interests,
the Collateral Agent may release any of the Collateral pursuant
to instructions given by the Banks in accordance with Section
10.05 of the Credit Agreement. Upon any such termination of the
Security Interests or release of Collateral, the Collateral Agent
will, at the expense of the Borrower, execute and deliver to the
Borrower such documents as the Borrower shall reasonably request
to evidence the termination of the Security Interests or the
release of such Collateral, as the case may be.
SECTION 15. Withdrawal of Enforcement Notice
An Enforcement Notice, once given, shall remain in effect
unless and until (i) the Required Banks notify the Collateral
Agent that they wish to withdraw such Enforcement Notice, (ii) no
monies have been applied to pay any Secured Obligations pursuant
to Section 10 (except pursuant to clause first thereof) as a
result of such Enforcement Notice and (iii) the Collateral Agent
determines that the withdrawal of such Enforcement Notice will
not result in any liability or unreimbursed loss to the
Collateral Agent by reason of actions taken by it in reliance
thereon.
SECTION 16. Designation of Secured Hedging Agreements
(a) If at any time the Borrower enters into any Interest
Rate Hedging Agreement, the Borrower may request the Collateral
Agent to designate such Interest Rate Hedging Agreement as a
"Secured Hedging Agreement" for purposes of this Agreement and
the Mortgages. Such notice shall specify the proposed date of
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such designation and shall attach definitive copies of such
Interest Rate Hedging Agreement and such other agreements and
documents relating thereto as the Collateral Agent may reasonably
request. The Collateral Agent shall designate such Interest Rate
Hedging Agreement as a Secured Hedging Agreement on the proposed
date of designation, subject to the satisfaction of the following
conditions: (i) the Agent shall have advised the Collateral
Agent on the proposed date of designation that the Agent has not
determined that (and has not been advised by any Bank that) any
Default has occurred and is continuing on such date, (ii)
immediately after giving effect to such designation, the
aggregate original notional principal amount of Debt covered by
all Secured Hedging Agreements shall not exceed $100,000,000,
(iii) the counterparty to such Interest Rate Hedging Agreement
shall have executed and delivered such instruments and agreements
as the Borrower or the Collateral Agent may reasonably request
(including an agreement to the same effect as the agreements
contained in Section 10.10(b) of the Credit Agreement) and (iv)
the Additional Collateral Condition shall have been satisfied
with respect to such designation. For purposes of this Section
16(a), the "Additional Collateral Condition" has been satisfied
at any time when the Borrower has theretofore added as additional
collateral for the Secured Obligations hereunder, pursuant to
documentation in form and substance reasonably satisfactory to
the Collateral Agent, one or more health care facilities with an
aggregate value (determined as contemplated by Section 10.08(c)
of the Credit Agreement) at least equal to 20% of the aggregate
notional principal amount of Debt covered by all Secured Hedging
Agreements (including the Secured Hedging Agreement then being
designated pursuant to this Section 16(a)). Promptly after
designating any Interest Rate Hedging Agreement as a Secured
Hedging Agreement, the Collateral Agent shall notify the
Borrower, the Agent, the Administrative Agent, the Banks and the
counterparty to such Interest Rate Hedging Agreement of such
designation.
(b) The Borrower may from time to time, upon at least
three Domestic Business Days' notice, request the Collateral
Agent to withdraw the designation of an Interest Rate Hedging
Agreement as a Secured Hedging Agreement by specifying the date
of the proposed withdrawal. Such withdrawal shall become
effective when the Collateral Agent shall have received from the
counterparty to such Interest Rate Hedging Agreement such
agreements and documents as the Collateral Agent may reasonably
request to evidence such counterparty's consent to such
withdrawal.
SECTION 17. Notices
All notices, communications and distributions hereunder
shall be given in accordance with Section 10.01 of the Credit
Agreement.
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SECTION 18. No Waivers; Non-Exclusive Remedies
No failure on the part of the Collateral Agent to
exercise, and no delay in exercising and no course of dealing
with respect to, any right under any Collateral Document shall
operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent of any right under any
Collateral Document preclude any other or further exercise
thereof or the exercise of any other right. The rights created
by the Collateral Documents shall be cumulative and are not
exclusive of any other remedies provided by law.
SECTION 19. Successors and Assigns
This Agreement is for the benefit of the Collateral Agent
and the other Secured Parties and their respective successors and
assigns. If all or any of the Secured Obligations are assigned,
the rights hereunder, to the extent applicable to the
indebtedness and other obligations so assigned, shall
automatically be transferred with such indebtedness and other
obligations. This Agreement shall be binding on the Borrower and
its successors and assigns.
SECTION 20. Changes in Writing
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in
writing signed by the Borrower and the Collateral Agent with the
consent of the Required Banks.
SECTION 21. New York Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to
the extent that remedies provided by the laws of any jurisdiction
other than New York are governed by the laws of such
jurisdiction.
SECTION 22. Severability
If any provision hereof is invalid or unenforceable in
any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in
favor of the Secured Parties in order to carry out the intentions
of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of such provision in any such
jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
FIRST HEALTHCARE CORPORATION
By: /s/ Robert K. Schneider
Title: Vice President and
Treasurer
J.P. MORGAN DELAWARE,
as Collateral Agent
By: /s/ Robert Henchey
Title: Vice President
<PAGE>
<PAGE>
<TABLE><CAPTION> SCHEDULE I
INITIAL SHARES
Number
Class and of Total Number of
Jurisdiction of Par Value Shares Certificates
Issuer Incorporation of Stock Pledged Pledged
<S> <C> <C> <C> <C>
Northwest Idaho Common/$1.00 1,000 #2
Health Care,
Inc.
Pasatiempo California Common/$1.00 100 #2
Development
Corp.
Hillhaven Oregon Common/$1.00 1,000 #3
Properties,
Ltd.
</TABLE>
<PAGE>
<PAGE>
<TABLE><CAPTION> SCHEDULE II
INTERCOMPANY NOTES
Original
Facility Principal
No. Payor Date Amount
<S> <C> <C> <C>
350 Stockton Health Care Center Limited Partnership 12/30/86 $ 925,000
947 St. George Care Center Limited Partnership 04/01/89 868,000
982 San Marcos Nursing Home Partnership 01/01/89 6,000,000
995 Starr Farm Partnership 08/31/92 600,000
</TABLE>
<PAGE>
<PAGE>
EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the Vice President and Treasurer and the
Senior Vice President, Secretary and General Counsel of First
Healthcare Corporation, a Delaware corporation (the "Borrower"),
hereby certify with reference to the Security Agreement dated as
of September 1, 1993 between the Borrower and J.P. Morgan
Delaware, as Collateral Agent (terms defined therein being used
herein as therein defined), to the Collateral Agent and each of
the other Secured Parties as follows:
1. Names. (a) The exact corporate name of the Borrower
as it appears in its certificate of incorporation is as follows:
First Healthcare Corporation
(b) Set forth below is each other corporate name the
Borrower has had since its organization together with the date of
the relevant change:
(c) Except as set forth in Schedule 1 hereto, the
Borrower has not changed its identity or corporate structure in
any way within the past five years.
[Changes in identity or corporate structure would include
mergers, consolidations and acquisitions, as well as any change
in the form, nature or jurisdiction of corporate organization.
If any such change has occurred, include in Schedule 1 the
information required by paragraphs 1 and 2 of this certificate as
to each acquiree or constituent party to a merger or
consolidation.]
2. Current Locations. (a) The chief executive office
of the Borrower, Northwest Health Care and Pasatiempo is located
at the following address:
Mailing Address County State
(b) The following are the locations in the State of
Vermont where the Borrower maintains any books or records
relating to any Receivable.
<PAGE>
<PAGE>
Name Mailing Address County
3. Prior Locations. Set forth below is the information
required by paragraph 2 above with respect to each location or
place of business maintained by the Borrower and referred to in
paragraph 2 above at any time during the past five years:
4. Unusual Transactions. Except as set forth in
Schedule 4 hereto, all Receivables have been originated by the
Borrower.
5. File Search Reports. Attached as Schedule 5(A)
hereto is a true copy of a file search report from the Uniform
Commercial Code filing officer in each jurisdiction identified in
paragraph 2 or 3 above with respect to each name set forth in
paragraph 1 above. Attached as Schedule 5(B) hereto is a true
copy of each financing statement or other filing identified in
such file search reports.
6. UCC Filings. A duly signed financing statement on
Form UCC-1 in substantially the form of Schedule 6 hereto has
been delivered to the Collateral Agent for filing in the Uniform
Commercial Code filing office in each jurisdiction identified in
paragraph 2 above.
7. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have
been paid or provided for.
IN WITNESS WHEREOF, we have hereunto set our hands this
___ day of ____________, 1993.
____________________________
Title:
____________________________
Title:
<PAGE>
<PAGE>
SCHEDULE 6
Description of Collateral
[as amended by Amendment No. 1
dated as of September 28, 1993
"Amendment No. 1" and as set forth
in UCC-3 Financing Statements
filed after the execution of
Amendment No. 1]
All of the following property of First Healthcare
Corporation, a Delaware corporation (the "Debtor"), whether now
owned or hereafter acquired or arising:
(i) Receivables,
(ii) Instruments,
(iii) Management Contracts,
(iv) Intercompany Receivables,
(v) books and records (including customer lists, credit
files, computer programs, printouts and other
computer materials and records) of the Debtor
pertaining to any of the foregoing,
(vi) the Pledged Securities,
(vii) all of the Debtor's rights and privileges with
respect to the Pledged Securities,
(viii) all income and profits on the Pledged Securities and
all interest, dividends and other payments and
distributions with respect thereto,
(ix) the Collateral Account, all cash deposited therein
from time to time and the liquid investments made
pursuant to Section 6(c) of the Security Agreement,
(x) the LC Collateral Account, all cash deposited
therein from time to time and the liquid investments
made pursuant to Section 6(d) of the Security
Agreement, and
(xi) Proceeds of all or any of the foregoing.
As used herein, the following terms have the following
meanings:
"Collateral Account" means the cash collateral account in
the name and under the control of J.P. Morgan Delaware, as
Collateral Agent, established pursuant to Section 6(a) of the
Security Agreement.
<PAGE>
<PAGE>
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of The Hillhaven Corporation in its
consolidated financial statements if such statements were
prepared as of such date.
"Excluded Receivable" means (i) any Medicaid Receivable
which has been sold by the Debtor to Hillhaven Funding
Corporation pursuant to the Medicaid Receivables Agreement or
(ii) any Receivable which has been originated at an "Excluded
Facility" (as defined in the Medicaid Receivables Agreement).
"Hillhaven Funding Note" means the subordinated purchase
money note, dated July 1, 1990, issued by Hillhaven Funding
Corporation to the Debtor pursuant to the Medicaid Receivables
Agreement.
"Initial Shares" means all of the shares of capital stock
of the Issuers outstanding on the date of the Security Agreement,
as listed in Schedule I to the Security Agreement.
"Instruments" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the Uniform Commercial
Code) evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the
payment of, any of the Receivables, including (but not limited
to) promissory notes, drafts, bills of exchange and trade
acceptances, whether now owned or hereafter acquired by the
Debtor.
"Intercompany Notes" means all promissory notes or other
instruments evidencing obligations owed to the Debtor by The
Hillhaven Corporation or any of its Subsidiaries (including any
Subsidiary of the Debtor) or any Non-Consolidated Partnership,
whether now existing or hereafter arising or acquired.
"Intercompany Receivables" means all obligations owed to
the Debtor by The Hillhaven Corporation or any of its
Subsidiaries (including any Subsidiary of the Debtor) or any Non-
Consolidated Partnership, including any such obligation which
might be characterized as an account, contract right or general
intangible under the Uniform Commercial Code in effect in any
jurisdiction, whether now existing or hereafter arising.
"Issuers" means Pasatiempo Development Corp., Hillhaven
Properties, Ltd. and Northwest Health Care, Inc.
"LC Collateral Account" means the separate segregated
collateral account established pursuant to Section 6(d) of the
Security Agreement.
<PAGE>
<PAGE>
"Management Contracts" means all agreements to which the
Debtor is a party, whether now existing or hereafter arising,
pursuant to which the Debtor provides management and other
services to other persons in connection with the operation of
health care facilities owned or leased by such other persons,
including (i) all rights of the Debtor to receive monies due and
to become due to it thereunder or in connection therewith and
(ii) all rights of the Debtor to damages arising out of, or for,
breach or default in respect thereof.
"Medicaid Receivable" means any Receivable with respect
to which the obligor is a state governmental authority (or agent
thereof) obligated to pay, pursuant to federal or state Medicaid
program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.
"Medicaid Receivables Agreement" means the Master Sale
and Servicing Agreement dated as of July 1, 1990, as amended from
time to time, among Hillhaven Funding Corporation, The Hillhaven
Corporation, the Debtor, Pasatiempo Development Corp. and
Northwest Health Care, Inc.
"Medicare Receivable" means any Receivable with respect
to which the obligor is a federal governmental authority (or
agent thereof) obligated to pay, pursuant to federal Medicare
program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.
"Non-Consolidated Partnership" means any partnership (i)
in which The Hillhaven Corporation or one of its Subsidiaries is
a general partner and (ii) which is not a Consolidated Subsidiary
of The Hillhaven Corporation.
"PIP Funding Note" means the $61,800,000 promissory note
dated September 2, 1993, issued by Hillhaven PIP Funding I, Inc.
to the Debtor.
"Pledged Notes" means (i) the PIP Funding Note, (ii) the
Intercompany Notes listed in Schedule II to the Security
Agreement, (iii) the Hillhaven Funding Note and (iv) all other
Intercompany Notes required to be pledged to J.P. Morgan
Delaware, as Collateral Agent, from time to time pursuant to
Section 4(b) of the Security Agreement.
"Pledged Securities" means the Pledged Notes and the
Pledged Stock.
"Pledged Stock" means (i) the Initial Shares and (ii) any
other shares of capital stock of any Issuer required to be
pledged to J.P. Morgan Delaware, as Collateral Agent, from time
to time pursuant to Section 4(b) of the Security Agreement.
<PAGE>
<PAGE>
"Proceeds" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, collateral, in each
case whether now existing or hereafter arising.
"Receivables" means all "accounts" (as defined in the
Uniform Commercial Code) now owned or hereafter acquired by the
Debtor and also means and includes all accounts receivable,
contract rights (including those arising in respect of Management
Contracts), book debts, notes, drafts and other obligations or
indebtedness owing to the Debtor arising from the sale, lease or
exchange of goods or other property by it and/or the performance
of services by it including any such obligation which might be
characterized as an account, contract right or general intangible
under the Uniform Commercial Code in effect in any jurisdiction,
and all monies due to or to become due to the Debtor under all
contracts for the sale, lease or exchange of goods or other
property and/or the performance of services by it (whether or not
yet earned by performance on the part of the Debtor), in each
case whether now in existence or hereafter arising or acquired,
including the right to receive the proceeds of said purchase
orders and contracts and all collateral, security and guarantees
of any kind given by any person with respect to any of the
foregoing; provided that the term "Receivables" shall not include
(i) the Debtor's right, title and interest in and to Excluded
Receivables, whether now owned or hereafter acquired, (ii) the
Debtor's right, title and interest in and to Sold Asset Notes,
whether now owned or hereafter acquired, or (iii) Retained
Collection Rights with respect to Medicaid Receivables, Medicare
Receivables and VA Receivables.
"Retained Collection Rights" means, with respect to any
Medicaid Receivable, Medicare Receivable or VA Receivable, the
right of the Debtor to collect and receive from the obligor
thereon payments made in respect of such Receivable in the
absence of a court order requiring such obligor to submit
payments thereon directly to a person other than the Debtor.
"Secured Parties" means J.P. Morgan Delaware, as
Collateral Agent, and all other holders of any of the Secured
Obligations (as defined in the Security Agreement).
"Security Agreement" means the Security Agreement dated
as of September 1, 1993 between the Debtor and J.P. Morgan
Delaware, as Collateral Agent, as the same may be amended from
time to time.
"Sold Asset Note" means any promissory note or other
instrument received as consideration for the sale of (i) any
health care facility, nursing center or retirement housing
facility or any leasehold interest in any of the foregoing or
(ii) any land held for investment.
<PAGE>
<PAGE>
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by The Hillhaven Corporation (or, if
such term is used with reference to any other person, by such
other person).
"VA Receivable" means any Receivable with respect to
which the obligor is the Veterans' Administration or any
successor thereto (or any agent thereof).
<PAGE>
<PAGE>
EXHIBIT F
CONFORMED COPY
[showing changes effected
by Amendment No. 1 dated
as of September 28, 1993]
PLEDGE AGREEMENT
AGREEMENT dated as of September 1, 1993 between THE
HILLHAVEN CORPORATION, a Nevada corporation (with its successors,
the "Guarantor"), and J.P. MORGAN DELAWARE, as Collateral Agent.
W I T N E S S E T H:
WHEREAS, the Guarantor and its wholly-owned subsidiary,
First Healthcare Corporation, a Delaware corporation (with its
successors, the "Borrower"), have entered into a Credit Agreement
dated as of September 1, 1993 among the Borrower, the Guarantor,
the Banks referred to therein, the LC Issuing Banks referred to
therein, Morgan Guaranty Trust Company of New York, as Agent,
Chemical Bank, as Administrative Agent, and J.P. Morgan Delaware,
as Collateral Agent (as the same may be amended from time to
time, the "Credit Agreement");
WHEREAS, the Guarantor has guaranteed the obligations of
the Borrower under the Credit Agreement and certain related
documents and desires to secure such guarantee as provided in
this Agreement; and
WHEREAS, the Guarantor may from time to time hereafter
guarantee the obligations of the Borrower under interest rate
hedging agreements and may desire to secure its obligations under
such guarantees as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used
herein, have the following respective meanings:
"Borrower" has the meaning set forth in the recitals to
this Agreement.
<PAGE>
<PAGE>
"Borrower Security Agreement" means the Security
Agreement dated as of September 1, 1993 between the Borrower and
the Collateral Agent, as the same may be amended from time to
time.
