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UNITED STATES
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 June 30, 1998
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: 0-20372
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RES-CARE, INC.
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0875371
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10140 LINN STATION ROAD 40223
LOUISVILLE, KENTUCKY (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (502) 394-2100
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 twelve 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 outstanding of the registrant's common stock, no par value,
as of July 31, 1998, was 18,769,111.
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INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997........................................ 2
Condensed Consolidated Statements of Income for the
three months ended June 30, 1998 and 1997 and
six months ended June 30, 1998 and 1997...................... 3
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1997...................... 4
Notes to Condensed Consolidated Financial Statements.............. 5
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 4. Submission of Matters to a Vote of Security Holders............... 15
Item 5. Other Information................................................. 16
Item 6. Exhibits and Reports on Form 8-K.................................. 16
Index to Exhibits................................................. 17
Signatures........................................................ 18
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
June 30 December 31
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,608 $ 66,584
Accounts and notes receivable, net 76,803 57,240
Inventories 680 634
Deferred income taxes 6,168 3,483
Prepaid expenses and other current assets 4,780 2,259
-------- --------
Total current assets 115,039 130,200
-------- --------
Property and equipment, net 60,973 54,403
Excess of acquisition cost over net assets
acquired, net 159,311 51,751
Other assets 29,090 18,814
-------- --------
$364,413 $255,168
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 20,757 $ 13,888
Accrued expenses 35,613 22,907
Accrued income taxes 2,974 1,564
Current portion of long-term debt 2,263 1,759
-------- --------
Total current liabilities 61,607 40,118
-------- --------
Long-term liabilities 5,138 1,714
Long-term debt 180,428 108,470
Deferred income taxes 1,208 38
-------- --------
Total liabilities 248,381 150,340
-------- --------
Commitments and contingencies
Minority interest -- 219
Shareholders' equity:
Preferred shares -- --
Common stock 41,678 41,678
Additional paid-in capital 14,405 11,215
Retained earnings 63,150 55,057
-------- --------
119,233 107,950
Less cost of common shares in treasury (3,201) (3,341)
-------- --------
Total shareholders' equity 116,032 104,609
-------- --------
$364,413 $255,168
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ----------------------
1998 1997 1998 1997
--------- -------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net revenues $ 129,595 $ 69,990 $ 235,533 $ 134,857
Facility and program expenses 111,609 61,309 203,487 117,579
Operating expenses:
Corporate general and
administrative 4,873 2,250 8,928 4,815
Depreciation and amortization 3,618 1,376 6,088 2,555
--------- -------- --------- ---------
Total operating expenses 8,491 3,626 15,016 7,370
--------- -------- --------- ---------
Total facility, program and
operating expenses 120,100 64,935 218,503 124,949
--------- -------- --------- ---------
Operating income 9,495 5,055 17,030 9,908
Other expenses (income):
Interest expense 2,917 354 4,875 916
Interest income (290) (162) (1,014) (278)
Gain from sale of assets (28) (11) (19) (26)
--------- -------- --------- ---------
Total other expenses, net 2,599 181 3,842 612
--------- -------- --------- ---------
Minority interest in income of
consolidated subsidiary -- (36) -- (80)
--------- -------- --------- ---------
Income before income taxes 6,896 4,838 13,188 9,216
Income tax expense 2,640 1,951 5,095 3,722
--------- -------- --------- ---------
Net income $ 4,256 $ 2,887 $ 8,093 $ 5,494
========= ======== ========= =========
Income per share data:
Basic earnings per share $ 0.23 $ 0.16 $ 0.43 $ 0.34
========= ======== ========= =========
Diluted earnings per share $ 0.21 $ 0.16 $ 0.41 $ 0.33
========= ======== ========= =========
Weighted average shares used in
per share calculations:
Basic earnings per share 18,745 17,541 18,681 16,314
Diluted earnings per share 26,181 17,949 25,808 16,868
</TABLE>
See notes to condensed consolidated financial statements.
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RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
Six Months Ended
June 30
---------------------
1998 1997
--------- --------
(unaudited)
<S> <C> <C>
Cash provided by operating activities $ 13,727 $ 5,608
Cash flows from investing activities:
Purchase of property and equipment (4,712) (5,667)
Acquisitions of businesses, net of cash acquired (93,122) (9,201)
Other (3,544) (1,377)
--------- --------
Cash used in investing activities (101,378) (16,245)
--------- --------
Cash flows from financing activities:
Net borrowings (repayments) under notes
payable to bank 46,832 (13,224)
Repayments of notes payable (1,037) (1,509)
Proceeds from sale of common stock,
net of expenses of $559 -- 26,196
Proceeds received from exercise of stock options 1,880 1,080
Partnership distributions -- (235)
--------- --------
Cash provided by financing activities 47,675 12,308
--------- --------
Increase (decrease) in cash and cash equivalents $ (39,976) $ 1,671
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
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RES-CARE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
Res-Care, Inc. and its subsidiaries (the "Company") are primarily engaged
in the delivery of residential, training, educational and support services to
various populations with special needs, including persons with mental
retardation and other developmental disabilities and at-risk and troubled youth.
These services have in the past traditionally been provided by state and local
government agencies and not-for-profit organizations.
The accompanying unaudited condensed consolidated financial statements of
the Company have been prepared in accordance with the instructions to Form 10-Q
and Article 10 of Regulation S-X and do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
financial condition and results of operations for the interim periods have been
included. Operating results for the periods ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998.
For further information, refer to the consolidated financial statements and
footnotes thereto in the Company's annual report on Form 10-K for the year ended
December 31, 1997.
NOTE 2. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
June 30 December 31
1998 1997
-------- -----------
(In thousands)
<S> <C> <C>
Revolving credit facility with banks .................... $ 46,832 $ --
6% convertible subordinated notes due 2004,
net of unamortized discount of $2,999 and
$3,232 in 1998 and 1997 ............................. 106,361 106,128
5.9% convertible subordinated notes due 2005 ............ 22,000 --
Notes payable ........................................... 7,468 2,500
Other ................................................... 30 1,601
-------- --------
182,691 110,229
Less current portion ................................ 2,263 1,759
-------- --------
$180,428 $108,470
======== ========
</TABLE>
On June 30, 1998, the Company amended and restated its credit agreement
with a group of banks to provide for maximum borrowings of $200 million,
increase the letter of credit
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facility from $10 million to $20 million, amend certain financial covenants and
add new subsidiaries and banks as parties to the loan agreement. At June 30,
1998, the Company had borrowings of $46.8 million under the credit facility and
$5.2 million of letters of credit outstanding. Interest is based on margins over
LIBOR. The amended and restated credit facility is secured by the common stock
of all of the Company's subsidiaries and contains financial covenants related to
net worth, debt service coverage, indebtedness to cash flow from operations, and
debt to capitalization.
NOTE 3. ACQUISITIONS
On March 12, 1998, the Company acquired all of the outstanding common stock
of Normal Life, Inc. (Normal Life), a Kentucky corporation, which provides
services to persons with mental retardation and other developmental disabilities
in Indiana, Kentucky, California, Louisiana, Texas, Georgia and Florida.
The aggregate stock purchase price of $73 million was paid with $51 million
in cash and $22 million in principal amount of the Company's 5.9% convertible
subordinated notes due 2005. The notes are convertible into common stock of the
Company at a conversion price of $25.8354, or approximately 851,545 shares,
commencing one year from the closing date of the transaction. The funds for the
acquisition came from the Company's existing cash and revolving credit facility.
The acquisition is being accounted for under the purchase method of
accounting. Accordingly, the cost to acquire Normal Life has been preliminarily
allocated to the assets acquired and liabilities assumed according to their
respective estimated fair values. Results of operations of Normal Life are
included in the condensed consolidated statements of income effective March 1,
1998.
Summarized below are the unaudited pro forma results of the Company's
operations for the six months ended June 30, 1998 and 1997, as though the
acquisition had occurred on January 1, 1998 and 1997, respectively.
<TABLE>
Six Months Ended June 30,
1998 1997
-------- ---------
(In thousands,
except earnings per share)
<S> <C> <C>
Net revenues ......................................... $246,476 $158,537
Income before income taxes ........................... 12,637 8,668
Net income ........................................... 7,744 5,200
Basic earnings per share ............................. $ 0.41 $ 0.32
======== ========
Diluted earnings per share ........................... $ 0.40 $ 0.32
======== ========
</TABLE>
These unaudited pro forma results of operations do not reflect the total
cost savings or other synergies that may result from the acquisition. In the
opinion of management of the Company, all adjustments necessary to present pro
forma results of operations have been made. The unaudited pro forma results of
operations do not purport to be indicative of the results
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that would have occurred had the acquisition occurred at the beginning of these
periods or results of operations that may be achieved in the future.
In connection with the Normal Life acquisition, the Company recognized a
liability of approximately $2.4 million associated with termination benefits and
the closing of duplicate facilities. The termination benefits relate principally
to corporate employees. During the six months ended June 30, 1998, the Company
paid approximately $742,000 against the liability established for such purposes.
The Company estimates that the remaining amounts will be paid by February 28,
1999.
During the first six months of 1998, the Company also completed ten other
acquisitions of programs or facilities serving more than 3,700 individuals, at
an aggregate cost of approximately $28.1 million. The purchase price for these
acquired operations was funded primarily from the Company's credit facility.
Additionally, the Company was awarded three contracts to operate facilities
serving approximately 2,000 consumers.
During July 1998, the Company completed the acquisitions of four operations
which are expected to generate more than $13 million in annualized revenue and
serve approximately 300 consumers. The aggregate cost of approximately $5.6
million was funded primarily from the Company's credit facility.
NOTE 4. EARNINGS PER SHARE
The following table shows the amounts used in computing earnings per share
and the effect on income and the weighted average number of shares of dilutive
potential common stock.
<TABLE>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
1998 1997 1998 1997
-------- ------- ------- -------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Income available to shareholders
for basic earnings per share.............. $ 4,256 $ 2,887 $ 8,093 $ 5,494
Interest expense, net of income tax effect,
on convertible subordinated notes......... 1,309 -- 2,437 --
------- ------- ------- -------
Income available to shareholders after
assumed conversion of convertible
subordinated notes........................ $ 5,565 $ 2,887 $10,530 $ 5,494
======= ======= ======= =======
Weighted average number of common shares
used in basic earnings per share.......... 18,745 17,541 18,681 16,314
Effect of dilutive securities:
Stock options............................. 770 408 790 554
Convertible subordinated notes............ 6,666 -- 6,337 --
------- ------- ------- -------
Weighted average number of common shares
and dilutive potential common shares used
in diluted earnings per share............. 26,181 17,949 25,808 16,868
======= ======= ======= =======
</TABLE>
7
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On May 12, 1998, at its annual meeting, the Company's Board of Directors
declared a 3-for-2 stock split, payable to shareholders of record at the close
of business on May 22, 1998. All shares outstanding and per share amounts have
been restated to reflect the stock split.
NOTE 5. EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARD
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, Reporting on the Costs of Start-up Activities.
The SOP requires that all costs of start-up activities and organization costs be
expensed as incurred. The SOP is effective for the Company's year ending
December 31, 1999. Initial application of the SOP will be reported as the
cumulative effect of a change in accounting principle. As of June 30, 1998,
deferred start-up and organization costs of $7.5 million (net of accumulated
amortization of $4.0 million) were included in other assets in the Company's
consolidated balance sheet.
NOTE 6. STOCK PLAN
On May 12, 1998, the stockholders approved the 1998 Omnibus Stock Plan
("Plan") reserving 1,125,000 shares of the Company's common stock for awards to
selected key employees of the Company. The Plan provides the Board of Directors
with the flexibility to grant stock options, stock appreciation rights,
restricted or unrestricted stock awards, phantom stock, and performance awards.
As of June 30, 1998, no options or awards had been granted under the Plan.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ACQUISITIONS AND CONTRACTS
During the second quarter of 1998, the Company completed six transactions
which are expected to generate more than $33.0 million in annualized revenue and
serve approximately 2,500 new consumers. The Division for Persons with
Disabilities added two operations during the quarter which are expected to
generate approximately $1.5 million in annualized revenue and serve over 350
consumers. The Division for Youth Services added four operations during the
quarter, most notably with its award of the management contract for the Earle C.
Clements Job Corps Center located in Morganfield, Kentucky, which serves more
than 2,000 students and is expected to generate approximately $30 million in
annualized revenue.
During the six months ended June 30, 1998, the Company completed fourteen
transactions which are expected to generate more than $136 million in annualized
revenue and serve approximately 7,000 consumers. In connection with the
acquisitions consummated during the six months ended June 30, 1998, the Company
paid total consideration of approximately $102 million. This amount was funded
from proceeds from the issuance of convertible subordinated notes and the
Company's revolving credit facility.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997
Revenues
Total net revenues for the second quarter of 1998 increased by 85.2%, or
$59.6 million, to $129.6 million compared to $70.0 million for the second
quarter of 1997. Of the increase, 66.4% resulted from increased disabilities
services revenues. Disabilities services net revenues increased by 69.4%, or
$39.6 million, to $96.6 million in the second quarter of 1998 compared to $57.0
million in the second quarter of 1997. Revenues increased primarily as a result
of the effects of a full quarter of operations added during 1997 and the first
quarter of 1998, including the effects of the Normal Life acquisition, which
closed effective March 1, 1998. This transaction added approximately $68 million
in annualized revenue and 1,300 new consumers.
Youth services net revenues for the second quarter of 1998 increased by
154.5%, or $20.0 million, to $32.9 million compared to $12.9 million during the
second quarter of 1997. The increase resulted primarily from the acquisition of
five Job Corps centers from Teledyne Economic Development in October 1997, that
were operational in the second quarter of 1998 compared to the same period of
1997, and the addition of the contract to manage the Earle C. Clements Job Corps
Center in the second quarter of 1998.
Facility and Program Expenses
Facility and program expenses in the second quarter of 1998 increased
82.0%, or $50.3 million, compared to the second quarter of 1997. Of this
increase, $33.3 million, or 66.2% was due to payroll and payroll-related
expenses. These expenses reflected additional personnel
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as well as other costs associated with new facilities and programs in both of
the Company's divisions. Facility and program expenses decreased as a percentage
of total net revenues from 87.6% in 1997 to 86.1% in 1998.
Disabilities services facility and program expenses in the second quarter
of 1998 increased 66.4%, or $32.9 million, to $82.6 million compared to $49.7
million during the second quarter of 1997. Payroll and payroll-related expenses
represented 71.0% of the increase due primarily to the additional personnel and
other costs associated with the new facilities and programs that were
operational in the second quarter of 1998 as compared to 1997. As a percentage
of net revenues, disabilities services facility and program expenses decreased
from 87.1% in 1997 to 85.5% in 1998.
Youth services facility and program expenses in the second quarter of 1998
increased 149.0%, or $17.4 million, to $29.0 million compared to $11.6 million
during the second quarter of 1997. Payroll and payroll-related expenses
represented 57.2% of the increase due primarily to the additional facilities and
programs that were operational during the second quarter of 1998 compared to the
same period in 1997. Also contributing to the increase are higher expenses
associated with contract services for certain new facilities and programs. As a
percentage of net revenues, youth services facility and program expenses
decreased to 87.9% in the second quarter of 1998 from 89.9% for the second
quarter of 1997.
Operating Expenses
Corporate general and administrative expenses increased 116.6%, or $2.6
million, in the second quarter of 1998 compared to the second quarter of 1997.
Payroll and payroll-related expenses represented 54.5% of the increase due
primarily to the addition of support staff and increases in staff salaries.
Corporate general and administrative expenses in the second quarter of 1998
increased as a percentage of total net revenues to 3.8% from 3.2% for the same
period in 1997.
Depreciation and amortization expenses in the second quarter of 1998
increased 162.9%, or $2.2 million, to $3.6 million compared to $1.4 million
during the second quarter of 1997. The increase resulted primarily from the
purchase of real property and intangible assets since the second quarter of
1997.
Other Expenses (Income)
Interest expense in the second quarter of 1998 increased $2.5 million to
$2.9 million compared to $400,000 for the second quarter of 1997. The increase
resulted primarily from interest on the convertible subordinated notes issued in
November and December 1997 and March 1998 as well as borrowings under the
Company's credit facility.