"Cash Distributions" means dividends, interest and other
payments and distributions made upon or with respect to the
Collateral in cash.
"Collateral" has the meaning set forth in Section 3(A).
"Collateral Agent" means J.P. Morgan Delaware, in its
capacity as Collateral Agent for the Secured Parties, and its
successors in such capacity.
"Credit Agreement Guarantee" means the Guarantor's
guarantee set forth in Article IX of the Credit Agreement.
"Enforcement Notice" means a notice delivered to the
Collateral Agent by the Required Banks (i) stating that an Event
of Default has occurred and is continuing and (ii) directing the
Collateral Agent to exercise one or more rights or remedies under
any Collateral Document.
"Excluded Cash Distributions" means Cash Distributions
received by the Guarantor or the Collateral Agent at a time when
no Enforcement Notice directing the Collateral Agent to receive
and retain such Cash Distributions is in effect.
"Guaranteed Obligations" means the obligations of the
Borrower guaranteed by the Guarantor pursuant to the Credit
Agreement Guarantee and the Secured Hedging Agreement Guarantees.
"Guarantor's Hillhaven Funding Note" means the
subordinated promissory note, dated July 1, 1990, issued by
Hillhaven Funding to the Guarantor pursuant to the Medicaid
Receivables Agreement.
"Hillhaven Funding" means Hillhaven Funding Corporation,
a Nevada corporation, and its successors.
"Hillhaven Funding Intercompany Accounts" means all
obligations of Hillhaven Funding to make payments to the
Guarantor, except for any such obligations evidenced by an
instrument.
"Hillhaven Funding Stock" means all of the shares of
capital stock of Hillhaven Funding outstanding on the date of
Amendment No. 1 hereto.
"Initial Shares" means all of the shares of capital stock
of Medisave outstanding on the date hereof, as listed in Schedule
I hereto.
<PAGE>
<PAGE>
"Interest Rate Hedging Agreement" means any interest rate
swap agreement, forward rate agreement, interest rate cap
agreement or other interest rate hedging agreement entered into
by the Borrower and any Bank or any Affiliate of a Bank.
"Issuers" means Hillhaven Funding and Medisave.
"Medicaid Receivables Agreement" means the Master Sale
and Servicing Agreement dated as of July 1, 1990, as amended from
time to time, among Hillhaven Funding, the Guarantor, the
Borrower, Pasatiempo Development Corp. and Northwest Health Care,
Inc.
"Medisave" means Medisave Pharmacies, Inc., a Delaware
corporation, and its successors.
"Pledged Notes" means (i) the Guarantor's Hillhaven
Funding Note and (ii) the instruments (if any) required to be
pledged to the Collateral Agent from time to time pursuant to
Section 3(B).
"Pledged Securities" means the Pledged Notes and the
Pledged Stock.
"Pledged Stock" means (i) the Initial Shares, (ii) the
Hillhaven Funding Stock and (iii) any other shares of capital
stock of the Issuers required to be pledged to the Collateral
Agent from time to time pursuant to Section 3(B).
"Secured Hedging Agreement Guarantee" means any guarantee
by the Guarantor of the obligations of the Borrower under an
Interest Rate Hedging Agreement, provided that the Collateral
Agent has theretofore designated such guarantee as a Secured
Hedging Agreement Guarantee pursuant to Section 14(A) and such
designation has not been withdrawn pursuant to Section 14(B).
"Secured Obligations" means the Guarantor's obligations
(whether contingent or non-contingent) under the Credit Agreement
Guarantee and all Secured Hedging Agreement Guarantees and all
other obligations of the Guarantor under this Agreement.
"Secured Parties" means the Collateral Agent and all
other holders of any of the Guaranteed Obligations (including all
Persons to whom any of the Guaranteed Obligations may be payable
from time to time).
"Security Interests" means the security interests in
the Collateral granted hereunder to secure the Secured
Obligations.
<PAGE>
<PAGE>
"UCC" means the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if, by
reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection of the Security Interests
in any Collateral is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than New York, "UCC" means the
Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
SECTION 2. Representations and Warranties
The Guarantor represents and warrants as follows:
(A) Title to Collateral. The Guarantor has good and
marketable title to all of the Collateral, free and clear of any
Liens other than the Security Interests. The Pledged Stock
includes all of the issued and outstanding capital stock of the
Issuers. All of the Pledged Stock has been duly authorized and
validly issued, and is fully paid and non-assessable, and is
subject to no options to purchase or similar rights of any
Person. The Guarantor is not and will not become a party to or
otherwise bound by any agreement, other than this Agreement,
which restricts in any manner the rights of any present or future
holder of any of the Pledged Stock with respect thereto.
(B) Validity, Perfection and Priority of Security
Interests. Upon (i) the delivery of the Pledged Notes and
certificates representing the Pledged Stock to the Collateral
Agent in accordance with Sections 3, 4 and 25(A) and (ii) the
filing of an amendment to a UCC financing statement substantially
in the form of Exhibit A to Amendment No. 1 hereto in the office
of the Department of Licensing of the State of Washington, the
Collateral Agent will have valid and perfected security interests
in the Collateral subject to no prior Lien and prior to the
rights of others therein. Except for the filing described in the
foregoing sentence and the filing of continuation statements with
respect thereto, no registration, recordation or filing with any
governmental body, agency or official is required in connection
with the execution or delivery of this Agreement or necessary for
the validity or enforceability hereof or for the perfection or
enforcement of the Security Interests. Neither the Guarantor nor
any of its Subsidiaries has performed or will perform any act
which might prevent the Collateral Agent from enforcing any of
the terms and conditions of this Agreement or which would limit
the Collateral Agent in any such enforcement.
(C) Chief Executive Office. The chief executive office
of the Guarantor is located at its address set forth on the
signature pages of the Credit Agreement.
<PAGE>
<PAGE>
SECTION 3. The Security Interests
In order to secure the full and punctual payment of the
Secured Obligations in accordance with the terms thereof, and to
secure the performance of all the obligations of the Guarantor
hereunder:
(A) The Guarantor hereby assigns and pledges to and
with the Collateral Agent for the benefit of the Secured Parties
and grants to the Collateral Agent for the benefit of the Secured
Parties security interests in the Pledged Stock, and all of its
rights and privileges with respect to the Pledged Stock, and all
income and profits thereon, and all dividends and other payments
and distributions with respect thereto, and all proceeds of the
foregoing. All of the property described in the preceding
sentence, and all additional property which may be added to the
collateral hereunder, is collectively referred to herein as the
"Collateral". Contemporaneously with the execution and delivery
of this Agreement, the Guarantor is delivering certificates
representing the Initial Shares to the Collateral Agent in pledge
hereunder.
(B) If any Issuer at any time issues any additional or
substitute shares of capital stock of any class, or if Hillhaven
Funding issues any instrument (other than the Guarantor's
Hillhaven Funding Note) to the Guarantor, the Guarantor will
immediately deliver to the Collateral Agent the certificates
representing such shares or such instrument, as the case may be,
in pledge as additional security for the Secured Obligations.
All such shares and instruments shall constitute Pledged
Securities and be subject to all provisions of this Agreement.
(C) The Security Interests are granted as security
only and shall not subject the Collateral Agent or any Secured
Party to, or transfer or in any way affect or modify, any
obligation or liability of the Guarantor with respect to any of
the Collateral or any transaction in connection therewith.
SECTION 4. Delivery of Pledged Securities
All Pledged Notes delivered to the Collateral Agent by
the Guarantor pursuant hereto shall be indorsed to the order of
the Collateral Agent, or accompanied by duly executed instruments
of transfer or assignment in blank, and accompanied by any
required transfer tax stamps, all in form and substance
reasonably satisfactory to the Collateral Agent. All
certificates representing Pledged Stock delivered to the
Collateral Agent by the Guarantor pursuant hereto shall be in
suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank,
and accompanied by any required transfer tax stamps, all in form
and substance reasonably satisfactory to the Collateral Agent.
<PAGE>
<PAGE>
SECTION 5. Further Assurances
(A) The Guarantor will, from time to time at its
expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper and
take any other action (including any filings of financing or
continuation statements under the UCC) that from time to time may
be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the
Collateral Agent and the other Secured Parties to obtain the full
benefits of this Agreement, or to enable the Collateral Agent to
exercise and enforce any of its rights, powers and remedies
hereunder with respect to any of the Collateral. To the extent
permitted by applicable law, the Guarantor authorizes the
Collateral Agent to execute and file financing statements or
continuation statements without the Guarantor's signature
appearing thereon. The Guarantor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing
statement. The Guarantor shall pay the reasonable costs of, or
incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(B) The Guarantor will not change its name, identity or
corporate structure in any manner or the location of its chief
executive office or chief place of business, unless it shall have
given the Collateral Agent prior notice thereof and delivered an
opinion of counsel with respect thereto in accordance with
Section 25(C)(vi).
SECTION 6. Record Ownership of Pledged Stock
If directed to do so by the Required Banks at any time,
the Collateral Agent shall cause the Pledged Stock (or any
portion thereof specified in such directions) to be transferred
of record into the name of the Collateral Agent or its nominee.
Promptly upon receiving any such directions, the Collateral Agent
will notify the Guarantor thereof and thereafter the Guarantor
will promptly give to the Collateral Agent copies of any notices
or other communications received by it with respect to Pledged
Stock registered in the name of the Guarantor, and the Collateral
Agent will promptly give to the Guarantor copies of any notices
and communications received by the Collateral Agent with respect
to Pledged Stock registered in the name of the Collateral Agent
or its nominee. The Collateral Agent shall pay over to the
Guarantor all Excluded Cash Distributions received by the
Collateral Agent upon or with respect to any Pledged Stock held
of record in the name of the Collateral Agent or its nominee.
<PAGE>
<PAGE>
SECTION 7. Right to Receive Distributions on Collateral
The Collateral Agent shall have the right to receive and
retain as Collateral hereunder all dividends and other payments
and distributions made upon or with respect to the Collateral and
the Guarantor shall take all such action as the Collateral Agent
may deem necessary or appropriate to give effect to such right;
provided that the foregoing sentence shall not apply to Excluded
Cash Distributions. All such dividends and other payments and
distributions which are received by the Guarantor (except
Excluded Cash Distributions) shall be received in trust for the
benefit of the Secured Parties and shall be segregated from other
assets of the Guarantor and shall, promptly upon the Guarantor's
receipt thereof, be paid over to the Collateral Agent as
Collateral in the same form as received (with any necessary
endorsements or executed assignments in blank), together with a
statement identifying the source of such Collateral and stating
that it is being delivered to the Collateral Agent to be held as
Collateral under this Agreement. If an Enforcement Notice
directing the Collateral Agent to receive and retain Cash
Distributions is given and later withdrawn pursuant to Section
17, the Collateral Agent's right to retain Cash Distributions
under this Section 7 shall cease and the Collateral Agent shall
pay over to the Guarantor any Cash Distributions retained by it
during the continuance of such Enforcement Notice.
SECTION 8. Right to Vote Pledged Stock
Unless an Enforcement Notice directing the Collateral
Agent to vote the Pledged Stock is in effect, the Guarantor shall
have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and
the Collateral Agent shall, upon receiving a written request from
the Guarantor, deliver to the Guarantor or as specified in such
request such proxies, powers of attorney, consents, ratifications
and waivers in respect of any of the Pledged Stock which shall
have been registered in the name of the Collateral Agent or its
nominee pursuant to Section 6 as shall be specified in such
request and be in form and substance reasonably satisfactory to
the Collateral Agent.
If an Enforcement Notice directing the Collateral Agent
to vote the Pledged Stock is in effect, the Collateral Agent
shall have the right to the extent permitted by law, and the
Guarantor shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give
consents, ratifications and waivers, and take any other action
with respect to any or all of the Pledged Stock with the same
force and effect as if the Collateral Agent were the absolute and
sole owner thereof. The Collateral Agent shall have no duty to
take any action under the preceding sentence unless the
Collateral Agent shall have received written instructions to take
such action from the Required Banks.
<PAGE>
<PAGE>
SECTION 9. General Authority
The Guarantor irrevocably appoints the Collateral Agent
its true and lawful attorney, with full power of substitution, in
the name of the Guarantor, the Collateral Agent, the other
Secured Parties or otherwise, for the sole use and benefit of the
Collateral Agent and the other Secured Parties, but at the
expense of the Guarantor, to the extent permitted by law to
exercise, at any time and from time to time while an Enforcement
Notice directing it to do so is in effect, all or any of the
following powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due upon
or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and
effectually as if the Collateral Agent were the absolute owner
thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference
thereto;
provided that the Collateral Agent shall give the Guarantor at
least ten Domestic Business Days' prior written notice of the
time and place of any sale or other intended disposition of any
of the Collateral except any Collateral which is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Collateral Agent
and the Guarantor agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the
Uniform Commercial Code.
SECTION 10. Remedies upon Enforcement Notice
Upon being instructed to do so in an Enforcement
Notice, the Collateral Agent may exercise on behalf of the
Secured Parties all the rights of a secured party under the
Uniform Commercial Code (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition,
the Collateral Agent may, without being required to give any
notice, except as herein provided or as may be required by
mandatory provisions of law, (A) apply the cash, if any, then
held by it as Collateral as specified in Section 13 and (B) if
there shall be no such cash or if such cash shall be insufficient
to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral
<PAGE>
<PAGE>
Agent may deem satisfactory. Any Secured Party may be the
purchaser of any or all of the Collateral so sold at any public
sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely
distributed standard price quotations, at any private sale). The
Collateral Agent is authorized, in connection with any such sale,
if it deems it advisable so to do, (i) to restrict the
prospective bidders on or purchasers of any of the Pledged
Securities to a limited number of sophisticated investors who
will represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or
sale of any of such Pledged Securities, (ii) to cause to be
placed on certificates for any or all of the Pledged Securities
a legend to the effect that such Pledged Securities has not been
registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and
(iii) to impose such other limitations or conditions in
connection with any such sale as the Collateral Agent deems
necessary or advisable in order to comply with said Act or any
other law or with Section 10.10(b) of the Credit Agreement. The
Guarantor agrees that it will execute and deliver such documents
and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Collateral Agent
shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any
such sale shall hold the Collateral so sold absolutely and free
from any claim or right of whatsoever kind, including any equity
or right of redemption of the Guarantor which may be waived, and
the Guarantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter
adopted. The notice (if any) of such sale required by Section 9
shall (x) in case of a public sale, state the time and place
fixed for such sale, (y) in case of sale at a broker's board or
on a securities exchange, state the board or exchange at which
such sale is to be made and the day on which the Collateral, or
the portion thereof so being sold, will first be offered for sale
at such board or exchange, and (z) in the case of a private sale,
state the day after which such sale may be consummated. Any such
public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral
Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may determine. The Collateral
Agent shall not be obligated to make any such sale pursuant to
any such notice. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the
Collateral Agent until the selling price is paid by the purchaser
<PAGE>
<PAGE>
thereof, but the Collateral Agent shall not incur any liability
in case of the failure of such purchaser to take up and pay for
the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. Upon being
instructed to do so in an Enforcement Notice, the Collateral
Agent, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts
of competent jurisdiction.
SECTION 11. Expenses
(A) The Guarantor agrees that it will forthwith upon
demand pay to the Collateral Agent:
(i) the amount of any taxes which the Collateral Agent
may have been required to pay by reason of the Security
Interests or to free any of the Collateral from any Lien
thereon,
(ii) the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of
counsel and of any other experts, which the Collateral Agent
may incur in connection with the administration or enforcement
of this Agreement, including such expenses as are incurred to
preserve the value of the Collateral and the validity,
perfection, rank and value of any Security Interest, and
(iii) the amount of any and all out-of-pocket expenses,
including the fees and disbursements of counsel and any other
experts, which the Collateral Agent may incur in connection
with (x) the collection, sale or other disposition of any of
the Collateral, (y) the exercise by the Collateral Agent of
any of the rights conferred upon it hereunder or (z) any
Default or Event of Default.
(B) Any amounts payable by the Guarantor pursuant to
this Section 11 not paid on demand shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to
the sum of 2% plus the rate otherwise applicable to Term Domestic
Loans for such day under the provisions of the Credit Agreement.
SECTION 12. Limitation on Duty of Collateral Agent
in Respect of Collateral
Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any
Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights
pertaining thereto. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
<PAGE>
<PAGE>
Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own
property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any agent or
bailee selected by the Collateral Agent in good faith.
SECTION 13. Application of Proceeds
Upon being instructed to do so in an Enforcement
Notice, the proceeds of any sale of, or other realization upon,
all or any part of the Collateral and any cash held by the
Collateral Agent shall be applied by the Collateral Agent to pay
the Guaranteed Obligations in the order of priorities set forth
in Section 10 of the Borrower Security Agreement.
SECTION 14. Designation of Secured
Hedging Agreement Guarantees
(A) If at any time the Guarantor guarantees the
obligations of the Borrower under any Interest Rate Hedging
Agreement, the Guarantor may request the Collateral Agent to
designate such guarantee as a "Secured Hedging Agreement
Guarantee" for purposes of this Agreement. Such notice shall
specify the proposed date of such designation and shall attach
definitive copies of the relevant Interest Rate Hedging
Agreement, the Guarantor's guarantee thereof and such other
agreements and documents relating thereto as the Collateral Agent
may reasonably request. The Collateral Agent shall designate
such guarantee as a Secured Hedging Agreement Guarantee on the
proposed date of designation, subject to the satisfaction of the
following conditions: (i) the Agent shall have advised the
Collateral Agent on the proposed date of designation that the
Agent has not determined that (and has not been advised by any
Bank that) any Default has occurred and is continuing on such
date, (ii) immediately after giving effect to such designation,
the aggregate original notional principal amount of Debt covered
by all Secured Hedging Agreement Guarantees shall not exceed
$100,000,000, (iii) the counterparty to the relevant Interest
Rating Hedging Agreement shall have executed and delivered such
instruments and agreements as the Guarantor or the Collateral
Agent may reasonably request (including an agreement to the same
effect as the agreements contained in Section 10.10(b) of the
Credit Agreement) and (iv) the Additional Collateral Condition
shall have been satisfied with respect to such designation. For
purposes of this Section 14(A), the "Additional Collateral
Condition" has been satisfied at any time when the Borrower has
theretofore added as additional collateral for the "Secured
Obligations" under (and as defined in) the Borrower Security
Agreement, pursuant to documentation in form and substance
reasonably satisfactory to the Collateral Agent, one or more
health care facilities with an aggregate value (determined as
contemplated by Section 10.08(c) of the Credit Agreement) at
least equal to 20% of the aggregate notional principal amount of
<PAGE>
<PAGE>
Debt covered by all Secured Hedging Agreement Guarantees
(including the Secured Hedging Agreement Guarantee then being
designated pursuant to this Section 14(A)). Promptly after
designating such guarantee as a Secured Hedging Agreement
Guarantee, the Collateral Agent shall notify the Guarantor, the
Agent, the Administrative Agent, the Banks and the counterparty
to the relevant Interest Rate Hedging Agreement of such
designation.