Income Taxes
Income taxes increased to $2.6 million in the second quarter of 1998
compared to $2.0 million in the second quarter of 1997, and reflects effective
tax rates of 38.3% and 40.3%, respectively.
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SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Revenues
Total net revenues for the first six months of 1998 increased by 74.7% or
$100.6 million, to $235.5 million compared to $134.9 million for the first six
months of 1997. Of the increase, 66.4% resulted from increased disabilities
services revenues. Disabilities services net revenues increased by 61.0%, or
$66.9 million, to $176.5 million in the first six months of 1998 compared to
$109.6 million in the first six months of 1997. Revenues increased primarily as
a result of the effects of a full six months of operations added during 1997, as
well as acquisitions during the first six months of 1998.
Youth services net revenues for the first six months of 1998 increased by
133.8%, or $33.7 million, to $59.0 million compared to $25.3 million during the
first six months of 1997. The increase resulted primarily from the acquisition
of five Job Corps centers from Teledyne Economic Development in October 1997,
other acquisitions that were operational in the first six months of 1998
compared to the same period of 1997 and the addition of the contract to manage
the Earle C. Clements Job Corps Center in the second quarter of 1998.
Facility and Program Expenses
Facility and program expenses in the first six months of 1998 increased
73.1%, or $85.9 million, compared to the first six months of 1997. Of this
increase, $57.8 million, or 67.3% was due to payroll and payroll-related
expenses. These expenses reflected additional personnel, as well as other costs
associated with new facilities and programs in both of the Company's divisions.
Facility and program expenses decreased as a percentage of total net revenues
from 87.2% in 1997 to 86.4% in 1998.
Disabilities services facility and program expenses in the first six months
of 1998 increased 59.5%, or $56.6 million, to $151.7 million compared to $95.1
million during the first six months of 1997. Payroll and payroll-related
expenses represented 72.8% of the increase due primarily to the additional
personnel and other costs associated with the new facilities and programs that
were operational in the first six months of 1998 as compared to 1997. As a
percentage of net revenues, disabilities services facility and program expenses
decreased from 86.8% in 1997 to 86.0% in 1998.
Youth services facility and program expenses in the first six months of
1998 increased 130.6%, or $29.3 million, to $51.8 million compared to $22.5
million during the first six months of 1997. Payroll and payroll-related
expenses represented 56.7% of the increase due primarily to the additional
facilities and programs that were operational during the first six months of
1998 compared to the same period in 1997. Also contributing to the increase are
higher expenses associated with contract services for certain new facilities and
programs. As a percentage of net revenues, youth services facility and program
expenses decreased to 87.7% in the first six months of 1998 from 88.9% for the
first six months of 1997.
Operating Expenses
Corporate general and administrative expenses increased 85.4%, or $4.1
million, in the first six months of 1998 compared to the first six months of
1997. Payroll and payroll-
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related expenses represented 53.5% of the increase due primarily to the addition
of support staff and increases in staff salaries. Corporate general and
administrative expenses in the first six months of 1998 increased as a
percentage of total net revenues to 3.8% from 3.6% for the same period in 1997.
Depreciation and amortization expenses in the first six months of 1998
increased 138.3%, or $3.5 million, to $6.1 million compared to $2.6 million
during the first six months of 1997. The increase resulted primarily from the
purchase of real property and intangible assets since the first six months of
1997.
Other Expenses (Income)
Interest expense in the first six months of 1998 increased $4.0 million to
$4.9 million compared to $900,000 for the first six months of 1997. The increase
resulted primarily from interest on the convertible subordinated notes issued in
November and December 1997 and March 1998 as well as borrowings under the
Company's credit facility. Interest income for the six months of 1998 increased
$700,000 to $1.0 million from $300,000 for the same period in 1997. This
increase is due principally to earnings on funds invested from the proceeds from
the issuance of the convertible subordinated notes in November and December
1997.
Income Taxes
Income taxes increased to $5.1 million in the first six months of 1998
compared to $3.7 million in the first six months of 1997, and reflects effective
tax rates of 38.6% and 40.4%, respectively.
Liquidity and Capital Resources
For the first six months of 1998, cash provided by operating activities was
$13.7 million compared to $5.6 million for the first six months of 1997, an
increase of $8.1 million in cash provided. The increase was due primarily to an
increase in accrued expenses, and also reflects reduced levels of growth in
accounts receivable balances from period to period partially offset by reduced
levels of growth in accounts payable balances.
During the first six months of 1998, cash used in investing activities was
$101.4 million compared to $16.2 million for the first six months of 1997, an
increase of $85.2 million, due primarily to the acquisition of businesses and
related assets.
For the first six months of 1998, cash provided by financing activities was
$47.7 million compared to $12.3 million for the first six months of 1997, an
increase of $35.4 million. The increase was due primarily to long-term
borrowings for acquisitions.
On June 30, 1998, the Company amended and restated its credit agreement
with a group of banks to provide for maximum borrowings of $200 million,
increase the letter of credit facility from $10 million to $20 million, amend
certain financial covenants and add new subsidiaries and banks as parties to the
loan agreement. As of June 30, 1998, the Company had $147.9 million available on
its line-of-credit and $26.6 million in cash and cash equivalents. Outstanding
at that date were irrevocable standby letters of credit in the principal amount
of $5.2 million issued in connection with workers' compensation insurance and
certain facility leases.
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Days revenue in accounts receivable for the Company was 58 days at June 30,
1998, compared to 61 days at December 31, 1997. Accounts receivable at June 30,
1998, increased to $76.8 million, compared to $57.2 million at December 31,
1997.
The Company has historically satisfied its working capital requirements,
capital expenditures (excluding major acquisitions) and scheduled debt payments
from its operating cash flow and utilization of its credit facility. Cash
requirements for the acquisition of new business operations have generally been
funded through a combination of cash generated from operating activities,
utilization of the Company's revolving credit facility and the issuance of
long-term obligations and common stock. The Company believes that cash generated
from operations and availability under its expanded credit facility will
continue to be sufficient to meet its working capital requirements, planned
capital expenditures, business acquisitions and scheduled debt repayments over
the next twelve months.
Year 2000 Issue
The Company has implemented steps intended to assure that its computer
systems and processes are capable of Year 2000 processing. Year 2000 readiness
assessments have been made in the Company's major application areas. Plans for
remediation efforts have been developed and are underway with implementation
expected to be completed by the end of the first quarter 1999. The Company is
reliant on systems maintained by third parties, including states and other
reimbursers, and is developing plans to address the risks of third-party
non-compliance. However, the Company is not presently in a position to make a
definitive assessment of the effect on results of operations or liquidity of
non-compliance by one or more federal or state agencies with which the Company
conducts significant business.
The Company has not made a full assessment of the costs of its Year 2000
compliance efforts, however, the Company believes that it will be able to fund
any additional costs from available resources without materially affecting
liquidity, financial condition, or results of operations.
Certain Risk Factors
The Company's growth in revenues and earnings per share has been directly
related to a considerable increase in the number of individuals served in its
Division for Persons with Disabilities and its Division for Youth Services. This
growth is largely dependent upon development-driven activities, including the
acquisitions of other businesses or facilities or of management contract rights
to operate facilities, the award of contracts to open new facilities or start
new operations or to assume management of facilities previously operated by
governmental agencies or not-for-profit organizations and the extension or
renewal of contracts previously awarded to the Company. The Company often makes
forward-looking statements regarding its development activities.
Changes in the Company's future revenues depend significantly upon the
success of these development activities, and in particular on the Company's
ability to obtain additional contracts and other rights to provide services to
the special needs populations it serves, whether through acquisitions, awards in
response to requests for proposals for new facilities or programs or for
facilities being privatized by governmental agencies, or other development
activities.
13
<PAGE> 15
Future revenues also depend on the Company's ability to maintain high levels of
occupancy in its residential programs and high utilization levels in other
programs, as well as to maintain and renew its existing services contracts and
its existing leases. The Company actively seeks acquisitions of other companies,
facilities and assets as a means of increasing the number of consumers served.
Changes in the market for such acquisition prospects, including increasing
competition for and increasing pricing of such acquisition prospects, could also
adversely affect the timing and/or viability of future development activities.