(B) The Guarantor may from time to time, upon at least
three Domestic Business Days' notice, request the Collateral
Agent to withdraw the designation of the Guarantor's guarantee of
an Interest Rate Hedging Agreement as a Secured Hedging Agreement
Guarantee by specifying the date of the proposed withdrawal.
Such withdrawal shall become effective when the Collateral Agent
shall have received from the counterparty to the relevant
Interest Rate Hedging Agreement such agreements and documents as
the Collateral Agent may reasonably request to evidence such
counterparty's consent to such withdrawal.
SECTION 15. Appointment of Co-Agents
At any time or times, in order to comply with any legal
requirement in any jurisdiction, the Collateral Agent may appoint
another bank or trust company or one or more other persons,
either to act as co-agent or co-agents, jointly with the
Collateral Agent, or to act as separate agent or agents on behalf
of the Secured Parties with such power and authority as may be
necessary for the effectual operation of the provisions hereof
and may be specified in the instrument of appointment (which may,
in the discretion of the Collateral Agent, include provisions for
the protection of such co-agent or separate agent similar to the
provisions of Section 12 hereof and Section 7.10 of the Credit
Agreement). References to the Collateral Agent in Section 11
shall be deemed to include any co-agent or separate agent
appointed pursuant to this Section 15.
SECTION 16. Termination of Security
Interests; Release of Collateral
Upon the repayment in full of all Guaranteed
Obligations, the expiration of all Letters of Credit issued or
otherwise outstanding under the Credit Agreement, the termination
of the Commitments under the Credit Agreement and the termination
of all Secured Hedging Agreement Guarantees, the Security
Interests shall terminate and all rights to the Collateral shall
revert to the Guarantor. At any time and from time to time prior
to such termination of the Security Interests, the Collateral
Agent may release any of the Collateral in accordance with
Section 10.05 of the Credit Agreement. Upon any such termination
of the Security Interests or any such release of any of the
Collateral, the Collateral Agent will, at the expense of the
<PAGE>
<PAGE>
Guarantor, execute and deliver to the Guarantor such documents as
the Guarantor shall reasonably request to evidence the
termination of the Security Interests or the release of such
Collateral, as the case may be.
SECTION 17. Withdrawal of Enforcement Notice
An Enforcement Notice, once given, shall remain in effect
unless and until (i) the Required Banks notify the Collateral
Agent that they wish to withdraw such Enforcement Notice, (ii) no
monies have been applied to pay any Guaranteed Obligations
pursuant to Section 10 of the Borrower Security Agreement (except
pursuant to clause first thereof) as a result of such Enforcement
Notice and (iii) the Collateral Agent determines that the
withdrawal of such Enforcement Notice will not result in any
liability or unreimbursed loss to the Collateral Agent by reason
of actions taken by it in reliance thereon.
SECTION 18. Reliance on Information
In determining whether any Enforcement Notice shall have
been given or withdrawn by the Required Banks or whether any
other action taken in connection with any Collateral Document has
been taken by the Banks entitled to take such action, the
Collateral Agent may rely upon the Administrative Agent for
information as to whether the Banks taking such action constitute
the Required Banks or are otherwise entitled to take such action,
and the Collateral Agent shall have no liability to the Borrower
or any of the Secured Parties for actions taken in reliance upon
such information.
SECTION 19. Notices
All notices hereunder shall be given in accordance with
Section 10.01 of the Credit Agreement.
SECTION 20. No Waiver; Non-Exclusive Remedies
No failure on the part of the Collateral Agent to
exercise, and no delay in exercising and no course of dealing
with respect to, any right under this Agreement shall operate as
a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent of any right under the Credit Agreement, this
Agreement or any other Collateral Document preclude any other or
further exercise thereof or the exercise of any other right. The
rights in the Credit Agreement, this Agreement and the other
Collateral Documents are cumulative and are not exclusive of any
other remedies provided by law.
<PAGE>
<PAGE>
SECTION 21. Successors and Assigns
This Agreement is for the benefit of the Collateral
Agent and the other Secured Parties and their respective
successors and assigns. In the event of an assignment of all or
any of the Guaranteed Obligations, the rights hereunder, to the
extent applicable to the indebtedness and other obligations so
assigned, shall automatically be transferred with such
indebtedness and other obligations. This Agreement shall be
binding on the Guarantor and its successors and assigns.
SECTION 22. Changes in Writing
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only in
writing signed by the Guarantor and the Collateral Agent with the
consent of the Required Banks.
SECTION 23. New York Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to
the extent that remedies provided by the laws of any jurisdiction
other than New York are governed by the laws of such
jurisdiction.
SECTION 24. Severability
If any provision hereof is invalid or unenforceable in
any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in
favor of the Collateral Agent and the other Secured Parties in
order to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or unenforceability of
such provision in any such jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 25. Hillhaven Funding Obligations
(A) Grant of Security Interests. In order to secure the
full and punctual payment of the Secured Obligations in
accordance with the terms thereof, and to secure the performance
of all the obligations of the Guarantor hereunder, the Guarantor
hereby assigns and pledges to and with the Collateral Agent for
the benefit of the Secured Parties, and grants to the Collateral
Agent for the benefit of the Secured Parties security interests
in and to, all of the following property of the Guarantor,
whether now owned or existing or hereafter acquired or arising:
the Pledged Notes and the Hillhaven Funding Intercompany
Accounts, and all of the Guarantor's rights and privileges with
respect thereto, and all interest and other payments and
<PAGE>
<PAGE>
distributions with respect thereto, and all proceeds of the
foregoing (the "Guarantor's Hillhaven Funding Obligations").
Contemporaneously with the execution and delivery of Amendment
No. 1 hereto, the Guarantor is delivering the Guarantor's
Hillhaven Funding Note to the Collateral Agent in pledge
hereunder.
(B) Additional Representation and Warranty. The
Guarantor represents and warrants as follows:
Other than financing statements or other similar or
equivalent documents or instruments with respect to the Security
Interests and other Permitted Liens, no financing statement,
mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file
or of record in any jurisdiction in which such filing or
recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person
(other than the Guarantor) asserting any claim thereto or
security interest therein, except that the Collateral Agent or
its designee may have possession of Collateral as contemplated by
this Agreement and the other Collateral Documents.
(C) Covenants.
(i) File Search Reports. Within 60 days after the date
of Amendment No. 1 hereto, the Guarantor will furnish to the
Collateral Agent a file search report from the Department of
Licensing of the State of Washington reflecting the filing of an
amendment to a UCC financing statement substantially in the form
of Exhibit A to said Amendment No. 1 and all prior filings of
financing statements naming the Guarantor as debtor.
(ii) Books and Records. The Guarantor shall keep full
and accurate books and records relating to the Guarantor's
Hillhaven Funding Obligations and stamp or otherwise mark such
books and records in such manner as the Required Banks may
reasonably request in order to reflect the Security Interests.
(iii) Sales of Collateral. The Guarantor will not sell,
assign or otherwise dispose of, or grant any option with respect
to, any Collateral.
(iv) Inspection of Collateral. The Guarantor, upon
reasonable request by the Collateral Agent, will permit the
Collateral Agent, at any time and from time to time during normal
business hours, to inspect, audit, check and make abstracts from
the Guarantor's books, records and other papers relating to the
Collateral. The cost of any such inspection shall be borne by
the Collateral Agent unless an Event of Default shall have
occurred and be continuing at the time of such inspection, in
which case the Guarantor shall pay, or reimburse the Collateral
Agent for, such cost.
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<PAGE>
(v) Additional Information. The Guarantor will,
promptly upon request, provide to the Collateral Agent all
information and evidence it may reasonably request concerning the
Collateral to enable the Collateral Agent to enforce the
provisions of this Agreement.
(vi) Opinions. At least ten (but not more than 30) days
before the Guarantor takes any action contemplated by Section
5(B), the Guarantor shall, at its expense, cause to be delivered
to the Secured Parties an opinion of counsel reasonably
satisfactory to the Collateral Agent to the effect that all
financing statements and amendments or supplements thereto,
continuation statements and other documents required to be
recorded or filed in order to perfect and protect the Security
Interests for a period, specified in such opinion, continuing
until a date not earlier than eighteen months from the date of
such opinion, against all creditors of and purchasers from the
Guarantor have been filed in each filing office necessary for
such purpose and that all filing fees and taxes, if any, payable
in connection with such filings have been paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
THE HILLHAVEN CORPORATION
By: /s/ Robert K. Schneider
Title: Vice President and
Treasurer
J.P. MORGAN DELAWARE,
as Collateral Agent
By: /s/ Robert Henchey
Title: Vice President
<PAGE>
<PAGE>
<TABLE><CAPTION> SCHEDULE I
PLEDGED STOCK
Number Number
Class and of Total of
Jurisdiction of Par Value Shares Certificates
Issuer Incorporation of Stock Pledged Pledged
<S> <C> <C> <C> <C>
Medisave Delaware Common/$100.00 10 #2
Pharmacies, Inc.
</TABLE>
<PAGE>
<PAGE>
EXHIBIT G
This instrument was prepared by the
attorney described below in consultation
with counsel in the State in which
the Property is located and, when
recorded, the recorded counterparts
should be returned to:
[________________________]
Caryn R. Stafford, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
===========================================================
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
dated as of September 1, 1993
by
FIRST HEALTHCARE CORPORATION,
the Mortgagor,
to
J.P. MORGAN DELAWARE,
as Collateral Agent for the Secured Parties,
the Mortgagee
Property:
____________________
===========================================================
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS AND
SECURES OBLIGATIONS CONTAINING PROVISIONS FOR CHANGES IN INTEREST
RATES. THIS INSTRUMENT ALSO SECURES FUTURE ADVANCES WHICH ARE
OBLIGATORY SUBJECT TO THE PROVISIONS OF THE FINANCING DOCUMENTS.
<PAGE>
<PAGE>
TABLE OF CONTENTS
(Note: The Table of Contents is not part of this Mortgage)
Page
PREAMBLE 01
RECITALS 01
GRANTING CLAUSES 02
GRANTING CLAUSE I. Land 02
GRANTING CLAUSE II. Improvements 02
GRANTING CLAUSE III. Equipment 03
GRANTING CLAUSE IV. Appurtenant Rights 04
GRANTING CLAUSE V. Agreements 05
GRANTING CLAUSE VI. Leases 05
GRANTING CLAUSE VII. Rents, Issues and Profits 05
GRANTING CLAUSE VIII. Permits 06
GRANTING CLAUSE IX. Proceeds and Awards 06
GRANTING CLAUSE X. Books and Records 06
GRANTING CLAUSE XI Property Proprietary Marks 06
GRANTING CLAUSE XII. Other Intangible Property 07
GRANTING CLAUSE XIII. Additional Property 07
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions 09
1.02 Interpretation 14
1.03 Resolution of Drafting Ambiguities 14
ARTICLE II
CERTAIN WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 2.01 Title 15
2.02 Secured Obligations 15
2.03 Impositions 15
2.04 Legal and Insurance Requirements 15
2.05 Status and Care of the Property 16
2.06 Permitted Contests 17
2.07 Liens 17
2.08 Transfer 18
<PAGE>
<PAGE>
ARTICLE III
INSURANCE, CASUALTY AND CONDEMNATION
SECTION 3.01 Insurance 18
3.02 Casualty and Condemnation 19
3.03 Insurance Claims and Proceeds;
Condemnation Awards 20
3.04 Major Loss; Substitution 21
ARTICLE IV
CERTAIN SECURED OBLIGATIONS
SECTION 4.01 Interest After Default 23
4.02 Changes in Laws Regarding Taxation 23
4.03 Indemnification 23
ARTICLE V
DEFAULTS, REMEDIES AND RIGHTS
SECTION 5.01 Events of Default 24
5.02 Remedies 24
5.03 Waivers by the Mortgagor 29
5.04 Jurisdiction and Process 29
5.05 Sales 30
5.06 Proceeds 32
5.07 Assignment of Leases 33
5.08 Dealing With the Mortgaged Property 34
5.09 Right of Entry 34
5.10 Right to Perform Obligations 35
5.11 Concerning the Mortgagee 35
5.12 Expenses 36
ARTICLE VI
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 6.01 Security Agreement 37
6.02 Fixture Filing 37
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Future Advances 38
7.02 Release of Mortgaged Property 39
7.03 Notices 39
7.04 Amendments in Writing 39
7.05 Severability 39
7.06 Binding Effect 40
7.07 GOVERNING LAW 40
Exhibit A - Description of the Land
<PAGE>
<PAGE>
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT (this "Mortgage")
dated as of September 1, 1993 by FIRST HEALTHCARE CORPORATION, a
Delaware corporation, having an address at 1148 Broadway Plaza,
Tacoma, Washington 98402 (the "Mortgagor"), to J.P. MORGAN
DELAWARE, a Delaware banking corporation, as Collateral Agent for
the Secured Parties (hereinafter defined), having an address at
902 Market Street, Wilmington, New Castle County, Delaware 19801
(the "Mortgagee").
W I T N E S S E T H *
RECITALS
A. Credit Agreement. Reference is hereby made to the
Credit Agreement (the "Credit Agreement"), dated as of September
1, 1993, among the Mortgagor, The Hillhaven Corporation, each
Bank which is or may hereafter become a party thereto, each LC
Issuing Bank which is or may hereafter become a party thereto,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent.
B. Mortgage. The Lien of this Mortgage is being granted
to secure payment, performance and observance of the following
indebtedness, liabilities and obligations, whether now or
hereafter owed or owing, hereinafter referred to collectively as
the "Secured Obligations":
(i) (a) the principal of all Loans made under, and
all Notes issued pursuant to, the Credit Agreement; (b) all
Reimbursement Obligations arising with respect to Letters of
Credit issued under the Credit Agreement; (c) all Contingent
LC Obligations in respect of such Letters of Credit; (d) all
other amounts payable by the Mortgagor under the Credit
Agreement, this Mortgage or any other Financing Document;
(e) all obligations of the Mortgagor (whether contingent on
non-contingent) under any Secured Hedging Agreement; (f) all
interest on the Secured Obligations listed in the foregoing
clauses (a) to (e) inclusive (including any interest which
accrues after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or
reorganization of the Mortgagor, whether or not allowed or
allowable as a claim in any such proceeding); and (g) all
renewals and extensions of any of the foregoing; and
(ii) the performance and observance of each other term,
covenant, agreement, obligation, requirement, condition and
provision to be performed or observed by the Mortgagor under
this Mortgage or any other Financing Document.
* Capitalized terms are defined in, or by reference in, Section
1.01.
<PAGE>
<PAGE>
[C. The maximum principal indebtedness that may be
secured by this Mortgage is $360,000,000. The scheduled maturity
date of the latest to mature of the Secured Obligations is
September 1, 1998.]
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for the purpose of
securing the due and punctual payment, performance and observance
of the Secured Obligations and intending to be bound hereby, the
Mortgagor does hereby [GRANT, BARGAIN, SELL, CONVEY, MORTGAGE,
ASSIGN, TRANSFER and WARRANT] to the Mortgagee, with power of
sale and right of entry as hereinafter provided, and (to the
extent covered by the Local UCC) does hereby GRANT AND WARRANT to
the Mortgagee a continuing first security interest in and to all
of the property and rights described in the following Granting
Clauses (all of which property and rights are collectively called
the "Mortgaged Property"), to wit:
GRANTING CLAUSE I.
Land. The parcel or parcels of land located in _________
County, _________, more particularly described in Exhibit A (the
"Land").
GRANTING CLAUSE II.
Improvements. All buildings, structures, facilities and
other improvements of every kind and description now or hereafter
located on the Land, including all parking areas, roads,
driveways, walks, fences, walls and berms; all estate, right,
title and interest of the Mortgagor in, to, under or derived
from: all recreation, drainage and lighting facilities and other
site improvements; all water, sanitary and storm sewer, drainage,
electricity, steam, gas, telephone, telecommunications and other
utility equipment and facilities; all plumbing, lighting,
heating, ventilating, air-conditioning, refrigerating,
incinerating, compacting, fire protection and sprinkler,
surveillance and security, vacuum cleaning, public address and
communications equipment and systems; all kitchen and laundry
appliances; all screens, awnings, floor coverings, partitions,
elevators, escalators, motors, electrical, computer and other
wiring, machinery, pipes, fittings and racking and shelving; and
all other items of fixtures, equipment and personal property of
every kind and description, in each case now or hereafter located
on the Land or affixed (actually or constructively) to the
Improvements which by the nature of their location thereon or
affixation thereto are real property under applicable law; and
including all materials intended for the construction,
reconstruction, repair, replacement, alteration, addition or
improvement of or to such buildings, equipment, fixtures,
<PAGE>
<PAGE>
structures and improvements, all of which materials shall be
deemed to be part of the Mortgaged Property immediately upon
delivery thereof on the Land and to be part of the improvements
immediately upon their incorporation therein (the foregoing being
collectively called the "Improvements").