Revenues of the Company's Division for Persons with Disabilities are highly
dependent on reimbursement under federal and state Medicaid programs. Generally,
each state has its own Medicaid reimbursement regulations and formula. The
Company's revenues and operating profitability are dependent upon the Company's
ability to maintain its existing reimbursement levels and to obtain periodic
increases in reimbursement rates. Changes in the manner in which Medicaid
reimbursement rates are established in one or more of the states in which the
Company conducts its operations could adversely affect revenues and
profitability. Other changes in the manner in which federal and state
reimbursement programs are operated and in the manner in which billings/costs
are reviewed and audited could also affect revenues and operating profitability.
The Company's cost structure and ultimate operating profitability are
significantly dependent on its labor costs and the availability and utilization
of its labor force and thus may be affected by a variety of factors, including
local competitive forces, changes in minimum wages or other direct personnel
costs, the Company's effectiveness in managing its direct service staff, and
changes in consumer services models, such as the trends toward supported living
and managed care.
Additionally, the Company's continued expansion of its existing operations,
and its ability to expand into providing services to populations utilizing the
Company's core competencies, are dependent upon continuation of trends toward
downsizing, privatization and consolidation and the Company's ability to tailor
its services to meet the specific needs of these different populations. The
success in operating in a changing environment is subject to a variety of
political, economic, social and legal pressures, including desires of
governmental agencies to reduce costs and increase levels of services, federal,
state and local budgetary constraints and actions brought by advocacy groups and
the courts to change existing service delivery systems. Material changes
resulting from these trends and pressures could adversely affect the demand for
and reimbursement of the Company's services and its operating flexibility, and
ultimately its revenues and profitability.
Forward-Looking Statements
The "Year 2000 Issue" and "Certain Risk Factors" sections above discuss
factors that could cause actual results to differ materially from the
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934) in the
"Liquidity and Capital Resources" section above.
14
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company (or a provider with whom the Company has a
management agreement), becomes a party to legal and/or administrative
proceedings involving state program administrators and others that, in the event
of unfavorable outcomes, may adversely affect revenues and period-to-period
comparisons. In May 1996, legislation was passed in Florida that would have
significantly reduced rates effective September 1, 1996 for the operations that
the Company manages and operates in that state. A preliminary injunction was
granted in a lawsuit by individual consumers, which requires the State to
continue full funding of certain intermediate care facilities and services for
persons with developmental disabilities. At the request of the State, the trial,
which was previously set for May 1998, was postponed without a new trial date
set. The Company does not believe the results of this matter will have a
material adverse effect on its consolidated financial condition, results of
operations or liquidity.
In addition, the Company is a party to various other legal proceedings
encountered in the ordinary course of business. The Company believes that many
of such lawsuits are without merit. Further, such claims are generally covered
by insurance. The Company does not believe the results of such litigation will
have a material adverse effect on its consolidated financial condition, results
of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The regular annual meeting of stockholders of Res-Care, Inc. was held
in Louisville, Kentucky on May 12, 1998. Represented at the meeting, either in
person or by proxy, were 10,852,032 voting shares out of a total of 12,431,428
voting shares outstanding. The matters voted upon at the meeting are described
in (c) below.
(b) Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
management's nominees as listed in the proxy statement.
(c) Three proposals were submitted to a vote of stockholders as follows:
1. The stockholders approved the election of the following persons as
directors of the Company:
NAME FOR WITHHELD
------------------ ---------- --------
James R. Fornear 10,827,760 24,272
Ronald G. Geary 10,828,965 23,067
E. Halsey Sandford 10,828,975 23,057
Spiro B. Mitsos 10,834,040 17,992
Seymour L. Bryson 10,834,175 17,857
W. Bruce Lunsford 10,830,470 21,562
There were no votes against or broker non-votes with respect to the
election of any nominee named above.
15
<PAGE> 17
2. To approve the Res-Care, Inc. 1998 Omnibus Stock Plan:
Votes For Proposal 6,914,218
Votes Against Proposal 1,928,029
Votes Abstaining 13,437
Broker Non-Votes 1,996,348
3. To approve the proposal to ratify the selection of KPMG Peat
Marwick LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998:
Votes For Proposal 10,845,399
Votes Against Proposal 2,726
Votes Abstaining 3,907
Broker Non-Votes 0
ITEM 5. OTHER INFORMATION
On May 15, 1998, the Company announced that Ralph G. Gronefeld, Jr.,
executive vice president of operations for the Company's Division for Youth
Services, assumed the duties of acting chief financial officer. Mr. Gronefeld
replaced Pamela M. Spaniac who is leaving the Company to pursue other
opportunities.
On June 25, 1998, the Company announced that James R. Fornear has retired
as chairman and will continue to serve as a director of the Company. Ronald G.
Geary was elected chairman in addition to his responsibilities as president and
chief executive officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 1998 Amended and Restated Loan Agreement by and between PNC Bank,
National Association; National City Bank of Kentucky; Bank One, Kentucky,
NA; SunTrust Bank, Nashville, N.A.; First Union National Bank; Wachovia
Bank, N.A.; AmSouth Bank; Key Corporate Capital, Inc.; Star Bank, National
Association; Paribas; First American National Bank; Fleet National Bank;
and Union Bank of California, N.A. and Res-Care, Inc., dated June 30, 1998.
27.1 Financial Data Schedule - June 30, 1998
27.2 Financial Data Schedule - June 30, 1997 (Restated)
(b) Reports on Form 8-K:
None.
16
<PAGE> 18
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
10.1 1998 Amended and Restated Loan Agreement by and between PNC Bank,
National Association; National City Bank of Kentucky; Bank One,
Kentucky, NA; SunTrust Bank, Nashville, N.A.; First Union National
Bank; Wachovia Bank, N.A.; AmSouth Bank; Key Corporate Capital,
Inc.; Star Bank, National Association; Paribas; First American
National Bank; Fleet National Bank; and Union Bank of California,
N.A.; and Res-Care, Inc., dated June 30, 1998.
27.1 Financial Data Schedule - June 30, 1998
27.2 Financial Data Schedule - June 30, 1997 (Restated)
17
<PAGE> 19
SIGNATURES
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.
RES-CARE, INC.
Registrant
Date: August 11, 1998 By: /s/ Ronald G. Geary
--------------- ---------------------------------------
Ronald G. Geary
Chairman, President and
Chief Executive Officer
Date: August 11, 1998 By: /s/ Ralph G. Gronefeld, Jr.
--------------- ---------------------------------------
Ralph G. Gronefeld, Jr.
Executive Vice President of Operations,
Division for Youth Services and
Acting Chief Financial Officer
18
<PAGE> 1
Exhibit 10.1
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
RES-CARE, INC. AND CONSOLIDATED SUBSIDIARIES
AS BORROWERS
AND
PNC BANK, KENTUCKY, INC.
AS ADMINISTRATIVE BANK
AND
THE BANKS LISTED ON SCHEDULE I
AS BANKS
DATED AS OF JUNE 30, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS AND CROSS REFERENCE...........................2
SECTION 2 REVOLVING CREDIT FACILITIES..............................23
2.1 Revolving Loan Commitments, Revolving Credit Loans.......23
2.2 Interest on the Revolving Credit Loans...................28
2.3 Fees.....................................................33
2.4 Prepayments and Payments; Reductions in Revolving Loan
Commitments..............................................35
2.5 Use of Proceeds..........................................36
2.6 Special Provisions Governing
Euro-Rate Loans..........................................37
2.7 Letters of Credit........................................39
SECTION 3 SWING LINE CREDIT FACILITY...............................46
3.1 Swing Line Credit Facility...............................46
3.2 Use of Proceeds..........................................48
SECTION 4 INCREASED COSTS; TAXES; CAPITAL
ADEQUACY.................................................48
4.1 Compensation for Increased Costs and Taxes...............48
4.2 Withholding of Taxes.....................................49
4.3 Capital Adequacy Adjustment..............................51
4.4 Banks' Obligation to Mitigate............................51
SECTION 5 CLOSING CONDITIONS.......................................52
5.1 Initial Closing Conditions...............................52
5.2 Conditions to All Revolving Credit
Loans, Letters of Credit and Swing Line Loans............54
SECTION 6 REPRESENTATIONS AND WARRANTIES...........................56
6.1 Organization, Standing, etc, of
the Borrowers............................................56
6.2 Qualification............................................56
6.3 Use of Proceeds..........................................56
6.4 Intellectual Property....................................56
6.5 Disclosure; Solvency.....................................57
6.6 Tax Returns and Payments.................................57
6.7 Indebtedness, etc........................................57
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<PAGE> 3
6.8 Title to Properties; Liens; Leases.......................57
6.9 Litigation, etc..........................................58
6.10 Authorization; Compliance With Other Instruments, etc....58
6.11 Enforceability...........................................58
6.12 Governmental Consent.....................................59
6.13 Consolidated Subsidiaries................................59
6.14. Year 2000................................................59
SECTION 7 AFFIRMATIVE COVENANTS....................................59
7.1 Maintenance of Properties, etc...........................59
7.2 Money Obligations, Payment of
Taxes, ERISA, etc........................................60
7.3 Financial Statements and Reports.........................60
7.4 Financial Records; Inspection............................62
7.5 Permits, Certificates, Leases, Licenses..................62
7.6 Notice...................................................62
7.7 Payment of Obligations...................................63
7.8 Environmental Matters....................................63
7.9 Consolidated Subsidiaries and Interests in Persons that
are not Consolidated Subsidiaries........................63
SECTION 8 NEGATIVE COVENANTS.......................................64
8.1 Mergers and Other Extraordinary Events...................64
8.2 Indebtedness, etc........................................65
8.3 Use of Assets............................................66
8.4 Mortgages, Liens, Encumbrances, Security Interests, etc..66
8.5 Nature of Businesses.....................................68
8.6 Minimum Net Worth........................................68
8.7 Ratio of Indebtedness to Cash Flow from Operations.......68
8.8 Ratio of Senior Indebtedness to Cash Flow from
Operations...............................................68
8.9 Ratio of Debt to Capitalization..........................68
8.10 Fixed Charge Coverage Ratio..............................69
8.11 Permitted Business Combinations..........................69
8.12 Loans, Advances and Guaranties by Borrowers..............69
8.13 Payment of Dividends.....................................70
8.14 Interest Rate Agreements.................................70
8.15 Redemption of Convertible Subordinated Notes.............71
SECTION 9 EVENTS OF DEFAULT; ACCELERATION..........................71
SECTION 10 REMEDIES UPON DEFAULT, ETC...............................73
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<PAGE> 4
10.1 Defaults.................................................73
10.2 Offset...................................................74
10.3 Rights Cumulative........................................74
10.4 Payment of Costs and Expenses............................74
SECTION 11 THE ADMINISTRATIVE BANK..................................74
11.1 Appointment..............................................74
11.2 Delegation of Duties.....................................75
11.3 Nature of Duties; Independent Credit Investigation.......75
11.4 Actions in Discretion of the Administrative Bank:
Instructions from the Banks..............................75
11.5 Reimbursement and Indemnification of the Administrative
Bank and the Banks by the Borrowers......................76
11.6 Exculpatory Provisions...................................76
11.7 Reimbursement and Indemnification of the Administrative
Bank by the Banks........................................77
11.8 Reliance by the Administrative Bank......................77
11.9 Notice of Default........................................77
11.10 The Banks in Their Individual Capacities.................77
11.11 Holders of Revolving Credit Notes........................77
11.12 Equalization of the Banks................................78
11.13 Successor Administrative Bank............................78
11.14 Calculations.............................................79
11.15 Beneficiaries............................................79
SECTION 12 ASSIGNMENTS AND PARTICIPATIONS...........................79
12.1 Assignments to Eligible Assignees........................79
12.2 Participations...........................................79
12.3 Assignments to Affiliates................................80
12.4 No Release of Obligations................................80
SECTION 13 INDEMNITY................................................80
SECTION 14 NOTICES..................................................80
SECTION 15 MISCELLANEOUS............................................82
15.1 Joint and Several Liability of Borrowers; Limitation
on Liability of Consolidated Subsidiary Borrowers........82
15.2 Ratable Sharing..........................................82
15.3 Waiver...................................................83
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<PAGE> 5
15.4 Survival of Representations and Warranties...............83
15.5 Invalidity...............................................83
15.6 Assignment...............................................83
15.7 Governing Law............................................83
15.8 Section Headings.........................................83
15.9 Entire Agreement.........................................84
15.10 Time of the Essence......................................84
15.11 Modifications............................................84
15.12 Submission to Jurisdiction, Etc..........................84
15.13 Waiver of Jury Trial.....................................85
15.14 Execution of Loan Instruments............................86
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<PAGE> 6
LIST OF EXHIBITS
- ----------------
Exhibit A: Form of Revolving Credit Promissory Note
(Revolving Credit Facility A)
Exhibit B: Form of Revolving Credit Promissory Note
(Revolving Credit Facility B)
Exhibit C: Swing Line Note
Exhibit D: Notice of Conversion/Continuation
Exhibit E: Request For Revolving Credit Loan
Exhibit F: Request for Swing Line Loan
Exhibit G: Compliance Certificate
Exhibit H: Assignment Agreement
Exhibit I: Confidentiality Agreement
Exhibit J: Stock Pledge Agreement (Res-Care)
Exhibit K: Form of Security Agreement
Exhibit L: UCC-1
Exhibit M: Form of Assumption Agreement
Exhibit N: Form of Amendment to Stock Pledge Agreement
Exhibit O: Form of Stock Pledge Agreement
(Shares of Non-Consolidated Person)
Exhibit P: Form of Borrower Counsel Opinion
Exhibit Q: Application for Letter of Credit
-v-
<PAGE> 7
1998 AMENDED AND RESTATED LOAN AGREEMENT
----------------------------------------
THIS 1998 AMENDED AND RESTATED LOAN AGREEMENT (this "Loan Agreement"), is made
and entered into this June 30, 1998 by and among (i) PNC BANK, NATIONAL
ASSOCIATION, in its capacity as the administrative bank hereunder (in such
capacity the "Administrative Bank"); (ii) the Banks identified on SCHEDULE I
hereto (all of such Banks are hereinafter collectively referred to as the
"Banks", and each is hereinafter individually referred to as a "Bank"); and
(iii) RES-CARE, INC., a Kentucky corporation with principal office and place of
business in Louisville, Kentucky ("Res-Care") and each of the Consolidated
Subsidiaries of Res-Care identified on SCHEDULE II hereto (Res-Care and each
Consolidated Subsidiary, a "Borrower," and all of the foregoing collectively,
the "Borrowers").
P R E L I M I N A R Y S T A T E M E N T:
- - - - - - - - - - - - - - - - - - - -
A. Res-Care and certain other Existing Borrowers (defined herein)
obtained from the Administrative Bank and certain of the Banks credit
accommodations pursuant to a Loan Agreement dated as of December 23, 1996 (the
"1996 Loan Agreement") including the following: (i) a revolving line of credit
in the principal amount of Sixty Five Million Dollars ($65,000,000) (the
"Original Revolving Credit Facility"), (ii) a commitment to issue letters of
credit for the account of the Borrowers in an aggregate outstanding amount of up
to Ten Million Dollars ($10,000,000) and (iii) a swing revolving line of credit
in the principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000) (the "Original Swing Line Credit Facility").
B. Res-Care and certain other Existing Borrowers and the Administrative
Bank and certain of the Banks amended the 1996 Loan Agreement pursuant to a
First Amendment to Loan Instruments dated as of June 23, 1997 (the "First
Amendment to Loan Instruments"), providing for, among other things, (i) the
increase of the principal amount of the Original Revolving Credit Facility to
One Hundred Million Dollars ($100,000,000), (ii) the increase of the principal
amount of the Original Swing Line Credit Facility to Twelve Million Five Hundred
Thousand Dollars ($12,500,000), (iii) the amendment of certain financial
covenants and (iv) the addition of certain New Borrowers as parties to the Loan
Instruments.
C. Res-Care and certain other Existing Borrowers and the Administrative
Bank and certain of the Banks further amended the 1996 Loan Agreement pursuant
to a Second Amendment to Loan Instruments dated as of November 20, 1997 (the
"Second Amendment to Loan Instruments"), providing for, among other things, (i)
the consent of the Banks to the Borrowers' incurring of subordinated
indebtedness, (ii) the amendment of certain financial covenants and (iii) the
addition of certain other New Borrowers as parties to the Loan Instruments.