GRANTING CLAUSE III.
Equipment. All estate, right, title and interest of the
Mortgagor in, to, under or derived from: all fixtures, chattels
and articles of personal property owned or leased by the
Mortgagor or in which the Mortgagor has or shall acquire an
interest, wherever situated, and now or hereafter located on or
in the Land or the Improvements, whether or not affixed thereto
(actually or constructively) and which are not real property
under applicable law, including all beds, bureaus, chests,
chairs, desks, lamps, mirrors, cabinets, lockers, bookcases,
shelving, divans, couches, luggage carts, luggage racks, stools,
sofas, pillows, blankets, dry cleaning facilities, dining room
wagons, keys or other entry systems, bars, bar fixtures, liquor
and other drink dispensers, icemakers, radios, television sets,
potted plants, partitions, shades, blinds, curtains, drapes,
draperies, carpets, rugs, furniture and furnishings, china,
glassware, silverware, pots, pans, linens, stoves, refrigerators,
freezers, dishwashers, food carts, cookware, garbage disposals,
washers and dryers and other food services, laundry and kitchen
appliances and equipment; all heating, lighting, plumbing,
ventilating, air conditioning, refrigerating, gas, steam,
electrical, incinerating and compacting plants, systems, fixtures
and equipment, bulbs and bells; all elevators, stoves, ranges,
vacuum and other cleaning systems, floor cleaning, waxing and
polishing equipment, intercom, paging and call systems,
switchboards, sprinkler systems and other fire prevention, alarm
and extinguishing apparatus and materials; all x-ray, medical and
other nursing home supplies, implements, appliances and
equipment; all pictures, paintings, works of art and decorations;
all pipes, conduits, dynamos, engines, compressors, generators,
boilers, stokers, furnaces, pumps, trunks, ducts, utensils,
tools, implements and fittings; and all other furniture,
appliances, equipment, supplies, and tangible property of every
kind and nature whatsoever owned or leased by the Mortgagor, or
in which the Mortgagor has or shall have an interest, now or
hereinafter located upon the Land, or appurtenances thereto, or
usable in connection with the present or future operation or
occupancy of the Land or the Improvements, and including any of
the foregoing that is temporarily removed from the Land or
Improvements to be repaired and later reinstalled thereon or
therein (the foregoing being collectively called the "Equipment";
and the Land with the Improvements thereon and the Equipment
therein being collectively called the "Property"). If the Lien
of this Mortgage is subject to a security interest covering any
Property described in this GRANTING CLAUSE III, then all of the
right, title and interest of the Mortgagor in and to any and all
such Property is hereby assigned to the Mortgagee, together with
the benefits of all deposits and payments now or hereafter made
thereon by or on behalf of the Mortgagor.
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GRANTING CLAUSE IV.
Appurtenant Rights. All estate, right, title and
interest of the Mortgagor in, to, under or derived from all
tenements, hereditaments and appurtenances now or hereafter
relating to the Property; the streets, roads, sidewalks and
alleys abutting the Property; all strips and gores within or
adjoining the Land; all land in the bed of any body of water
adjacent to the Land; all land adjoining the Land created by
artificial means or by accretion; all air space and rights to use
air space above the Land; all development or similar rights now
or hereafter appurtenant to the Land; all rights of ingress and
egress now or hereafter appertaining to the Property; all
easements and rights of way now or hereafter appertaining to the
Property; and all royalties and other rights now or hereafter
appertaining to the use and enjoyment of the Property, including
alley, party walls, support, drainage, crop, timber,
agricultural, horticultural, oil, gas and other mineral, water
stock, riparian and other water rights.
GRANTING CLAUSE V.
Agreements. All estate, right, title and interest of the
Mortgagor in, to, under or derived from: all Insurance Policies
(including all unearned premiums and dividends thereunder), all
guarantees and warranties relating to the Property, all supply
and service contracts for water, sanitary and storm sewer,
drainage, electricity, steam, gas, telephone and other utilities
now or hereafter relating to the Property, all agreements with
hospitals, managed care providers, physician groups or clinics
and medical associations now or hereafter relating to the use or
operation of the Property, and all other contract rights now or
hereafter relating to the use or operation of the Property (the
foregoing being collectively called the "Agreements").
GRANTING CLAUSE VI.
Leases. All estate, right, title and interest of the
Mortgagor in, to, under or derived from all Leases now or
hereafter in effect, whether or not of record, for the use or
occupancy of all or any part of the Property.
GRANTING CLAUSE VII.
Rents, Issues and Profits. All estate, right, title and
interest of the Mortgagor in, to, under or derived from: all
rents, royalties, issues, profits, receipts, revenue, income and
other benefits now or hereafter accruing with respect to the
Property, including all rents and other sums now or hereafter
payable pursuant to the Leases; all other sums now or hereafter
payable with respect to the use, occupancy, management, operation
or control of the Property; and all other claims, rights and
remedies now or hereafter belonging
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or accruing with respect to the Property, including fixed,
additional and percentage rents, occupancy charges, security
deposits, parking, maintenance, common area, tax, insurance,
utility and service charges and contributions (whether collected
under the Leases or otherwise), proceeds of sale of electricity,
gas, heating, air-conditioning and other utilities and services
(whether collected under the Leases or otherwise), and deficiency
rents and liquidated damages following default or cancellation
(the foregoing rents and other sums described in this Granting
Clause being collectively called the "Rents"), all of which the
Mortgagor hereby irrevocably directs be paid to the Mortgagee,
subject to the license granted to the Mortgagor pursuant to
Section 5.07(b), to be held, applied and disbursed as provided in
this Mortgage.
GRANTING CLAUSE VIII.
Permits. All estate, right, title and interest of the
Mortgagor in, to, under or derived from all licenses,
authorizations, certificates, variances, consents, approvals and
other permits now or hereafter pertaining to the ownership,
management or operation of the Property (the foregoing being
collectively called the "Permits").
GRANTING CLAUSE IX.
Proceeds and Awards. All estate, right, title and
interest of the Mortgagor in, to, under or derived from all
proceeds of any Transfer, financing, refinancing or conversion
into cash or liquidated claims, whether voluntary or involuntary,
of any of the Mortgaged Property, including all Insurance
Proceeds, Awards and title insurance proceeds under any title
insurance policy now or hereafter held by the Mortgagor, and all
rights, dividends and other claims of any kind whatsoever
(including damage, secured, unsecured, priority and bankruptcy
claims) now or hereafter relating to any of the Mortgaged
Property, all of which the Mortgagor hereby irrevocably directs
be paid to the Mortgagee to the extent provided hereunder, to be
held, applied and disbursed as provided in this Mortgage.
GRANTING CLAUSE X.
Books and Records. All books and records (including
customer and patient lists, credit files, computer print outs and
other computer records) of the Mortgagor now or hereafter
pertaining to the ownership, management or operation of the
Property.
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GRANTING CLAUSE XI.
Property Proprietary Marks. All estate, right, title and
interest of the Mortgagor in, to, under or derived from the trade
name set forth on the cover page hereof, any trade name by which
the Property is hereafter known or designated and all trademarks,
service marks, logos and copyrights relating to such trade names
(the foregoing being collectively called the "Property
Proprietary Marks"), provided that the foregoing pledge, grant or
assignment of the right to use the words "Hillhaven" or "First
Healthcare" as part of any Property Proprietary Mark (i) shall
not restrict the use of such words, or Property Proprietary Marks
including such words, at any other facility of the Guarantor or
its Subsidiaries and (ii) shall automatically cease and terminate
one year after any such Property Proprietary Mark is transferred
to a Person (including the Mortgagee) which acquires the Property
upon any foreclosure of this Mortgage.
GRANTING CLAUSE XII.
Other Intangible Property. All estate, right, title and
interest of the Mortgagor in, to, under or derived from all
intangible property, to the extent not described in the foregoing
Granting Clauses, now or hereafter necessary to operate the
Property as a going concern.
GRANTING CLAUSE XIII.
Additional Property. All greater, additional or other
estate, right, title and interest of the Mortgagor in, to, under
or derived from the Mortgaged Property now or hereafter acquired
by the Mortgagor, including all right, title and interest of the
Mortgagor in, to, under or derived from all extensions,
improvements, betterments, renewals, substitutions and
replacements of, and additions and appurtenances to, any of the
Mortgaged Property hereafter acquired by or released to the
Mortgagor or constructed or located on, or affixed to, the
Property, in each case, immediately upon such acquisition,
release, construction, location or affixation; all estate, right,
title and interest of the Mortgagor in, to, under or derived from
any other property and rights which are, by the provisions of the
Collateral Documents, required to be subjected to the Lien
hereof; all estate, right, title and interest of the Mortgagor
in, to, under or derived from any other property and rights which
are necessary to maintain the Property and the Mortgagor's
business or operations conducted therein as a going concern, in
each case, to the fullest extent permitted by law, without any
further conveyance, mortgage, assignment or other act by the
Mortgagor; and all estate, right, title and interest of the
Mortgagor in, to, under or derived from all other property and
rights which are by any instrument or otherwise subjected to the
Lien hereof by the Mortgagor.
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EXCLUDING HOWEVER from the foregoing assignments, pledges
and grants of security interests all of the Mortgagor's right,
title and interest in and to any of the property described below
(such property being referred to hereinafter as "Excluded
Property"):
(i) any Agreements or Permits if, but only to the extent
that, the Mortgagor is expressly prohibited under any
applicable law from granting a security interest therein or
any applicable law provides for the involuntary forfeiture
thereof in the event a security interest is granted therein
without the consent of the appropriate governmental authority,
agency, body, official or instrumentality (a "Governmental
Authority"), or at all;
(ii) any Agreements or leased Equipment if, but only to
the extent that, the terms and provisions of a written
agreement, document or instrument in effect on the date
hereof, creating or evidencing such property or any rights
relating thereto expressly prohibit the granting of a security
interest therein or condition the granting of a security
interest therein on the consent of a third party whose consent
has not been obtained or would cause, or allow a third party
to cause, the forfeiture of such property upon the granting of
a security interest therein; and
(iii) all "Receivables" pledged pursuant to the Borrower
Security Agreement, all "Excluded Medicaid Receivables" and
all "Retained Collection Rights" with respect to "Medicaid
Receivables", "Medicare Receivables" and "VA Receivables" (as
such quoted terms are defined in the Borrower Security
Agreement).
Provided that if any prohibition or condition requiring
such consent referred to in clause (i) or (ii) above relates only
to the foreclosure of a security interest or the exercise of
other rights or remedies upon a default but not to the granting
of a security interest therein, then a security interest in such
property shall be deemed to be granted by this Mortgage subject
to the condition that the consent of such Governmental Authority
or third party, as the case may be, is obtained prior to
foreclosure or the exercise of other rights or remedies
hereunder;
Provided further, that in the event of the termination or
elimination of any prohibition or the requirement for any consent
contained in any law, rule, regulation, agreement, document or
instrument, to the extent sufficient to permit any Excluded
Property described in clause (i) or (ii) to become Mortgaged
Property hereunder, or upon the granting of any such consent or
waiving or terminating any requirement for such consent, such
Excluded Property, to the fullest extent permitted by law,
automatically shall be deemed to be assigned and pledged to the
Mortgagee and shall be included in the Mortgaged Property
hereunder.
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TO HAVE AND TO HOLD the Mortgaged Property, together with
all estate, right, title and interest of the Mortgagor and anyone
claiming by, through or under the Mortgagor in, to, under or
derived from the Mortgaged Property and all rights and
appurtenances relating thereto, to the Mortgagee, forever.
PROVIDED ALWAYS that this Mortgage is upon the express
condition that the Mortgaged Property shall be released from the
Lien of this Mortgage in full or in part in the manner and at the
time provided in Section 7.02.
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THE MORTGAGOR ADDITIONALLY COVENANTS AND AGREES WITH THE
MORTGAGEE AS FOLLOWS:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions. (a) Capitalized terms used
in this Mortgage, but not otherwise defined herein, are defined
in, or are defined by reference to, the Credit Agreement and have
the same meanings herein as therein.
(b) In addition, as used herein, the following terms
have the following meanings:
"Agreements" is defined in Granting Clause V.
"Awards" means, at any time, all awards or payments
received or receivable by reason of any Condemnation,
including all amounts received or receivable with respect to
any Transfer in lieu or anticipation of Condemnation or in
connection with any agreement with any condemning authority
which has been made in settlement of any proceeding relating
to a Condemnation.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as
amended.
"Borrower Security Agreement" means the Security
Agreement, dated as of September 1, 1993, between the
Mortgagor and the Collateral Agent.
"Casualty" means any damage to, or destruction of, the
Property.
"Collateral Account" is defined in the Borrower
Security Agreement.
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"Condemnation" means any condemnation or other taking
or temporary or permanent requisition of the Property, any
interest therein or right appurtenant thereto, or any change
of grade affecting the Property, as the result of the
exercise of any right of condemnation or eminent domain. A
Transfer to a governmental authority in lieu or anticipation
of Condemnation shall be deemed to be a Condemnation.
"Credit Agreement" is defined in the Recitals.
"Enforcement Notice" is defined in the Borrower Security
Agreement.
"Equipment" is defined in Granting Clause III.
"Excluded Property" is defined in the Granting Clauses.
"Governmental Authority" is defined in the Granting
Clauses.
"Impositions" means all taxes (including real estate
taxes and transfer taxes), assessments (including all
assessments for public improvements or benefits, whether or
not commenced or completed prior to the date hereof), water,
sewer or other rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other autho-
rization fees and other charges, in each case whether
general or special, ordinary or extraordinary, foreseen or
unforseen, of every character (including all interest and
penalties thereon), which at any time may be assessed,
levied, confirmed or imposed on or in respect of, or be a
Lien upon, (i) the Property, any other Mortgaged Property or
any interest therein, (ii) any occupancy, use or possession
of, or activity conducted on, the Property, (iii) the Rents
from the Property or the use or occupancy thereof, or (iv)
the Secured Obligations or the Collateral Documents, but
excluding income, excess profits, franchise, capital stock,
estate, inheritance, succession, gift or similar taxes of
the Mortgagor or the Mortgagee or any other Secured Party,
except to the extent that such taxes of the Mortgagor or the
Mortgagee or any other Secured Party are imposed in whole or
in part in lieu of, or as a substitute for, any taxes which
are or would otherwise be Impositions.
"Improvements" is defined in Granting Clause II.
"Insurance Policies" means the insurance policies and
coverages required to be maintained by the Mortgagor with
respect to the Property pursuant to the Credit Agreement.
"Insurance Premiums" means all premiums payable under
the Insurance Policies.
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"Insurance Proceeds" means, at any time, all insurance
proceeds (except proceeds of business interruption
insurance) or payments to which the Mortgagor may be or
become entitled under the Insurance Policies by reason of
any Casualty plus all insurance proceeds and payments to
which the Mortgagor may be or become entitled by reason of
any Casualty under any other insurance policies or coverages
maintained by the Mortgagor with respect to the Property.
"Insurance Requirements" means all provisions of the
Insurance Policies, all requirements of the issuer of any of
the Insurance Policies and all orders, rules, regulations
and any other requirements of the National Board of Fire
Underwriters (or any other body exercising similar
functions) binding upon the Mortgagor and applicable to the
Property, any adjoining vaults, sidewalks, parking areas or
driveways or any use or condition thereof.
"Land" is defined in Granting Clause I.
"Lease" means each lease, sublease, tenancy,
subtenancy, license, franchise, concession or other
occupancy agreement relating to the Property, together with
any guarantee of the obligations of the tenant or occupant
thereunder or any right to possession under any federal or
state bankruptcy code in the event of the rejection of any
sublease by the sublandlord thereof or its trustee pursuant
to said code.
"Legal Requirements" means all provisions of the
Permits (including any thereof included within the
definition of Excluded Property) and all applicable laws,
statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, directions and
requirements of, and agreements with, all Governmental
Authorities, now or hereafter applicable to the Property, or
any use or condition thereof.
"Local UCC" means the Uniform Commercial Code as in
effect in the State in which the Property is located.
"Major Loss" means a Casualty or Condemnation which
renders unusable 20% or more of the then licensed beds at the
Property.
"Mortgage" is defined in the Preamble.
"Mortgaged Property" is defined in the Granting
Clauses.
"Mortgagee" is defined in the Preamble.
"Mortgagor" is defined in the Preamble.
"National Flood Insurance Program" means the National
Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973 (42 U.S.C. Sections 4001 et seq.).
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"Permits" is defined in Granting Clause VIII.
"Permitted Disposition" means any (i) Transfer in
connection with a Condemnation, (ii) Transfer of used, surplus
or worn out Equipment in the ordinary course of business,
(iii) easement or similar encumbrance with respect to the
Property granted by the Mortgagor to any adjoining landowner
or any railroad, telephone, cable television, water, sewer,
utility or similar company, municipality or other governmental
subdivision in the ordinary course of business or (iv)
Transfer or abandonment of, or other change to, any Property
Proprietary Mark.
"Post-Default Rate" means, with respect to any
amount payable by the Mortgagor hereunder which is not paid
when due, a rate per annum equal to the sum of 2% plus the
rate otherwise applicable to Term Domestic Loans from time to
time under the provisions of the Credit Agreement.
"Property" is defined in Granting Clause III.
"Property Proprietary Mark" is defined in Granting Clause
XI.
"Receiver" is defined in Section 5.02(a)(iv).
"Rents" is defined in Granting Clause VII.
"Restoration" means the restoration, repair,
replacement or rebuilding of the Property after a Casualty
or Condemnation, and "Restore" means to restore, repair,
replace or rebuild the Property after a Casualty or
Condemnation, in each case to a value and condition
substantially the same as the value and condition
immediately prior to the Casualty or Condemnation.
"Secured Hedging Agreement" is defined in the Borrower
Security Agreement.
"Secured Obligations" is defined in the Recitals.
"Secured Parties" means the Collateral Agent and all
other holders of any of the Secured Obligations (including all
Persons to whom any of the Secured Obligations may be payable
from time to time).