<PAGE> 8
D. Res-Care and certain other Existing Borrowers and the Administrative
Bank and certain of the Banks further amended the 1996 Loan Agreement pursuant
to a Third Amendment to Loan Instruments dated as of March 12, 1998 (the "Third
Amendment to Loan Instruments"), providing for, among other things, the Existing
Borrowers to add certain New Borrowers and to make certain other amendments. The
1996 Loan Agreement, as amended by the First Amendment to Loan Instruments, the
Second Amendment to Loan Instruments and the Third Amendment to Loan
Instruments, is referred to as the "Old Loan Agreement."
E. The Existing Borrowers wish to amend and restate the Loan Agreement
and the Loan Instruments to provide for, among other things, (i) the increase of
the principal amount of the Original Revolving Credit Facility to One Hundred
Seventy Five Million Dollars ($175,000,000), (ii) the increase of the principal
amount of the Original Swing Line Credit Facility to Fifteen Million Dollars
($15,000,000), (iii) the creation of a new revolving credit facility in the
principal amount of Twenty Five Million Dollars ($25,000,000) with a 364-day
term, (iv) the amendment of certain financial covenants and (v) the addition of
certain New Borrowers as parties to the Loan Instruments.
The Old Loan Agreement and the exhibits and schedules thereto, as
amended and restated by this Loan Agreement and the exhibits and schedules
hereto, referred to as the "Loan Agreement." Each capitalized term used herein,
unless otherwise expressly defined herein, shall have the meaning set forth in
the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the mutuality, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS AND CROSS REFERENCE
-------------------------------
Certain terms used in this Loan Agreement are defined in this Section
1; other terms are defined elsewhere in this Loan Agreement.
1.1 "Accounts Receivable" means all (a) rights to payment for any goods
sold or services performed, whether such right to payment exists on the date of
this Loan Agreement or is created thereafter, and whenever and wherever
acquired, whether or not such right to payment has been earned by performance,
and whether or not such right to payment is evidenced by any document,
instrument or chattel paper, and all claims against common carriers for goods
and Inventory lost in transit; and (b) the proceeds or products of any of the
foregoing. The term "Accounts Receivable" includes the term "account" as defined
in KRS 355.9-106. The amount of an Account Receivable shall be the amount of the
receivable net of all discounts.
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<PAGE> 9
1.2 "Administrative Bank" has the meaning assigned to that term in the
introduction to this Loan Agreement.
1.3 "Administrative Bank Change in Control" means the acquisition by
any Person or "group" (as defined in Section 13 (d) (3) of the Securities
Exchange Act of 1934, as amended) of more than 50% of the Voting Stock of PNC
Bank Corp., including any such acquisition by merger or consolidation.
1.4 "Advance" means with respect to any Borrower, each and every
advance of proceeds under the Revolving Credit Facilities, the Letter of Credit
Subfacility, or the Swing Line Credit Facility, directly or indirectly, to such
Borrower, regardless of whether such advance is accounted for under GAAP as an
extension of credit, a contribution of capital or otherwise.
1.5 "Affiliate" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person, (ii) any other Person that, directly or indirectly, owns or
controls, whether beneficially or as a trustee, guardian or other fiduciary, 10%
or more of the stock having ordinary voting power in the election of directors
of such Person, or (iii) each of such Person's directors and officers appointed
by the Board of Directors of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") , as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
1.6 "Amendment to Security Agreements" means the Amendment to Security
Agreements dated as of the Closing Date executed by each of the Existing
Borrowers in favor of the Banks, amending the Security Agreements previously
delivered by the Existing Borrowers to the Administrative Bank.
1.7 "And/or" means one or the other or both, or any one or more or all,
of the things or persons or parties in connection with which the conjunction is
used.
1.8 "Applicable Base Rate Margin" means the applicable per annum
percentage set forth in the table appearing in Section 2.2A hereof, with respect
to Base Rate Loans.
1.9 "Applicable Euro-Rate Margin" means the applicable per annum
percentage set forth in the table appearing in Section 2.2A hereof, with respect
to Euro-Rate Loans.
1.10 "Applicable Commitment Fee Percentages" means the applicable per
annum percentage set forth in the table appearing in Section 2.3B hereof, with
respect to the calculation of Revolving Credit Commitment Fees.
-3-
<PAGE> 10
1.11 "Applicable Letter of Credit Percentages" means the applicable per
annum percentage set forth in the table appearing in Section 2.7F of the Loan
Agreement.
1.12 "Application and Agreement For Letter of Credit" means the
document substantially in the form of EXHIBIT Q annexed hereto, with appropriate
insertions and deletions, with respect to the proposed issuance or amendment of
a Letter of Credit.
1.13 "Assignment Agreement" means an Assignment Agreement between an
assigning Bank and its assignee, substantially in the form of EXHIBIT H annexed
hereto.
1.14 "Assumption Agreement" means an Assumption Agreement in favor of
the Administrative Bank, for the benefit of the Banks, executed and delivered by
a Consolidated Subsidiary that becomes a Borrower subsequent to the Closing
Date, pursuant to the requirement of Section 7.9 hereof, substantially in the
form of EXHIBIT M hereto.
1.15 "Authorized Officer" means the President, the Financial Officer
and any other officer of Res-Care, for itself and as agent for the other
Borrowers, who, by the Articles of Incorporation, Bylaws or Resolutions of the
Board of Directors of such Borrower, is authorized to execute and deliver this
Loan Agreement and the other Loan Instruments on behalf of such Borrower.
1.16 "Banks" has the meaning assigned to that term in the introduction
to this Loan Agreement.
1.17 "Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy" as now and hereafter in effect, or any successor statute.
1.18 "Base Rate" means the variable rate per annum equal to the higher
of (i) the Federal Funds Effective Rate plus one half of one percent (0.5%), as
the same may change from time to time, or (ii) the Prime Rate, as the same may
change from time to time.
1.19 "Base Rate Loan" means Revolving Credit Loans bearing interest at
rates determined with reference to the Base Rate, as the same may change from
time to time as provided in Section 2.2A.
1.20 "Borrowers" means each and any of the Persons identified as
"Borrowers" in SCHEDULE II to this Loan Agreement, as it may be amended from
time to time to include as "Borrowers" any new Consolidated Subsidiaries
hereafter acquired or created, pursuant to the provisions of Section 7.9 hereof.
1.21 "Borrowers' Loan Accounts" means the accounts respectively on the
books of the Banks in which will be recorded Revolving Credit Loans made by the
Banks to the Borrowers, payments made on such Revolving Credit Loans and other
appropriate debits and credits as provided by this Loan Agreement.
-4-
<PAGE> 11
1.22 "Business Combination" means any acquisition or merger, whether
accounted for under GAAP as a purchase or pooling of interests and regardless of
whether the value of the consideration paid or received is comprised of cash,
assets, common stock, preferred stock, partnership interests, limited liability
company or limited liability partnership interests.
1.23 "Business Combination Consideration" means the aggregate legal
consideration paid by Res-Care and/or its Consolidated Subsidiaries in
connection with a Business Combination, which legal consideration shall be the
sum of the consideration granted by the Borrowers (whether by cash, stock or
other means), plus the amount of the acquired entity's debt assumed or
refinanced by the Borrowers (and excluding any of the acquired entity's debt not
assumed or refinanced by the Borrowers). For purposes of determining the
"Business Combination Consideration" herein, common stock of Res-Care issued to
a seller in a Business Combination shall be valued at 50% of the market value of
such common stock (based upon the closing price of the common stock of Res-Care
as reported on the NASDAQ National Market System) as of the effective date of
the Business Combination.
1.24 "Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the Commonwealth of Kentucky or
is a day on which banking institutions located in the Commonwealth of Kentucky
are authorized or required by law or other governmental action to close.
1.25 "Capital Lease" means each capital lease of the Borrowers with
respect to which at least a portion of the obligation of the Borrowers
thereunder is properly classified a liability on a balance sheet in conformity
with GAAP.
1.26 "Capitalization" means the sum of the amounts for the period in
question of (i) the Net Worth and (ii) the Debt of the Borrowers.
1.27 "Cash Flow from Operations" means the sum of the amounts for the
period in question of (i) Net Income, (ii) Interest Expense, (iii) provisions
for taxes based on income, (iv) depreciation, amortization and other non-cash
charges to Net Income, minus non-cash credits to Net Income, of the Borrowers on
a consolidated basis in accordance with GAAP, determined as of the end of each
month, for the previous 12 months. The Borrowers may include in the calculation
of "Cash Flow from Operations" the sum of (i), (ii), (iii) and (iv) for the 12
months preceding the date of calculation for any entity that has been acquired
in a Permitted Business Combination; provided, however, that:
(a) until such time as section (b) below is applicable, if the
portion of the sum of (i), (ii), (iii) and (iv) that is based upon
pre-acquisition unaudited financial results of entities acquired in
Permitted Business Combinations (the "Pre-Acquisition Cash Flow from
Operations") equals or exceeds twenty five percent (25%) (the "Cash
Flow from Operations Limitation") of the total "Cash Flow from
Operations" of the Borrowers for the period being measured, then the
calculation of total "Cash Flow from Operations" may include the
portion
-5-
<PAGE> 12
of the Pre-Acquisition Cash Flow from Operations that is equal to the
Cash Flow from Operations Limitation but must exclude the portion of
Pre-Acquisition Cash Flow from Operations that exceeds the Cash Flow
from Operations Limitation;
(b) if the calculation of "Cash Flow from Operations" is
performed at any time from the beginning of the seventh month after the
date of acquisition of an entity until the end of the twelfth month
following the acquisition, the calculation with respect to such entity
shall be based upon the actual financial results of such entity for the
period occurring after the acquisition, annualized on a 12-month basis;
(c) Net Income for purposes of the calculation of Cash Flow
from Operations shall not include any Net Income of a Borrower derived
from such Borrower's ownership of a Person that is not a Consolidated
Subsidiary except to the extent such Borrower has received a
distribution of such Net Income from such Person; and
(d) Net Income for purposes of the calculation of "Cash Flow
from Operations" may include an adjustment, subject to the approval of
the Administrative Bank in its discretion exercised reasonably, to
increase Net Income by the amount of certain extraordinary or
non-recurring expenses as were incurred by entities acquired in
Permitted Business Combinations during the 12 months preceding the date
of calculation, to the extent that the Borrowers have demonstrated to
the reasonable satisfaction of the Administrative Bank that such
extraordinary or non-recurring expenses will not continue during the
period after the acquisition.
1.28 "Change in Control" means (i) the acquisition by any Person other
than Res-Care or "group" (as defined in Section 13 (d) (3) of the Securities
Exchange Act of 1934, as amended) of more than 50% of the Voting Stock of
Res-Care, including any such acquisition by merger or consolidation or (ii) the
acquisition by any Person other than Res-Care or "group" as defined in clause
(i) of more than 30% of the Voting Stock of Res-Care, including any such
acquisition by merger or consolidation, accompanied by a change in the Board of
Directors of Res-Care during any period of up to 12 consecutive months, such
that individuals who at the beginning of such period were directors of Res-Care
shall cease for any reason (other than death, disability or retirement of an
officer of Res-Care who is serving as a director at such time so long as another
officer of Res-Care replaces such Person as a director) to constitute a majority
of the Board of Directors of Res-Care.
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1.29 "Closing Fees" means the Closing Fees described in Section 2.3A
hereof and set forth in SCHEDULE 2.3A hereto.
1.30 "Closing Date" means June 30, 1998.
1.31 "Compliance Certificate" means a certificate substantially in the
form of EXHIBIT G annexed hereto delivered by the Borrowers to the
Administrative Bank pursuant to Section 7.3(iii) hereof.
1.32 "Confidentiality Agreement" means a Confidentiality Agreement
between a Bank and a potential assignee Bank or a potential participant Bank
substantially in the form of EXHIBIT I annexed hereto.
1.33 "Consolidated Subsidiary" means each Subsidiary of Res-Care whose
accounts are or should be consolidated with those of Res-Care in accordance with
GAAP. As of the Closing Date, the Consolidated Subsidiaries of Res-Care are
listed on SCHEDULE 6.13.
1.34 "Contingent Obligations" means, with respect to the Borrowers, any
direct or indirect liability, contingent or otherwise (excluding all
transactions which, on a consolidated basis under GAAP, should be eliminated) of
the Borrowers, (i) with respect to any indebtedness, lease, dividend, letter of
credit or other obligation of another (excluding reimbursement obligations with
respect to surety or performance bonds incurred in the ordinary course of a
Borrower's business and in accordance with ordinary trade practices) if the
primary purpose or intent thereof by the Borrowers is to provide assurance to
the obligee of such obligation of another that such obligation of another will
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holder of such obligation will be protected (in whole or in
part) against loss in respect thereof, or (ii) under any letter of credit issued
for the account of the Borrowers or for which the Borrowers are otherwise liable
for reimbursement thereof, or (iii) under interest rate swap agreements,
interest rate collar agreements or other similar arrangements providing interest
rate protection. Contingent Obligations shall include, without limitation, (a)
the direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by the Borrowers of the obligation of another,
and (b) any liability of the Borrowers for the obligations of another through
any agreement (contingent or otherwise) (1) to purchase, repurchase, or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (2) to maintain
the solvency of any balance sheet item, level of income or financial condition
of another, or (3) to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an agreement, in
the case of any agreement described under subclauses (1), (2) or (3) of this
sentence the primary purpose or intent thereof is as described in clause (i) of
the preceding sentence. The amount of any Contingent Obligation, as at any time
of determination, shall be equal to the amount of the obligation so guaranteed
or otherwise supported at such time of determination which amount shall be
deemed to be the amount of such obligation guaranteed, as reasonably estimated
by the Borrowers, if such
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<PAGE> 14
amount cannot be specifically determined at the time of determination. A
schedule of the Contingent Obligations of Res-Care as of the Closing Date is
attached to the Loan Agreement as SCHEDULE 1.34.
1.35 "Continuing Director" means any member of the Board of Directors
of Res-Care who is a member of such Board on the Closing Date and any Person who
is a member of such Board and whose nomination as a director was approved by a
majority of the Continuing Directors then on the Board of Directors of Res-Care.
1.36 "Convertible Subordinated Notes" means the Convertible
Subordinated Notes of Res-Care in the principal amount not exceeding
$115,000,000, which meet all of the criteria set forth in Section 8.2 hereof.
1.37 "Convertible Subordinated Notes (Normal Life)" means the
convertible subordinated notes issued by Res-Care in favor of certain former
shareholders of Normal Life in connection with the acquisition of Normal Life
stock, in the aggregate amount not exceeding $22,000,000.
1.38 "Covered Tax" means any Tax that is not an Excluded Tax.
1.39 "Current Maturities of Long Term Debt" means the current principal
maturities of all indebtedness for borrowed money (including but not limited to
amortization of capitalized lease obligations) having an original term of one
year or more.
1.40 "Date of Determination" means, for purposes of determining the
applicable Pricing Level on any Pricing Level Calculation Date, the last day of
the most recently ended calendar month.
1.41 "Debt" means, with respect to the Borrowers on a consolidated
basis in accordance with GAAP, (i) all indebtedness for borrowed money,
including, without limitation, all Revolving Credit Loans and all Swing Line
Loans, issued for the account of the Borrowers, but excluding reimbursement
obligations of the Borrowers in respect of all letters of credit, including the
Letters of Credit, and (ii) that portion of obligations with respect to Capital
Leases which is properly classified as a liability on a balance sheet in
conformity with GAAP.
1.42 "Default Rate" means, (i) for any Revolving Credit Loan bearing
interest as a Base Rate Loan or as a Euro-Rate Loan, and (ii) for any Swing Line
Loan, the Base Rate plus the Applicable Base Rate Margin plus two percent (2%).
1.43 "Designated Interest Rate Agreement" shall have the meaning set
forth in Section 8.14 hereof.
1.44 "Dollars" or "$" means lawful currency of the United States of
America.