"Transfer" means, when used as a noun, any sale,
conveyance, assignment, lease, or other transfer and, when
used as a verb, to sell, convey, assign, lease, or otherwise
transfer, in each case (i) whether voluntary or involuntary,
(ii) whether direct or indirect and (iii) including any
agreement providing for a Transfer or granting any right or
option providing for a Transfer.
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"Unavoidable Delays" means delays due to acts of God,
fire, flood, earthquake, explosion or other Casualty,
inability to procure or shortage of labor, equipment,
facilities, sources of energy (including electricity, steam,
gas or gasoline), materials or supplies, failure of
transportation, strikes, lockouts, action of labor unions,
Condemnation, litigation relating to Legal Requirements,
inability to obtain Permits (including any thereof included
within the definition of Excluded Property) or other causes
beyond the reasonable control of the Mortgagor, provided
that lack of funds shall not be deemed to be a cause beyond
the control of the Mortgagor.
(c) In this Mortgage, unless otherwise specified,
references to this Mortgage or to Leases, Permits, the Credit
Agreement, Notes, Letters of Credit, the Borrower Security
Agreement, any of the Financing Documents and any of the
Collateral Documents include all amendments, supplements,
consolidations, replacements, restatements, extensions, renewals
and other modifications thereof, in whole or in part.
SECTION 1.02. Interpretation. In this Mortgage, unless
otherwise specified, (i) singular words include the plural and
plural words include the singular; (ii) words which include a
number of constituent parts, things or elements, including the
terms Leases, Improvements, Land, Secured Obligations, Property
and Mortgaged Property, shall be construed as referring
separately to each constituent part, thing or element thereof, as
well as to all of such constituent parts, things or elements as a
whole; (iii) words importing any gender include the other
genders; (iv) references to any Person include such Person's
successors and assigns and in the case of an individual, the word
"successors" includes such Person's heirs, devisees, legatees,
executors, administrators and personal representatives; (v)
references to any statute or other law include all applicable
rules, regulations and orders adopted or made thereunder and all
statutes or other laws amending, consolidating or replacing the
statute or law referred to; (vi) the words "consent", "approve",
"agree" and "request", and derivations thereof or words of
similar import, mean the prior written consent, approval,
agreement or request of the Person in question; (vii) the words
"include" and "including", and words of similar import, shall be
deemed to be followed by the words "without limitation";
(viii) the words "hereto", "herein", "hereof" and "hereunder",
and words of similar import, refer to this Mortgage in its
entirety; (ix) references to Articles, Sections, Schedules,
Exhibits, subsections, paragraphs and clauses are to the
Articles, Sections, Schedules, Exhibits, subsections, paragraphs
and clauses of this Mortgage; (x) the Schedules and Exhibits to
this Mortgage are incorporated herein by reference; (xi) the
titles and headings of Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses are inserted as a matter of
convenience and shall not affect the construction of this
Mortgage; (xii) all obligations of the Mortgagor hereunder shall
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be satisfied by the Mortgagor at the Mortgagor's sole cost and
expense; and (xiii) all rights and powers granted to the
Mortgagee hereunder shall be deemed to be coupled with an
interest and be irrevocable.
SECTION 1.03. Resolution of Drafting Ambiguities. The
Mortgagor acknowledges that it was represented by counsel in
connection with this Mortgage, that it and its counsel reviewed
and participated in the preparation and negotiation of this
Mortgage and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party or the
Mortgagee shall not be employed in the interpretation of this
Mortgage.
ARTICLE II
CERTAIN WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 2.01. Title. (a) The Mortgagor warrants that,
as of the date hereof, (i) the Mortgagor has good and marketable
title to the fee simple interest in the Land and the Improvements
thereon, (ii) the Mortgagor is the owner of, or has a valid
leasehold interest in, the Equipment and all other items
constituting the Mortgaged Property, and (iii) this Mortgage
constitutes a valid, binding and enforceable first Lien on the
Mortgaged Property, in each case subject only to Permitted
Encumbrances with respect thereto.
(b) The Mortgagor shall forever preserve, protect,
warrant and defend (A) the validity, enforceability and priority
of the Lien of this Mortgage on the Mortgaged Property, and (B)
the right, title and interest of the Mortgagee and any purchaser
at any sale of the Mortgaged Property hereunder or relating
hereto, in each case against all other Liens and claims
whatsoever, subject only to Permitted Encumbrances existing as of
the date hereof.
SECTION 2.02. Secured Obligations. The Mortgagor shall
duly and punctually pay, perform and observe the Secured
Obligations in accordance with the terms and provisions of the
Financing Documents.
SECTION 2.03. Impositions. The Mortgagor shall (i)
subject to Section 2.06, duly and punctually pay all Impositions
prior to the delinquency date thereof; (ii) subject to Section
2.06, duly and punctually file all returns and other statements
required to be filed with respect to any Imposition prior to the
delinquency date thereof; and (iii) promptly notify the Mortgagee
of the receipt by the Mortgagor of any notice of default in the
payment of any Imposition or in the filing of any return or other
statement relating to any Imposition and simultaneously furnish
to the Mortgagee a copy of such notice of default.
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SECTION 2.04. Legal and Insurance Requirements. (a)
The Mortgagor represents and warrants that (i) as of the date
hereof, the Property and the use and operation thereof comply
with all Legal Requirements and Insurance Requirements, (ii)
there is no default under any Legal Requirement or Insurance
Requirement, and (iii) the execution, delivery and performance of
this Mortgage will not contravene any provision of or constitute
a default under any Legal Requirement or Insurance Requirement,
except where failures to comply therewith or defaults thereunder
could not, in the aggregate, reasonably be expected to have a
material adverse effect on the use or operation of the Property.
(b) The Mortgagor shall (i) duly and punctually comply
with all Legal Requirements and Insurance Requirements other than
Legal Requirements and Insurance Requirements (x) the validity or
applicability of which are being contested pursuant to Section
2.06, or (y) which the failure to comply with could not
reasonably be expected to have a material adverse effect on the
operations conducted at the Property; (ii) procure, maintain and
duly and punctually comply with all Permits required for any
construction, reconstruction, repair, alteration, addition,
improvement, maintenance, management, use and operation of the
Property as conducted from time to time other than Permits (x)
the necessity of which are being contested pursuant to Section
2.06 or (y) which the failure to obtain could not reasonably be
expected to have a material adverse effect on the use or the
operation of the Property as then conducted; (iii) promptly
notify the Mortgagee of the receipt by the Mortgagor of any
notice of default regarding any Legal Requirement, Insurance
Requirement or Permit or any possible or actual termination of
any Permit or Insurance Policy and furnish to the Mortgagee a
copy of such notice of default or termination, except where the
failure to comply therewith or the termination thereof could not
reasonably be expected to have a material adverse effect on the
use or operation of the Property as then conducted; and (iv)
promptly after obtaining knowledge thereof notify the Mortgagee
of any condition which, with or without the giving of notice or
the passage of time or both, would constitute a default regarding
any Legal Requirement or Insurance Requirement or a termination
of any Permit or Insurance Policy and the action being taken to
remedy such condition, except where the failure to comply
therewith or the termination thereof could not reasonably be
expected to have a material adverse effect on the use or
operation of the Property as then conducted.
SECTION 2.05. Status and Care of the Property. (a) The
Mortgagor represents and warrants that (i) the Property is served
by all necessary water, sanitary and storm sewer, drainage,
electric, steam, gas, telephone and other utility facilities
sufficient to serve the current use and operation of the
Property; (ii) the Property has legal access to all streets or
roads necessary for the current use and operation of the
Property; and (iii) the Property is not located in an area
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designated as "flood prone" (as defined under the regulations
adopted under the National Flood Insurance Program), or to the
extent the Property is located in an area designated as "flood
prone", the Mortgagor maintains in full force and effect flood
insurance under the National Flood Insurance Program to the
extent and in the amounts required by applicable law.
(b) The Mortgagor shall (i) not cause or permit the
Property to be wasted or become in disrepair; (ii) use and
operate the Property, or cause the same to be used and operated,
for substantially the same uses and purposes as they are used and
operated as of the date hereof, except for changes in use made in
the ordinary course of business, including expansion onto vacant
portions of the Land of the current use; and (iii) promptly make,
or cause to be made, all repairs, replacements, alterations,
additions and improvements of and to the Property, whether
interior or exterior, structural or nonstructural, foreseen or
unforseen, which may be necessary or appropriate to keep the
Property in good order, repair and condition, subject, however,
in the case of Restorations, to the right of the Mortgagor
pursuant to Section 3.04(b) to elect not to Restore following a
Major Loss.
SECTION 2.06. Permitted Contests. The Mortgagor may
contest, by appropriate proceedings conducted in good faith and
with due diligence, any Legal Requirement, any Insurance
Requirement or any Imposition, provided that (i) no Mortgaged
Property or interest therein is in danger of being sold,
forfeited or lost, or the priority of the Lien of the Mortgagee
is not at risk, as a result of such contest or proceedings;
(ii) in the case of any Legal Requirement, the Mortgagee and the
other Secured Parties are not in danger of any criminal or
material civil penalty or any other liability for failure to
comply therewith and no Mortgaged Property or interest therein is
subject to the imposition of any Lien as a result of such failure
which is not properly contested pursuant to this Section; and
(iii) in the case of any Insurance Requirement, no Insurance
Policy or coverage is in danger of being forfeited or lost as a
result of such contest or proceedings, unless replaced; and
provided further that the Mortgagor establishes any reserve or
other appropriate provision required with respect to such contest
under generally accepted accounting principles consistently
applied.
SECTION 2.07. Liens. The Mortgagor shall not create or
permit to be created or to remain, and shall immediately
discharge or cause to be discharged, any Lien on the Mortgaged
Property or any interest therein, in each case (i) whether
voluntarily or involuntarily created, (ii) whether directly or
indirectly a Lien thereon and (iii) whether subordinated hereto,
except Permitted Liens. The provisions of this Section shall
apply to each and every Lien (other than Permitted Liens) on the
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Mortgaged Property or any interest therein, regardless of whether
a consent to, or waiver of a right to consent to, any other Lien
thereon has been previously obtained in accordance with the terms
of the Financing Documents.
SECTION 2.08. Transfer. The Mortgagor shall not
Transfer, or suffer any Transfer of, the Mortgaged Property or
any part thereof or interest therein, except Permitted
Dispositions. The provisions of this Section shall apply to each
and every Transfer of the Mortgaged Property or any interest
therein, regardless of whether a consent to, or waiver of a right
to consent to, any other Transfer thereof has been previously
obtained in accordance with the terms of the Financing Documents.
ARTICLE III
INSURANCE, CASUALTY AND CONDEMNATION
SECTION 3.01. Insurance. (a) The Mortgagor shall
maintain in full force and effect Insurance Policies with respect
to the Property as required by the Credit Agreement.
The physical damage insurance maintained with respect to the
Property shall (i) bear the New York standard non-contributory
mortgagee endorsement (or the equivalent thereto) in favor of the
Mortgagee as Collateral Agent and (ii) provide that all property
losses insured against shall be adjusted by the Mortgagor,
subject to the Mortgagee's rights pursuant to Section 3.03(a).
The public liability insurance maintained with respect to the
Property shall name the Mortgagee and the other Secured Parties
as additional insureds. All insurance maintained by the
Mortgagor with respect to the Property shall provide that no
cancellation or material change thereof shall be effective until
at least 30 days after receipt by the Mortgagee of written notice
thereof; and all losses shall be payable notwithstanding any
foreclosure or other action or proceeding taken pursuant to this
Mortgage.
(b) The Mortgagor shall furnish to the Mortgagee from
time to time not later than 15 days prior to the expiration date
of each policy required to be maintained by the Mortgagor
hereunder, an insurance certificate or certificates executed by
the insurer or its authorized agent with respect to the new or
extended policy. If the Mortgagor fails to maintain the
Insurance Policies required to be maintained under this Section,
the Mortgagee shall have the right to obtain such Insurance
Policies and pay the premiums therefor. If the Mortgagee obtains
such Insurance Policies or pays the premiums therefor, upon
demand, the Mortgagor shall reimburse the Mortgagee for its
expenses in connection therewith, together with interest thereon,
pursuant to Section 4.01.
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(c) The Mortgagor may effect such coverage under
subsection (a) of this Section under blanket insurance policies
covering other properties of the Guarantor and its Subsidiaries,
provided that (i) any such blanket insurance policy shall specify
therein, or the insurer under such policy shall certify to the
Mortgagee, (A) the maximum amount of the total insurance afforded
by the blanket policy allocated to the Property, and (B) any
sublimits in such blanket policy applicable to the Property,
which sublimits shall not be less than the amounts required
pursuant to this Section; (ii) any such blanket insurance policy
shall comply in all respects with the other provisions of this
Section; and (iii) the protection afforded under any such blanket
insurance policy shall be no less than that which would have been
afforded under a separate policy relating only to the Property.
(d) The Mortgagor shall not maintain additional or
separate insurance concurrent in form or contributing in the
event of loss with the insurance required under this Section,
unless (i) the policies providing such additional or separate
insurance are submitted to the Mortgagee for its approval; (ii)
the insurers under such policies and the terms thereof are
approved by the Mortgagee, which approval shall not be
unreasonably withheld; and (iii) the Mortgagee and the other
Secured Parties are included in such policies as loss payees or
additional insureds.
SECTION 3.02. Casualty and Condemnation. (a) The
Mortgagor represents and warrants that, as of the date hereof,
(i) there is no Casualty or Condemnation, (ii) there are no
negotiations or proceedings which might result in a Condemnation
and (iii) to the knowledge of the Mortgagor, no Condemnation is
proposed or threatened.
(b) If any Casualty occurs, the Mortgagor shall
immediately take such action as may be necessary or appropriate
to preserve the undamaged portion of the Property and to protect
against personal injury or property damage.
(c) If any Casualty or Condemnation occurs and the
Mortgagor elects to Restore, upon such election, the Mortgagor
shall promptly commence and diligently pursue to completion the
Restoration of such Property, subject to Unavoidable Delays,
whether or not the Insurance Proceeds or Awards with respect to
such Casualty or Condemnation are available to the Mortgagor to
pay the cost of Restoration or are sufficient for such purpose;
provided that (i) any such Restoration shall be effected with due
diligence, in a good and workmanlike manner, in compliance with
all applicable Legal Requirements and Insurance Requirements;
(ii) any such Restoration shall be conducted under the
supervision of an architect or engineer if customary for such
Restoration (iii) any such Restoration shall be located wholly on
the Land and, unless consented to by the Mortgagee and by the
owner of the adjacent property, shall be independent of and not
connected with improvements located on adjacent property; (iv)
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each such Restoration shall be promptly and fully paid for by the
Mortgagor except to the extent that any such payment is being
contested in good faith; and (vi) the Mortgagor shall procure
prior to the commencement of any such Restoration, and maintain
throughout the continuation of the work involved, such insurance
and performance and payment bonds as are customary for the type
of construction and work involved.
SECTION 3.03. Insurance Claims and Proceeds;
Condemnation Awards. (a) If any Casualty occurs, (i) the
Mortgagor shall promptly make proof of loss under the applicable
Insurance Policies and diligently pursue to conclusion its claim
for the Insurance Proceeds payable thereunder and any suit,
action or other proceeding necessary or appropriate to obtain
payment of such Insurance Proceeds and (ii) all such Insurance
Proceeds shall be paid to the Mortgagee for deposit in the
Collateral Account to be held, applied and disbursed in
accordance with the Borrower Security Agreement. Until so
deposited, any Insurance Proceeds received by the Mortgagor shall
be held in trust by the Mortgagor for and as the property of the
Mortgagee and the other Secured Parties and shall not be
commingled with any other funds or property of the Mortgagor.
(b) If any Condemnation occurs, or if any negotiation or
proceeding is commenced which might result in a Condemnation, or
if any Condemnation is proposed or threatened, the Mortgagor
shall, promptly after receiving notice or obtaining knowledge
thereof, do all things deemed necessary or appropriate by the
Mortgagor to preserve the Mortgagor's interest in such Property
and promptly make claim for the Awards payable with respect
thereto and diligently pursue to conclusion such claim for such
Awards and any suit, action or other proceeding necessary or
appropriate to obtain payment thereof. All Awards with respect
to any Condemnation shall be paid to the Collateral Agent for
deposit in the Collateral Account to be held, applied and
disbursed in accordance with the Borrower Security Agreement.
Until so deposited, any such Awards received by the Mortgagor
shall be held in trust by the Mortgagor for and as the property
of the Mortgagee and the other Secured Parties and shall not be
commingled with any other funds or property of the Mortgagor.
SECTION 3.04. Major Loss; Substitution. (a) If a
Casualty or Condemnation that constitutes a Major Loss occurs, or
if any negotiation or proceeding is commenced which might result
in a Condemnation that would constitute a Major Loss, or if any
Condemnation is proposed or threatened which might result in a
Major Loss, the Mortgagor shall promptly after receiving notice
or obtaining knowledge thereof give notice thereof to the
Mortgagee, describing in detail reasonably satisfactory to the
Mortgagee the nature and extent of such Casualty or Condemnation
(or such negotiation, proceeding or proposed or threatened
Condemnation) and the effect (or possible effect) of such
Casualty or such actual, proposed or threatened Condemnation on
the operations of the Mortgagor at the Property.
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(b) Within 90 days after a Casualty or Condemnation
which constitutes a Major Loss occurs, a Financial Officer of the
Mortgagor shall notify the Mortgagee (i) whether the Property can
and will be Restored and (ii) whether such Financial Officer
reasonably and in good faith expects that at least 90% of the
licensed beds available for use at the Property immediately prior
to such Casualty or Condemnation will be usable in the
Mortgagor's operations at the Property within 150 days after such
Casualty or Condemnation.
(c) Within 150 days after a Casualty or Condemnation
which constitutes a Major Loss occurs, the Mortgagor shall
substitute one or more Additional Properties for the Property in
the manner specified in Section 10.08 of the Credit Agreement;
provided that no such substitution shall be required if:
(i) the notice given by a Financial Officer of the
Mortgagor to the Mortgagee pursuant to Section 3.04(b)
indicates that the Property can and will be Restored and that
such Financial Officer reasonably and in good faith expects
that at least 90% of the licensed beds available for use at
the Property immediately prior to such Casualty or
Condemnation will be usable in the Mortgagor's operations at
the Property within 150 days after such Casualty or
Condemnation;
(ii) a Financial Officer of the Mortgagor notifies the
Mortgagee in good faith within 150 days after such Casualty or
Condemnation that at least 90% of the licensed beds available
for use at the Property immediately prior to such Casualty or
Condemnation are then usable in the Mortgagor's operations at
the Property; and
(iii) a Financial Officer of the Mortgagor notifies the
Mortgagee in good faith within 18 months after such Casualty
or Condemnation that the Property has been Restored.
If a Financial Officer of the Mortgagor shall not have given
notice to the Mortgagee to the effect set forth in clause (ii) or
(iii) above on or before the last day of the period prescribed
therein, the Mortgagor shall substitute one or more Additional
Properties for the Mortgaged Property in the manner specified in
Section 10.08 of the Credit Agreement within 60 days after the
last day of such period.
ARTICLE IV
CERTAIN SECURED OBLIGATIONS
SECTION 4.01. Interest After Default. If, pursuant to
the terms of this Mortgage, the Mortgagee shall make any payment
on behalf of the Mortgagor (including any payment made by the
Mortgagee pursuant to Section 5.10), or shall incur hereunder any
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expense for which the Mortgagee is entitled to reimbursement
pursuant to the terms of the Financing Documents, such Secured
Obligation shall be payable on demand and any amounts not paid on
demand shall bear interest, payable on demand, for each day until
paid at the Post-Default Rate for such day. Such interest, and
any other interest on the Secured Obligations payable at the
Post-Default Rate pursuant to the terms of the Financing
Documents, shall accrue through the date paid notwithstanding any
intervening judgment of foreclosure or sale. All such interest
shall be part of the Secured Obligations and shall be secured by
this Mortgage.
SECTION 4.02. Changes in the Laws Regarding Taxation.
If, after the date hereof, there shall be enacted any applicable
law deducting from the value of the Property for the purpose of
taxation the Lien of any Collateral Document or changing in any
way the applicable law for the taxation of mortgages, deeds of
trust or other Liens or obligations secured thereby, or the
manner of collection of such taxes, so as to adversely affect
this Mortgage, the Secured Obligations or any Secured Party, upon
demand by the Mortgagee or any other affected Secured Party, the
Mortgagor shall pay all taxes, assessments or other charges
resulting therefrom or shall reimburse such Secured Party for all
such taxes, assessments or other charges which such Secured Party
is obligated to pay as a result thereof.
SECTION 4.03. Indemnification. The Mortgagor shall
protect, indemnify and defend each of the Mortgagee and the other
Secured Parties from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever
(including reasonable attorneys' fees and expenses) which may be
imposed on, incurred by or asserted against any Secured Party by
reason or on account of, or in connection with (a) the
Mortgagee's exercise of any of its rights and remedies hereunder;
(b) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Mortgaged
Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, street or
ways; (c) any failure on the part of the Mortgagor to perform or
comply with any of the terms of this Mortgage; (d) the
performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property
or any part thereof; or (e) any other conduct or misconduct of
the Mortgagor, any lessee of any of the Mortgaged Property, or
any of their respective agents, contractors, subcontractors,
servants, employees, licensees or invitees; provided, however,
that any claims caused by the willful misconduct or gross
negligence of any Secured Party as determined by a court of
competent jurisdiction shall be excluded from the foregoing
indemnification of
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such Secured Party. Any amount payable under this Section will
be deemed a demand obligation and will bear interest pursuant to
Section 4.01. The obligations of the Mortgagor under this
Section shall survive the termination of this Mortgage.
ARTICLE V
DEFAULTS, REMEDIES AND RIGHTS
SECTION 5.01. Events of Default. Any Event of Default
under the Credit Agreement shall constitute an Event of Default
hereunder. All notice and cure periods provided in the Credit
Agreement and the other Financing Documents shall run
concurrently with any notice or cure periods provided under
applicable law.
SECTION 5.02. Remedies. (a) Upon being instructed to
do so in an Enforcement Notice, the Mortgagee shall have the
right and power to exercise any of the following remedies and
rights, subject to mandatory provisions of applicable law, to
wit:
(i) to institute a proceeding or proceedings, by
advertisement, judicial process or otherwise as provided
under applicable law, for the complete or partial
foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale hereunder
or under any applicable provision of law; or
(ii) to sell the Mortgaged Property, and all estate,
right, title, interest, claim and demand of the Mortgagor
therein and thereto, and all rights of redemption thereof,
at one or more sales, as an entirety or in parcels, with
such elements of real or personal property, at such time and
place and upon such terms as the Mortgagee may deem
expedient or as may be required under applicable law, and in
the event of a sale hereunder or under any applicable
provision of law of less than all of the Mortgaged Property,
this Mortgage shall continue as a Lien on the remaining
Mortgaged Property; or
(iii) to institute a suit, action or proceeding for the
specific performance of any of the provisions of this
Mortgage; or
(iv) to be entitled to the appointment of a receiver,
supervisor, trustee, liquidator, conservator or other
custodian (a "Receiver") of the Mortgaged Property, without
notice to Mortgagor, to the fullest extent permitted by law,
as a matter of right and without regard to, or the necessity
to disprove, the adequacy of the security for the Secured
Obligations or the solvency of the Mortgagor or any other
Obligor, and the Mortgagor hereby, to the fullest extent
permitted by applicable law, irrevocably waives such
necessity and consents to such appointment, without notice,
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said appointee to be vested with the fullest powers permitted
under applicable law, including to the extent permitted under
applicable law those under clause (v) of this subsection (a);
or
(v) to enter upon the Property, by the Mortgagee or a
Receiver (whichever is the Person exercising the rights
under this clause), and, to the extent permitted by
applicable law, exclude the Mortgagor and its managers,
employees, contractors, agents and other representatives
therefrom in accordance with applicable law, without
liability for trespass, damages or otherwise, and take
possession of all other Mortgaged Property and all books,
records and accounts relating thereto, and upon demand the
Mortgagor shall surrender possession of the Property, the
other Mortgaged Property and such books, records and
accounts to the Person exercising the rights under this
clause; and having and holding the same, the Person
exercising the rights under this clause may use, operate,
manage, preserve, control and otherwise deal therewith and
conduct the business thereof, either personally or by its
managers, employees, contractors, agents or other
representatives, without interference from the Mortgagor or
its managers, employees, contractors, agents and other
representatives; and, upon each such entry and from time to
time thereafter, at the expense of the Mortgagor and the
Mortgaged Property, without interference by the Mortgagor or
its managers, employees, contractors, agents and other
representatives, the Person exercising the rights under this
clause may, as such Person deems expedient, (A) insure or
reinsure the Property, (B) make all necessary or proper
repairs, renewals, replacements, alterations, additions,
Restorations, betterments and improvements to the Property
and (C) in such Person's own name or, at the option of such
Person, in the Mortgagor's name, exercise all rights, powers
and privileges of the Mortgagor with respect to the
Mortgaged Property, including the right to enter into Leases
with respect to the Property, including Leases extending
beyond the time of possession by the Person exercising the
rights under this clause; and the Person exercising the
rights under this clause shall not be liable to account for
any action taken hereunder, other than for Rents actually
received by such Person, and shall not be liable for any
loss sustained by the Mortgagor resulting from any failure
to let the Property or from any other act or omission of
such Person, except to the extent such loss is caused by
such Person's own willful misconduct or gross negligence; or
(vi) with or, to the fullest extent permitted by
applicable law, without entry upon the Property, in the name
of the Mortgagee or a Receiver as required by law (whichever
is the Person exercising the rights under this clause) or,
at such Person's option, in the name of the Mortgagor, to
collect, receive, sue for and recover all Rents and proceeds
of or derived from the Mortgaged Property, and after
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deducting therefrom all costs, expenses and liabilities of
every character incurred by the Person exercising the rights
under this clause in collecting the same and in using,
operating, managing, preserving and controlling the Mortgaged
Property and otherwise in exercising the rights under clause
(v) of this subsection (a) or any other rights hereunder,
including all amounts necessary to pay Impositions, Rents,
Insurance Premiums and other costs, expenses and liabilities
relating to the Property, as well as reasonable compensation
for the services of such Person and its managers, employees,
contractors, agents or other representatives, to apply the
remainder as provided in Section 5.06; or
(vii) to take any action with respect to any Mortgaged
Property permitted under the Local UCC; or
(viii) to take any other action, or pursue any other
remedy or right, as the Mortgagee may have under applicable
law, and the Mortgagor does hereby grant the same to the
Mortgagee.
(b) To the fullest extent permitted by applicable law,
(i) each remedy or right hereunder shall be in
addition to, and not exclusive or in limitation of, any
other remedy or right hereunder, under any other Financing
Document or under applicable law;
(ii) every remedy or right hereunder, under any other
Financing Document or under applicable law may be exercised
concurrently or independently and whenever and as often as
deemed appropriate by the Mortgagee;
(iii) no failure to exercise or delay in exercising any
remedy or right hereunder, under any other Financing
Document or under applicable law shall be construed as a
waiver of any Default or other occurrence hereunder or under
any other Financing Document;
(iv) no waiver of, failure to exercise or delay in
exercising any remedy or right hereunder, under any other
Financing Document or under applicable law upon any Default
or other occurrence hereunder or under any other Financing
Document shall be construed as a waiver of, or otherwise
limit the exercise of, such remedy or right upon any other
or subsequent Default or other or subsequent occurrence
hereunder or under any other Financing Document;
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(v) no single or partial exercise of any remedy or
right hereunder, under any other Financing Document or under
applicable law upon any Default or other occurrence
hereunder or under any other Financing Document shall
preclude or otherwise limit the exercise of any other remedy
or right hereunder, under any other Financing Document or
under applicable law upon such Default or occurrence or upon
any other or subsequent Default or other or subsequent
occurrence hereunder or under any other Financing Document;
(vi) the acceptance by the Mortgagee or any other
Secured Party of any payment less than the amount of the
Secured Obligation in question shall be deemed to be an
acceptance on account only and shall not be construed as a
waiver of any Default hereunder or under any other Financing
Document with respect thereto; and
(vii) the acceptance by the Mortgagee or any other
Secured Party of any payment of, or on account of, any
Secured Obligation shall not be deemed to be a waiver of any
Default or other occurrence hereunder or under any other
Financing Document with respect to any other Secured
Obligation.
(c) If the Mortgagee has proceeded to enforce any remedy
or right hereunder or with respect hereto by foreclosure, sale,
entry or otherwise, it may compromise, discontinue or abandon
such proceeding for any reason without notice to the Mortgagor or
any other Person (except other Secured Parties to the extent
required by the other Financing Documents); and, if any such
proceeding shall be discontinued, abandoned or determined
adversely for any reason, the Mortgagor and the Mortgagee shall
retain and be restored to their former positions and rights
hereunder with respect to the Mortgaged Property, subject to the
Lien hereof except to the extent any such adverse determination
specifically provides to the contrary.
(d) For the purpose of carrying out any provisions of
Section 5.02(a)(v), 5.02(a)(vi), 5.05, 5.07, 5.10 or 6.01 or any
other provision hereunder authorizing the Mortgagee or any other
Person to perform any action on behalf of the Mortgagor, the
Mortgagor hereby irrevocably appoints the Mortgagee or a Receiver
appointed pursuant to Section 5.02(a)(iv) or such other Person as
the attorney-in-fact of the Mortgagor (with a power to substitute
any other Person in its place as such attorney-in-fact) to act in
the name of the Mortgagor or, at the option of the Person
appointed to act under this subsection, in such Person's own
name, to take the action authorized under Section 5.02(a)(v),
5.02(a)(vi), 5.05, 5.07, 5.10 or 6.01 or such other provision,
and to execute, acknowledge and deliver any document in
connection therewith or to take any other action incidental
thereto as the Person appointed to act under this subsection
shall deem appropriate in its discretion; and the Mortgagor
hereby irrevocably authorizes and directs any other Person to
rely and act on behalf of the foregoing appointment and a
certificate of the Person appointed to act under this subsection
that such Person is authorized to act under this subsection.
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SECTION 5.03. Waivers by the Mortgagor. To the fullest
extent permitted under applicable law, the Mortgagor shall not
assert, and hereby irrevocably waives, any right or defense the
Mortgagor may have under any statute or rule of law or equity now
or hereafter in effect relating to (i) appraisement, valuation,
homestead exemption, extension, moratorium, stay, statute of
limitations, redemption, marshalling of the Mortgaged Property or
the other assets of the Mortgagor, sale of the Mortgaged Property
in any order or notice of deficiency or intention to accelerate
any Secured Obligation; (ii) impairment of any right of
subrogation or reimbursement; (iii) any requirement that at any
time any action must be taken against any other Person, any
portion of the Mortgaged Property or any other asset of the
Mortgagor or any other Person; (iv) any provision barring or
limiting the right of the Mortgagee to sell any Mortgaged
Property after any other sale of any other Mortgaged Property or
any other action against the Mortgagor or any other Person; (v)
any provision barring or limiting the recovery by the Mortgagee
of a deficiency after any sale of the Mortgaged Property; (vi)
any other provision of applicable law which might defeat, limit
or adversely affect any right or remedy of the Mortgagee or any
other Secured Party under or with respect to this Mortgage or any
other Collateral Document as it relates to any Mortgaged
Property; or (vii) the right of the Mortgagee as Collateral Agent
to foreclose this Mortgage in its own name on behalf of all of
the Secured Parties by judicial action as the real party in
interest without the necessity of joining any other Secured
Party.
SECTION 5.04. Jurisdiction and Process. (a) To the
extent permitted under applicable law, in any suit, action or
proceeding arising out of or relating to this Mortgage or any
other Collateral Document as it relates to any Mortgaged
Property, the Mortgagor irrevocably consents to the non-exclusive
jurisdiction of any state or federal court sitting in the State
in which the Property is located and irrevocably waives any
defense or objection which it may now or hereafter have to the
jurisdiction of such court or the venue of such court or the
convenience of such court as the forum for any such suit, action
or proceeding.
(b) Nothing in this Section shall affect the right of
the Mortgagee to bring any suit, action or proceeding arising out
of or relating to this Mortgage or any other Collateral Document
in any court having jurisdiction under the provisions of any
other Collateral Document or applicable law or to serve any
process, notice of sale or other notice in any manner permitted
by any other Collateral Document or applicable law.
SECTION 5.05. Sales. Except as otherwise provided
herein, to the fullest extent permitted under applicable law, at
the election of the Mortgagee, the following provisions shall
apply to any sale of the Mortgaged Property hereunder, whether
made pursuant to the power of sale hereunder, any judicial
proceeding or any judgment or decree of foreclosure or sale or
otherwise:
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(a) The Mortgagee or the court officer (whichever is
the Person conducting any sale) may conduct any number of
sales from time to time. The power of sale hereunder or
with respect hereto shall not be exhausted by any sale as to
any part or parcel of the Mortgaged Property which is not
sold, unless and until the Secured Obligations shall have
been paid in full, and shall not be exhausted or impaired by
any sale which is not completed or is defective. Any sale
may be as a whole or in part or parcels and, as provided in
Section 5.03, the Mortgagor has waived its right to direct
the order in which the Mortgaged Property or any part or
parcel thereof is sold.
(b) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale
or for such postponed or adjourned sale without further
notice.
(c) After each sale, the Person conducting such sale
shall execute and deliver to the purchaser or purchasers at
such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right,
title and interest of the Mortgagor in and to the Mortgaged
Property sold and shall receive the proceeds of such sale
and apply the same as provided in Section 5.06. The
Mortgagor hereby irrevocably appoints the Person conducting
such sale as the attorney-in-fact of the Mortgagor (with
full power to substitute any other Person in its place as
such attorney-in-fact) to act in the name of the Mortgagor
or, at the option of the Person conducting such sale, in
such Person's own name, to make without warranty by such
Person any conveyance, assignment, transfer or delivery of
the Mortgaged Property sold, and to execute, acknowledge and
deliver any instrument of conveyance, assignment, transfer
or delivery or other document in connection therewith or to
take any other action incidental thereto, as the Person
conducting such sale shall deem appropriate in its
discretion; and the Mortgagor hereby irrevocably authorizes
and directs any other Person to rely and act upon the
foregoing appointment and a certificate of the Person
conducting such sale that such Person is authorized to act
hereunder. Nevertheless, upon the request of such
attorney-in-fact the Mortgagor shall promptly execute,
acknowledge and deliver any documentation which such
attorney-in-fact may require for the purpose of ratifying,
confirming or effectuating the powers granted hereby or any
such conveyance, assignment, Transfer or delivery by such
attorney-in-fact.
(d) Any statement of fact or other recital made in any
instrument referred to in Section 5.05(c) given by the
Person conducting any sale as to the nonpayment of any
Secured Obligation, the amount of the Secured Obligations
due and payable, the request to the Mortgagee to sell, the
<PAGE>
<PAGE>
notice of the time, place and terms of sale and of the
Mortgaged Property to be sold having been duly given, the
refusal, failure or inability of the Mortgagee to act, the
appointment of any substitute or successor agent, any other
act or thing having been duly done by the Mortgagor, the
Mortgagee or any other such Person, shall be taken as
conclusive and binding against all other Persons as evidence
of the truth of the facts so stated or recited.
(e) The receipt by the Person conducting any sale of
the purchase money paid at such sale shall be sufficient
discharge therefor to any purchaser of any Mortgaged
Property sold, and no such purchaser, or its
representatives, grantees or assigns, after paying such
purchase price and receiving such receipt, shall be bound to
see to the application of such purchase price or any part
thereof upon or for any trust or purpose of this Mortgage
or, in any manner whatsoever, be answerable for any loss,
misapplication or nonapplication of any such purchase money
or be bound to inquire as to the authorization, necessity,
expediency or regularity of such sale.
(f) Subject to mandatory provisions of applicable law,
any sale shall operate to divest all of the estate, right,
title, interest, claim and demand whatsoever, whether at law
or in equity, of the Mortgagor in and to the Mortgaged
Property sold, and shall be a perpetual bar both at law and
in equity against the Mortgagor and any and all Persons
claiming such Mortgaged Property or any interest therein by,
through or under the Mortgagor.
(g) At any sale, the Mortgagee may bid for and acquire
the Mortgaged Property sold and, in lieu of paying cash
therefor, may make settlement for the purchase price by
causing the Secured Parties to credit against the Secured
Obligations, including the expenses of the sale and the cost
of any enforcement proceeding hereunder, the amount of the
bid made therefor to the extent necessary to satisfy such
bid.
(h) If the Mortgagor or any Person claiming by,
through or under the Mortgagor shall transfer or fail to
surrender possession of the Mortgaged Property, after the
exercise by the Mortgagee of the Mortgagee's remedies under
Section 5.02(a)(v) or after any sale of the Mortgaged
Property pursuant hereto, then the Mortgagor or such Person
shall be deemed a tenant at sufferance of the purchaser at
such sale, subject to eviction by means of summary process
for possession of land, or subject to any other right or
remedy available hereunder or under applicable law.
(i) Upon any sale, it shall not be necessary for the
Person conducting such sale to have any Mortgaged Property
being sold present or constructively in its possession.
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<PAGE>
(j) If a sale hereunder shall be commenced by the
Mortgagee, the Mortgagee may at any time before the sale
abandon the sale, and may institute suit for the collection
of the Secured Obligations or for the foreclosure of this
Mortgage; or if the Mortgagee shall institute a suit for
collection of the Secured Obligations or the foreclosure of
this Mortgage, the Mortgagee may at any time before the
entry of final judgment in said suit dismiss the same and
sell the Mortgaged Property in accordance with the
provisions of this Mortgage.
SECTION 5.06. Proceeds. Except as otherwise provided
herein or required under applicable law, upon being instructed to
do so in an Enforcement Notice, the proceeds of any sale of the
Mortgaged Property hereunder, whether made pursuant to the power
of sale hereunder, any judicial proceeding or any judgment or
decree of foreclosure or sale or otherwise, shall be applied and
paid as follows:
(a) First: to the payment of all expenses of such
sale, including compensation for the Person conducting such
sale (which may include the Mortgagee), the cost of title
searches, foreclosure certificates and attorneys' fees and
expenses incurred by such Person, together with interest on
any such expenses paid by such Person at the Post-Default
Rate from the date of demand through the date repaid to such
Person;
(b) Second: to the payment of the expenses and other
amounts payable under Sections 4.02 and 5.10, if any;
(c) Third: to the payment of the other Secured
Obligations in the order and priority set forth in Section
10 of the Borrower Security Agreement, until all Secured
Obligations shall have been paid in full; and
(d) Fourth: to pay to the Mortgagor or its successors
and assigns, or as a court of competent jurisdiction may
direct, any surplus then remaining from such proceeds.
SECTION 5.07. Assignment of Leases. (a) Subject to
paragraph (d) below, the assignments of the Leases and the Rents
under Granting Clauses VI and VII are and shall be present,
absolute and irrevocable assignments by the Mortgagor to the
Mortgagee and, subject to the license to the Mortgagor under
Section 5.07(b), the Mortgagee or a Receiver appointed pursuant
to Section 5.02(a)(iv) (whichever is the Person exercising the
rights under this Section) shall have the absolute, immediate and
continuing right to collect and receive all Rents now or
hereafter, including during any period of redemption, accruing
with respect to the Property. At the request of the Mortgagee or
such Receiver, the Mortgagor shall promptly execute, acknowledge,
deliver, record, register and file any additional general
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<PAGE>
assignment of the Leases or specific assignment of any Lease
which the Mortgagee or such Receiver may require from time to
time (all in form and substance satisfactory to the Mortgagee or
such Receiver) to effectuate, complete, perfect, continue or
preserve the assignments of the Leases and the Rents under
Granting Clauses VI and VII.
(b) The Mortgagor shall have a license granted hereby to
collect and receive all Rents and apply the same subject to the
provisions of the Financing Documents, such license to be
terminable by the Mortgagee as provided in Section 5.07(c).
(c) Upon being instructed to do so in an Enforcement
Notice, the Mortgagee or a Receiver appointed pursuant to Section
5.02(a)(iv) (whichever is the Person exercising the rights under
this Section) shall have the right to terminate the license
granted under Section 5.07(b) by notice to the Mortgagor and to
exercise the rights and remedies provided under Section 5.07(a),
under Sections 5.02(a)(v) and (vi) or under applicable law. Upon
demand by the Person exercising the rights under this Section,
the Mortgagor shall promptly pay to such Person all security
deposits under the Leases and all Rents allocable to any period
after such demand. Subject to Sections 5.02(a)(v) and (vi) and
any applicable requirement of law, any Rents received hereunder
by such Receiver shall be promptly paid to the Mortgagee, and any
Rents received hereunder by the Mortgagee shall be deposited in
the Collateral Account, to be held, applied and disbursed as
provided in the Borrower Security Agreement, provided that,
subject to Sections 5.02(a)(v) and (vi) and any applicable
requirement of law, any security deposits actually received by
such Receiver shall be promptly paid to the Mortgagee, and any
security deposits actually received by the Mortgagee shall be
held, applied and disbursed as provided in the applicable Leases
and applicable law.
(d) Nothing herein shall be construed to be an
assumption by the Person exercising the rights under this
Section, or otherwise to make such Person liable for the
performance, of any of the obligations of the Mortgagor under the
Leases, provided that such Person shall be accountable as
provided in Section 5.07(c) for any Rents or security deposits
actually received by such Person.
SECTION 5.08. Dealing With the Mortgaged Property.
Subject to Section 7.02, the Mortgagee shall have the right to
release any portion of the Mortgaged Property to or at the
request of the Mortgagor, for such consideration as the Mortgagee
may require without, as to the remainder of the Mortgaged
Property, in any way impairing or affecting the Lien or priority
of this Mortgage, or improving the position of any subordinate
lienholder with respect thereto, or the position of any
guarantor, endorser, co-maker or other obligor of the Secured
<PAGE>
<PAGE>
Obligations, except to the extent that the Secured Obligations
shall have been reduced by any actual monetary consideration
received for such release and applied to the Secured Obligations,
and may accept by assignment, pledge or otherwise any other
property in place thereof as the Mortgagee may require without
being accountable therefor to any other lienholder.
SECTION 5.09. Right of Entry. The Mortgagee and the
representatives of the Mortgagee shall have the right, upon being
instructed to do so by the Required Banks (i) without notice, if
any Enforcement Notice is in effect (ii) with simultaneous
notice, if any payment or performance is necessary in the opinion
of the Mortgagee to preserve the Mortgagee's rights under this
Mortgage or with respect to the Mortgaged Property, or
(iii) after reasonable notice, in all other cases, to enter upon
the Property at reasonable times, and with reasonable frequency,
to inspect the Mortgaged Property or, subject to the provisions
hereof, to exercise any right, power or remedy of the Mortgagee
hereunder, provided that any Person so entering the Property
shall not unreasonably interfere with the ordinary conduct of the
Mortgagor's business, and provided further that no such entry on
the Property, for the purpose of performing obligations under
Section 5.10 or for any other purpose, shall be construed to be
(x) possession of the Property by such Person or to constitute
such Person as a mortgagee in possession, unless such Person
exercises its right to take possession of the Property under
Section 5.02(a)(v), or (y) a cure of any Default or waiver of any
Default or Secured Obligation. The cost of any inspection
pursuant to clause (iii) above shall be borne by the Mortgagee
unless an Event of Default shall have occurred and be continuing
at the time of such inspection, in which case the Mortgagor shall
pay, or reimburse the Mortgagee for, such cost.
SECTION 5.10. Right to Perform Obligations. If the
Mortgagor fails to pay or perform any obligation of the Mortgagor
hereunder, the Mortgagee and the representatives of the Mortgagee
shall have the right, upon being instructed to do so by the
Required Banks at any time, to pay or perform such obligation
(i) without notice, if any Enforcement Notice is in effect, (ii)
with simultaneous notice, if such payment or performance is
necessary in the opinion of the Mortgagee to preserve the
Mortgagee's rights under this Mortgage or with respect to the
Mortgaged Property or (iii) after notice given reasonably in
advance to allow the Mortgagor an opportunity to pay or perform
such obligation, provided that the Mortgagor is not contesting
payment or performance in accordance with the terms hereof and
further provided that no such payment or performance shall be
construed to be a cure of any Default or waiver of any Default or
Secured Obligation. The Mortgagor shall reimburse the Mortgagee
on demand for the reasonable costs of performing any such
obligations and any amounts not paid on demand shall bear
interest, payable on demand, for each day until paid at the Post-
Default Rate for such day.
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<PAGE>
SECTION 5.11. Concerning the Mortgagee. (a) The
provisions of Section 7.10 of the Credit Agreement shall inure to
the benefit of the Mortgagee in respect of this Mortgage and
shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights,
privileges and immunities of the Mortgagee therein set forth:
(i) The Mortgagee is authorized to take all such
action as is provided to be taken by it as Mortgagee
hereunder and all other action incidental thereto. As to
any matters not expressly provided for herein (including the
timing and methods of realization upon the Mortgaged
Property) the Mortgagee shall act or refrain from acting in
accordance with written instructions from the Required
Secured Parties or, in the absence of such instructions, in
accordance with its discretion.
(ii) The Mortgagee shall not be responsible for the
existence, genuineness or value of any of the Mortgaged
Property or for the validity, perfection, priority or
enforceability of the Lien of this Mortgage on any of the
Mortgaged Property, whether impaired by operation of law or
by reason of any action or omission to act on its part
hereunder. The Mortgagee shall have no duty to ascertain or
inquire as to the performance or observance of any of the
terms of this Mortgage by the Mortgagor.
(b) At any time or times, in order to comply with any
legal requirement in any jurisdiction, the Mortgagee may appoint
another bank or trust company or one or more other Persons,
either to act as co-agent or co-agents, jointly with the
Mortgagee, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary
for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment (which may, in the
discretion of the Mortgagee, include provisions for the
protection of such co-agent or separate agent similar to the
provisions of this Section 5.11). References to the Mortgagee in
Section 5.12 shall be deemed to include any co-agent or separate
agent appointed pursuant to this Section 5.11.
Section 5.12. Expenses. The Mortgagor agrees that it
will forthwith on demand pay to the Mortgagee (i) the amount of
any taxes which the Mortgagee may have been required to pay by
reason of the Lien of this Mortgage or to free any of the
Mortgaged Property from any Lien thereon (other than Permitted
Liens), (ii) the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of
counsel and of any other experts, which the Mortgagee may incur
in connection with preserving the value of the Mortgaged Property
and the validity, perfection, rank and value of the Lien of this
Mortgage and (iii) the amount of any and all out-of-pocket
expenses, including the fees and disbursements of counsel and of
any other experts, which the Mortgagee may incur in connection
with the collection, sale or other disposition of any of the
Mortgaged Property.
<PAGE>
<PAGE>
ARTICLE VI
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 6.01. Security Agreement. To the extent that
the Mortgaged Property constitutes or includes tangible or
intangible personal property, including goods or items of
personal property which are or are to become fixtures under
applicable law, the Mortgagor hereby grants a security interest
therein and this Mortgage shall also be construed as a pledge and
a security agreement under the Local UCC; and, upon being
instructed to do so in an Enforcement Notice, the Mortgagee shall
be entitled to exercise with respect to such tangible or
intangible personal property all remedies available under the
Local UCC and all other remedies available under applicable law.
Without limiting the foregoing, any personal property may, at the
Mortgagee's option and, except as otherwise required by
applicable law, without the giving of notice, (i) be sold
hereunder, (ii) be sold pursuant to the Local UCC or (iii) be
dealt with by the Mortgagee in any other manner permitted under
applicable law. The Mortgagee may require the Mortgagor to
assemble the personal property and make it available to the
Mortgagee at a place to be designated by the Mortgagee. At any
time and from time to time while an Enforcement Notice directing
it to do so is in effect, the Mortgagee shall be the
attorney-in-fact of the Mortgagor with respect to any and all
matters pertaining to the personal property with full power and
authority to give instructions with respect to the collection and
remittance of payments, to endorse checks, to enforce the rights
and remedies of the Mortgagor and to execute on behalf of the
Mortgagor and in Mortgagor's name any instruction, agreement or
other writing required therefor. The Mortgagor acknowledges and
agrees that a disposition of the personal property in accordance
with the Mortgagee's rights and remedies in respect to the
Property as heretofore provided is a commercially reasonable
disposition thereof. Notwithstanding the foregoing, to the
extent that the Mortgaged Property includes personal property
covered by the Borrower Security Agreement the provisions of the
Borrower Security Agreement shall govern with respect to such
personal property.
SECTION 6.02. Fixture Filing. To the extent that the
Mortgaged Property includes goods or items of personal property
which are or are to become fixtures under applicable law, and to
the extent permitted under applicable law, the filing of this
Mortgage in the real estate records of the county in which the
Mortgaged Property is located shall also operate from the time of
filing as a fixture filing with respect to such Mortgaged
Property, and the following information is applicable for the
purpose of such fixture filing, to wit:
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<PAGE>
(a) Name and Address of the debtor:
First Healthcare Corporation
1148 Broadway Plaza
Tacoma, Washington 98402
Attn: General Counsel
(b) Name and Address of the secured party:
J.P. Morgan Delaware,
as Collateral Agent
902 Market Street
Wilmington, Delaware 19801
(c) This document covers goods or items of personal
property which are or are to become fixtures upon the Property.
(d) The name of the record owner of the real estate on
which such fixtures are or are to be located is First Healthcare
Corporation.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Future Advances. The Secured Obligations
secured by this Mortgage include Revolver Loans made and
Reimbursement Obligations relating to Letters of Credit issued or
extended under the Credit Agreement in the maximum principal or
face amount of $185,000,000 which are advanced, paid and
readvanced from time to time. Notwithstanding the amount
outstanding at any particular time, this Mortgage secures the
total amount of Secured Obligations. The unpaid balance of the
Revolver Loans and the unpaid balance of the Reimbursement
Obligations may at certain times be, or be reduced to, zero. A
zero balance, by itself, does not affect any Bank's or LC Issuing
Bank's obligation to issue or extend Letters of Credit or to make
payments upon draws under Letters of Credit, or any Bank's
obligation to advance Revolver Loans, all of which are obligatory
subject to the conditions stated in the Credit Agreement. Each
of the interest of the Mortgagee hereunder and the priority of
the Lien of this Mortgage will remain in full force and effect
with respect to all of the Secured Obligations notwithstanding
such a zero balance of the Revolver Loans or the Reimbursement
Obligations, and the Lien of this Mortgage will not be
extinguished until this Mortgage has been terminated pursuant to
Section 7.02(a).
<PAGE>
<PAGE>
SECTION 7.02. Release of Mortgaged Property. (a) This
Mortgage shall cease, terminate and thereafter be of no further
force or effect (except as provided in Section 4.03) upon payment
in full of all Secured Obligations, the expiration of all Letters
of Credit issued under the Credit Agreement, the termination of
all Commitments under the Credit Agreement and the termination of
all Secured Hedging Agreements.
(b) The Mortgagee shall release the Mortgaged Property
from the Lien of this Mortgage in connection with a substitution
of an Additional Property permitted under Section 10.08 of the
Credit Agreement or as required under Section 3.04(c) hereof.
(c) Any termination or release under this Section 7.02
shall be at the Mortgagor's request and expense and either in the
statutory form or in a form reasonably satisfactory to the
Mortgagee.
SECTION 7.03. Notices. All notices, approvals,
requests, demands and other communications hereunder shall be
given in accordance with Section 10.01 of the Credit Agreement at
the address specified beneath the intended recipient's name on
the signature pages thereof, or at such other address as shall be
designated by such party in a Notice to the Mortgagor and the
Mortgagee in accordance with such Section 10.01 of the Credit
Agreement.
SECTION 7.04. Amendments in Writing. No provision of
this Mortgage shall be modified, waived or terminated, and no
consent to any departure by the Mortgagor from any provision of
this Mortgage shall be effective, unless the same shall be by an
instrument in writing, signed by the Mortgagor and the Mortgagee
in accordance with Section 10.05(b) of the Credit Agreement. Any
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.05. Severability. All rights, powers and
remedies provided in this Mortgage may be exercised only to the
extent that the exercise thereof does not violate applicable law,
and all the provisions of this Mortgage are intended to be
subject to all mandatory provisions of applicable law and to be
limited to the extent necessary so that they will not render this
Mortgage illegal, invalid, unenforceable or not entitled to be
recorded, registered or filed under applicable law. If any
provision of this Mortgage or the application thereof to any
Person or circumstance shall, to any extent, be illegal, invalid
or unenforceable, or cause this Mortgage not to be entitled to be
recorded, registered or filed, the remaining provisions of this
Mortgage or the application of such provision to other Persons or
circumstances shall not be affected thereby, and each provision
of this Mortgage shall be valid and be enforced to the fullest
extent permitted under applicable law.
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<PAGE>
SECTION 7.06. Binding Effect. (a) The provisions of
this Mortgage shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and
assigns.
(b) To the fullest extent permitted under applicable
law, the provisions of this Mortgage binding upon the Mortgagor
shall be deemed to be covenants which run with the land.
(c) Nothing in this Section shall be construed to permit
the Mortgagor to Transfer or grant a Lien upon the Mortgaged
Property contrary to the provisions of the Credit Agreement.
SECTION 7.07. GOVERNING LAW. THIS MORTGAGE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE PROPERTY IS LOCATED.
IN WITNESS WHEREOF, the Mortgagor has executed and
delivered this Mortgage as of the day first set forth above.
FIRST HEALTHCARE CORPORATION
[Seal]
By:_______________________
Name:
Title:
<PAGE>
<PAGE>
[Add State form of acknowledgment]
<PAGE>
<PAGE>
EXHIBIT A
Description of the Land
<PAGE>
<PAGE>
EXHIBIT H
FORM OF FINANCIAL OFFICER'S CERTIFICATE
THE HILLHAVEN CORPORATION
OFFICER'S CERTIFICATE
This certificate is being furnished pursuant to Sections
5.01[(a)/(b)] and (d) of the Credit Agreement dated as of
September 1, 1993 (the "Credit Agreement") among First Healthcare
Corporation, as Borrower, The Hillhaven Corporation, as
Guarantor, the Banks referred to therein, the LC Issuing Banks
referred to therein, Morgan Guaranty Trust Company of New York,
as Agent, Chemical Bank, as Administrative Agent, and J.P. Morgan
Delaware, as Collateral Agent. Terms used herein which are not
otherwise defined shall have the meanings ascribed to them in the
Credit Agreement.
The undersigned hereby certifies that he is the Vice President
and Treasurer of the Borrower and the Guarantor. The undersigned
further certifies that, to the best of his knowledge:
1. The enclosed consolidated financial statements of the
Guarantor, the Borrower and Medisave, at and for the
[Fiscal Year ended May 31, 1993], present fairly and in a
consistent manner the financial condition, results of
operations and cash flows of each such entity at such
date and for such period in conformity with generally
accepted accounting principles. The enclosed balance
sheets of Northwest Health Care, Pasatiempo Development
and Hillhaven Properties, Ltd. at [May 31, 1993] present
fairly and in a consistent manner the financial condition
of each such entity at such date.
2. As of the date of the enclosed financial statements, the
Obligors were in compliance with the requirements of
Sections 5.11 through 5.16, inclusive, of the Credit
Agreement, as shown on the attached Exhibit ___.
3. As of the date of the enclosed financial statements, the
Obligors were in compliance with the requirements of
Sections 5.22 through 5.25, inclusive, of the Credit
Agreement, as shown on the attached Exhibit ___.
4. No Default exists as of the date hereof.
5. Since the date of the financial statements previously
delivered to the Banks under Section 5.01(a) or 5.01(b)
of the Credit Agreement, no event has occurred or
condition arisen which has had a Material Adverse Effect
and which is not reflected in the financial statements
being delivered herewith.
<PAGE>
<PAGE>
6. No change in the generally accepted accounting principles
applied in preparing the enclosed financial statements
has been made from those applied in preparing the most
recent audited financial statements previously delivered
which is material to the enclosed financial statements.
The information provided herein is given as of the date hereof.
THE HILLHAVEN CORPORATION
Robert K. Schneider
Vice President and
Treasurer
Dated:
<PAGE>
<PAGE>
[FOR ILLUSTRATION PURPOSES ONLY]
FINANCIAL COVENANT RATIOS
(Dollars in Thousands)
May 31, 1993
FIXED CHARGE COVERAGE [Sec. 5.22]
Consolidated Net Income 39,079
Less: Gains on sale of assets
(net of tax) (2,454)
Adjusted Consolidated Net Income 36,625
Plus: Consolidated Interest Expense 55,560
Plus: Income tax expense (7,217)
Plus: Depreciation & amortization 49,326
Plus: Non-cash compensation 3,443
Plus: Consolidated Rental Expense 46,261
Plus: NME Guarantee Fees 9,637
Less: Interest income (1,596)
Consolidated EBITDARG 192,039
Consolidated Interest Expense 55,560
Consolidated Rental Expense 46,261
NME Guarantee Fees 9,637
Total interest, rent, guarantee fees 111,458
Fixed Charge Coverage 1.7230
Minimum allowable Fixed Charge Coverage 1.6000
CASH FLOW COVERAGE [Sec. 5.23]
Adjusted Consolidated Net Income 36,625
Plus: Depreciation & amortization 49,326
Plus: Non-cash compensation 3,443
Plus (minus): Incr.(Decr.) in def.inc.
tax liab. (12,631)
Consolidated Operating Cash Flow 76,763
Current portion of lt debt 18,835
Non-current lt debt 818,248
Contingent liabilities 39,761
Consolidated Debt for Borrowed
Money 876,844
Cash Flow Ratio 0.0875
Minimum Cash Flow Ratio allowable 0.100
<PAGE>
<PAGE>
[FOR ILLUSTRATION PURPOSES ONLY]
FINANCIAL COVENANT RATIOS
May 31, 1993
LEVERAGE RATIO [Sec. 5.24]
Consolidated Debt for Borrowed Money 876,844
Consolidated stockholder's equity 180,226
Less: Consolidated Intangible Assets (20,305)
Consolidated Tangible Net Worth 159,921
Leverage Ratio 5.4830
Maximum Leverage Ratio allowable 2.7500
MINIMUM CONSOLIDATED TANGIBLE NET WORTH [Sec. 5.25]
Base per agreement 230,000
Prior cumulative compliance level
adjustment 0
Plus: 75% of qtr. net income > $0.00 0
Less: 85% of Equity Security issues 0
Cumulative compliance level
adjustment 0
Minimum Compliance Level 230,000
Consolidated Tangible Net Worth 159,921
<PAGE>
<PAGE>
EXHIBIT I
[Amendment No. 4 Effective Date]
To the Banks, the LC Issuing
Banks and the Agents
referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am the General Counsel of First Healthcare Corporation,
a Delaware corporation (the "Borrower"), and of The Hillhaven
Corporation, a Nevada corporation (the "Guarantor" and, together
with the Borrower, the "Obligors"), and have acted as such in
connection with Amendment No. 4 dated as of October 28, 1994
("Amendment No. 4") to the Credit Agreement dated as of
September 1, 1993 among the Borrower, the Guarantor, the Banks
referred to therein, the LC Issuing Banks referred to therein,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent (as amended by amendments dated as of October
12, 1993, December 30, 1993 and May 27, 1994 and by Amendment No.
4, the "Amended Credit Agreement"). This opinion is being
rendered to you pursuant to Section 3.03(f) of Amendment No. 4.
Unless otherwise defined herein, terms defined in the Amended
Credit Agreement are used herein as defined therein.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of Amendment No. 4, the
Amended Credit Agreement and the Notes issued thereunder and such
other documents, corporate records, certificates of public
officials and other instruments, and have conducted such other
investigations of fact and law, as I have deemed necessary or
advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion
that:
1. The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware, and the Guarantor is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Nevada.
<PAGE>
<PAGE>
2. Each Obligor (i) has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and
as proposed to be conducted and (ii) is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements) and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to
so qualify or obtain such licenses and approvals would have a
Material Adverse Effect.
3. The execution and delivery by each Obligor of
Amendment No. 4 and the performance by such Obligor of its
obligations under the Amended Credit Agreement (i) are within the
corporate power of such Obligor, (ii) have been duly authorized
by all necessary corporate action, (iii) require no action by or
in respect of, or filing with, any governmental body, agency or
official (except such actions or filings as have been taken or
made prior to the Amendment No. 4 Effective Date and are in full
force and effect on the Amendment No. 4 Effective Date), (iv) do
not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Charter Documents of such
Obligor or any of its Subsidiaries or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such
Obligor or any of its Subsidiaries and (v) do not result in or
require the imposition of any Lien (other than the Liens created
by the Collateral Documents) on any asset of such Obligor or any
of its Subsidiaries.
4. The Amended Credit Agreement constitutes a valid and
binding agreement of each Obligor, and the Notes constitute valid
and binding obligations of the Borrower.
5. There is no action, suit or proceeding pending
against, or to my knowledge threatened against or affecting, the
Guarantor or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official (i) in
which there is a reasonable possibility of an adverse decision
which could have a Material Adverse Effect or (ii) which in any
manner questions the validity of Amendment No. 4 or the Amended
Credit Agreement.
6. Insofar as the Uniform Commercial Code of the State
of Washington (the "Washington UCC") is applicable thereto, the
security interests in the Collateral referred to in each of the
Borrower Security Agreement and the Guarantor Pledge Agreement
(collectively, the "Security Documents") validly secure the
payment of all future Loans made by the Banks to the Borrower and
all future Letters of Credit issued by the LC Issuing Banks for
the account of the Borrower, whether or not at the time such
Loans are made or such Letters of Credit are issued an Event of
Default or other event has relieved or may relieve the Banks or
the LC Issuing Banks from their obligations to make such Loans or
to issue such Letters of Credit.
<PAGE>
<PAGE>
7. The Obligors' obligations with respect to the
additional Term Loans to be made pursuant to the Amended Credit
Agreement after the Amendment No. 4 Effective Date are included
in the definition of "Secured Obligations" in each Security
Document and each Mortgage, and no filing or recording of any
document or instrument (other than filings already made and the
filing of continuation statements) or other action is or will be
required under the Washington UCC to perfect and to maintain the
perfection of the security interests in the Collateral referred
to in each Security Document and each Mortgage securing such
Secured Obligations to the extent that the Washington UCC governs
the perfection and the effect of perfection or non-perfection of
such security interests, except that (A) the continuation of such
perfected security interests is limited to the extent set forth
in RCW 62A.9-103(3)(e) and RCW 62A.9-306 of the Washington UCC
and (B) I express no opinion as the priority of such perfected
security interests.
I express no opinion as to the applicability (and, if
applicable, the effect) of Section 548 of the United States
Bankruptcy Code or any comparable provision of state law to the
questions addressed above or the conclusions expressed with
respect thereto.
The opinions expressed in paragraph 4 above are subject
to the following qualifications:
(i) the enforceability of the Amended Credit Agreement
and the Notes may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles; and
(ii) insofar as provisions contained in the Amended
Credit Agreement provide for indemnification, the enforcement
thereof may be limited by public policy considerations.
With respect to the opinions expressed in paragraphs 4, 6
and 7 above, I point out that the Amended Credit Agreement, the
Notes, the Borrower Security Agreement and the Guarantor Pledge
Agreement (the "New York Law Documents") contain provisions
stating that such documents are governed by and are to be
construed in accordance with the laws of the State of New York
(except, in the case of the Security Documents, as otherwise
required by mandatory provisions of law). I am of the opinion
that a Washington state court or a United States federal court
sitting in Washington would give effect to the provisions in the
New York Law Documents providing for New York law to govern the
New York Law Documents (except as aforesaid), and I have no
reason to believe that any such court would refuse to enforce any
of the provisions thereof for public policy reasons or otherwise.
If the New York Law Documents were governed by the laws of the
State of Washington, I would give the same opinions expressed in
paragraphs 4, 6 and 7 above with respect thereto under Washington
law.
<PAGE>
<PAGE>
I am a member of the bar of the State of California and,
except as stated below, the opinions expressed above are limited
to the laws of the State of Washington and the Federal laws of
the United States of America. I have made no examination of the
effects of the laws of any other jurisdiction upon the issues
covered by such opinions, except that insofar as the foregoing
opinions relate to matters of Delaware or Nevada law, I have
reviewed the relevant provisions of the Delaware General
Corporation Law and the Nevada Private Corporation Law and have
satisfied myself with respect thereto to the extent necessary to
express such opinions. Insofar as the foregoing opinions relate
to matters of Washington law, I have relied upon the opinion of
even date herewith of Brian Rodan, a Senior Associate Counsel of
the Borrower and the Guarantor, a copy of which is attached
hereto.
This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for
any other purpose or relied upon by any other person without my
prior written consent.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT J
FORM OF OPINION OF DAVIS POLK & WARDWELL
[Amendment No. 4 Effective Date]
To the Banks, the LC Issuing
Banks and the Agents
referred to below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have participated in the preparation of Amendment
No. 4 dated as of October 28, 1994 ("Amendment No. 4") to the
Credit Agreement dated as of September 1, 1993 among First
Healthcare Corporation, a Delaware corporation (the "Borrower"),
The Hillhaven Corporation, a Nevada corporation (the "Guarantor"
and, together with the Borrower, the "Obligors"), the Banks
referred to therein, the LC Issuing Banks referred to therein,
Morgan Guaranty Trust Company of New York, as Agent, Chemical
Bank, as Administrative Agent, and J.P. Morgan Delaware, as
Collateral Agent (as amended by amendments dated as of October
12, 1993, December 30, 1993 and May 27, 1994 and by Amendment No.
4, the "Amended Credit Agreement").
We have acted as special counsel for the Agent and the
Administrative Agent for the purpose of rendering this opinion
pursuant to Section 3.03(g) of Amendment No. 4. Unless otherwise
defined herein, terms defined in the Amended Credit Agreement are
used herein as defined therein.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of Amendment No. 4, the
Amended Credit Agreement and such other documents, corporate
records, certificates of public officials and other instruments,
and have conducted such other investigations of fact and law, as
we have deemed necessary or advisable for purposes of this
opinion.
In expressing the opinions below, we have assumed,
without independent investigation, that each of the Obligors has
all corporate powers required for, and has duly authorized by all
requisite corporate action, the execution and delivery of
Amendment No. 4 and the Notes and the performance of its
obligations under the Amended Credit Agreement and the Notes. We
note that these topics are addressed in the opinion of Richard P.
Adcock, General Counsel of the Borrower and the Guarantor, dated
the date hereof and delivered to you today.
<PAGE>
<PAGE>
Upon the basis of the foregoing and subject to the
qualifications set forth below, we are of the opinion that:
1. The Amended Credit Agreement constitutes a valid and
binding agreement of each Obligor, and the Notes delivered on the
Closing Date constitute valid and binding obligations of the
Borrower.
2. The Obligors' obligations with respect to the
additional Term Loans to be made pursuant to the Amended Credit
Agreement after the Amendment No. 4 Effective Date are included
in the definition of "Secured Obligations" in the Borrower
Security Agreement and the Guarantor Pledge Agreement, and no
filing or recording of any document or instrument or other action
is or will be required under New York law to cause such
obligations to be Secured Obligations for purposes of the
Borrower Security Agreement and the Guarantor Pledge Agreement.
3. No New York governmental registration, recordation or
filing by the Borrower or the Guarantor is required in connection
with the execution or delivery of Amendment No. 4 or is necessary
for the validity or enforceability of the Amended Credit
Agreement.
We express no opinion as to the applicability (and, if
applicable, the effect) of Section 548 of the United States
Bankruptcy Code or any comparable provision of state law to the
questions addressed above or the conclusions expressed with
respect thereto.
The opinions expressed in paragraph 1 above are subject
to the following qualifications:
(i) the enforceability of the Amended Credit Agreement
and the Notes may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles; and
(ii) we express no opinion as to the effect of the law of
any jurisdiction other than the State of New York wherein any
Bank may be located or wherein enforcement of the Amended
Credit Agreement or the Notes issued thereunder may be sought
which limits the rates of interest legally chargeable or
collectable.
We are members of the bar of the State of New York and
the foregoing opinion is limited to the laws of the State of New
York and the Federal laws of the United States of America.
This opinion is rendered solely to you in connection with
the above matter. This opinion may not be relied upon by you for
any other purpose or relied upon by any other person without our
prior written consent.
Very truly yours,
<PAGE>
<PAGE>
<PAGE>
CONTACT:
Tim Carroll
The Hillhaven Corporation
Vice President, Investor Relations
(206) 756-4806
HILLHAVEN AND NME DISCUSS OWNERSHIP STAKE
TACOMA, Washington (December 21, 1994) -- The Hillhaven
Corporation (NYSE:HIL) confirmed today that it will begin
discussions with National Medical Enterprises, Inc. (NYSE:NME)
with respect to NME's investment in Hillhaven. Hillhaven will
continue to analyze various financial alternatives in order to
preserve its flexibility to maximize the long term value for all
Hillhaven shareholders.
Among the alternatives which may be discussed are the issuance by
NME of debt or equity securities that would be convertible into
Hillhaven common stock, the maintenance by NME of its interest in
Hillhaven, or the sale by NME of the Hillhaven common stock in
an underwritten secondary offering or otherwise. There can be no
assurance that the ongoing discussions will result in any
transaction.
Bruce L. Busby, Hillhaven's Chairman and Chief Executive Officer
commented, "Since our spinoff in 1990, we have modified our
relationship with NME over time to the mutual benefit of both
companies. We view these discussions as an opportunity to
further position Hillhaven as a leading healthcare services
company with the strategic and financial strength to prosper in
our core businesses."
The Hillhaven Corporation is one of the nation's largest
diversified health care providers, operating 363 nursing centers,
retirement housing communities and pharmacy outlets in 36 states.
Hillhaven offers an extensive array of health care services
including subacute care, inpatient and outpatient rehabilitation,
orthopedic and stroke recovery programs, post-operative care,
long term care, specialized care for Alzheimer's disease,
pharmacy services and retirement and assisted living services.
# # #
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Consolidated Financial Statements of The Hillhaven Corporation at and for the
Six Months Ended November 30, 1994 and the related notes thereto and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 43,501
<SECURITIES> 0
<RECEIVABLES> 167,993
<ALLOWANCES> 11,337
<INVENTORY> 18,465
<CURRENT-ASSETS> 257,187
<PP&E> 1,033,651
<DEPRECIATION> 240,516
<TOTAL-ASSETS> 1,201,922
<CURRENT-LIABILITIES> 198,080
<BONDS> 577,604
<COMMON> 21,468
0
15
<OTHER-SE> 371,640
<TOTAL-LIABILITY-AND-EQUITY> 1,201,922
<SALES> 0
<TOTAL-REVENUES> 775,047
<CGS> 0
<TOTAL-COSTS> 657,021
<OTHER-EXPENSES> 55,397
<LOSS-PROVISION> 3,300
<INTEREST-EXPENSE> 24,556
<INCOME-PRETAX> 41,199
<INCOME-TAX> 13,613
<INCOME-CONTINUING> 27,586
<DISCONTINUED> 0
<EXTRAORDINARY> 174
<CHANGES> 0
<NET-INCOME> 27,412
<EPS-PRIMARY> .84
<EPS-DILUTED> .75
</TABLE>