1.45 "EBIT" means, for the period in question, the sum of the amounts
for such period of the Borrowers' (i) Net Income, (ii) Interest Expense, and
(iii) provisions for taxes based on income,
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minus non-cash credits to Net Income, of the Borrowers on a consolidated basis
in accordance with GAAP, determined as of the end of each month, for the
previous 12 months. The Borrowers may include in the calculation of "EBIT" the
sum of (i), (ii) and (iii) for the 12 months preceding the date of calculation
for any entity that has been acquired in a Permitted Business Combination;
provided, however, that:
(a) until such time as section (b) below is applicable, if the
portion of the sum of (i), (ii) and (iii) that is based upon
pre-acquisition unaudited financial results of entities acquired in
Permitted Business Combinations (the "Pre-Acquisition EBIT") equals or
exceeds twenty five percent (25%) (the "EBIT Limitation") of the total
"EBIT" of the Borrowers for the period being measured, then the
calculation of total "EBIT" may include the portion of the
Pre-Acquisition EBIT that is equal to the EBIT Limitation but must
exclude the portion of Pre-Acquisition EBIT that exceeds the EBIT
Limitation;
(b) if the calculation of "EBIT" is performed at any time from
the beginning of the seventh month after the date of acquisition of an
entity until the end of the twelfth month following the acquisition,
the calculation with respect to such entity shall be based upon the
actual financial results of such entity for the period occurring after
the acquisition, annualized on a 12-month basis;
(c) Net Income for purposes of the calculation of "EBIT" shall
not include any Net Income of a Borrower derived from such Borrower's
ownership of a Person that is not a Consolidated Subsidiary except to
the extent such Borrower has received a distribution of such Net Income
from such Person; and
(d) Net Income for purposes of the calculation of "EBIT" may
include an adjustment, subject to the approval of the Administrative
Bank in its discretion exercised reasonably, to increase Net Income by
the amount of certain extraordinary or non-recurring expenses as were
incurred by entities acquired in Permitted Business Combinations during
the 12 months preceding the date of calculation, to the extent that the
Borrowers have demonstrated to the reasonable satisfaction of the
Administrative Bank that such extraordinary or non-recurring expenses
will not continue during the period after the acquisition.
1.46 "Enforcement Date" means the earlier of the date of the
commencement of a case under Title 11 of the United States Code involving
Res-Care or any Consolidated Subsidiary or the date enforcement under this Loan
Agreement is sought.
1.47 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
1.48 "Euro-Rate" means, with respect to Euro-Rate Loans, the interest
rate per annum determined by the Administrative Bank by dividing (the resulting
quotient rounded upward to the
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nearest 1/100th of 1% per annum) (i) the rate of interest determined by the
Administrative Bank in accordance with its usual procedures (which determination
shall be conclusive and binding upon the Borrowers, absent manifest error on the
part of the Administrative Bank) to be equal to the offered rate for deposits in
Dollars for the applicable Interest Period which appear on Page 3750 of the
TELERATE rate reporting system or other similar system as of approximately 11
a.m, Greenwich Mean Time, two (2) Business Days prior to the first day of such
Interest Period and having a borrowing date and a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Euro-Rate = Offered Rate on TELERATE page 3750
----------------------------------------------
1.00 - Euro-Rate Reserve Percentage
1.49 "Euro-Rate Loans" means Revolving Credit Loans bearing interest at
rates determined by reference to the Euro-Rate as provided in Section 2.2A
hereof.
1.50 "Euro-Rate Reserve Percentage" of the Administrative Bank for the
Interest Period for any Euro-Rate Loan means the reserve percentage applicable,
if any, during such Interest Period (or, if more than one such percentage shall
be so applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Administrative Bank with respect to
liabilities or assets consisting of or including eurocurrency liabilities
(within the meaning of that term in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time) having a term equal
to such Interest Period.
1.51 "Events of Default" means the occurrence or happening of any of
the matters set forth in Section 9 hereof.
1.52 "Excluded Tax" means any of the following taxes, levies, imposts,
duties, deductions, withholdings or charges, and all liabilities with respect
thereto: (i) Taxes imposed on the net income of any Bank or a Tax Transferee
(including without limitation branch profits taxes, minimum taxes and taxes
computed under alternative methods, at least one of which is based on net
income) (collectively referred to as "net income taxes") by (A) the United
States of America, (B) the jurisdiction under the laws of which such Bank or Tax
Transferee is organized or any political subdivision thereof, or (C) the
jurisdiction of such Bank's or Tax Transferee's applicable lending office or any
political subdivision thereof, or (D) any jurisdiction in which such Bank or Tax
Transferee is doing business, (ii) any Taxes to the extent that they are in
effect and would apply to a payment to any Bank as of the Closing Date, or as of
the date such Person becomes a Bank, in the case of any assignee pursuant to
Section 13 hereof, (iii) any Taxes that are in effect and would apply to a
payment to a Tax Transferee as of the date of acquisition of any portion of the
Revolving Credit Loans by such Tax Transferee or the date of the change of
lending office of such Tax Transferee, as the case may be (PROVIDED HOWEVER
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that a Person shall not be considered a Tax Transferee for purposes of this
clause (iii) as a result of a change of its lending office or the taking of any
other steps pursuant to Section 4.4 hereof), (iv) any Taxes to the extent of any
credit or other Tax benefit available to any Bank or Tax Transferee, as
applicable, as a result thereof, or (v) any Taxes that would not have been
imposed but for the failure by any Bank or Tax Transferee, as applicable, to
provide and keep current any certification or other documentation required to
qualify for an exemption from or reduced rate of any Tax.
1.53 "Existing Borrowers" means any and all Borrowers party to the Loan
Agreement as of June 30, 1998, but does not currently include the entities
listed on SCHEDULE II.B to the Loan Agreement.
1.54 "Facility" or "Facilities" means each facility, program, group
home and training center now or hereafter owned, operated and/or managed by any
of the Borrowers at which the services or programs described in Section 8.5
hereof are provided by the Borrowers.
1.55 "Fair Saleable Value" of any assets means the amount which may be
realized as of the Enforcement Date, within a reasonable time, either through
collection of such assets or sale of such assets at the regular market value,
understanding "regular market value" to mean the amount which could be obtained
for the assets in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions.
1.56 "Federal Funds Effective Rate" for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; PROVIDED, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
1.57 "Financial Officer" means the chief financial officer of Res-Care
or other officer who is the highest ranking officer with responsibility for the
financial affairs of Res-Care.
1.58 "Fiscal Quarter" means a fiscal quarter of the Borrowers. The
Fiscal Quarters of the Borrowers currently end on the last day of each March,
June, September and December of each calendar year.
1.59 "Fiscal Year" means a fiscal year of the Borrowers. The Borrowers'
current Fiscal Year ends on the last day of December of each calendar year.
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1.60 "Fixed Charge Coverage Ratio" means, as of any Date of
Determination thereof, the ratio of (i) the sum of the Borrowers' EBIT and
Operating Lease/Rental Expense to (ii) the sum of the Borrowers' Interest
Expense, Operating Lease/Rental Expense and Current Maturities of Long Term
Debt.
1.61 "Funding Date" means the date of the funding of a Revolving Credit
Loan.
1.62 "GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, as applied in accordance with the modifications contained
in Section 1.117 hereof.
1.63 "General Intangibles" means all intangible personal property
(including things in action) other than goods, accounts, chattel paper,
documents and instruments (all as defined in the Uniform Commercial Code),
whether such personal property is owned on the date of this Loan Agreement, or
is acquired thereafter, and shall include, but is not limited to, all existing
and future royalties, rights, claims, benefits and proceeds in, under or to any
franchise agreements, insurance policies, customer lists, choses in action,
books, records, patents and patents applications, copyrights, trademarks, trade
names, trade secrets, sales contracts, licenses, certificates of need, permits,
tax and any other types of refunds, returned and unearned insurance premiums,
claims, product designs, drawings, technical data, computer programs, computer
tapes and software, catalogs, blue prints, contract rights, and all rights as an
unpaid vendor or lienor, including stoppage in transit, replevin or reclamation.
The term "General Intangible" includes "general intangible" as defined in KRS
355.9-105.
1.64 "Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any governmental or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
1.65 "Indebtedness" means, with respect to the Borrowers on a
consolidated basis in accordance with GAAP, (i) all indebtedness for borrowed
money, including, without limitation, all Revolving Credit Loans, all Swing Line
Loans, all reimbursement obligations of the Borrowers in respect of all letters
of credit, including the Letters of Credit, issued for the account of the
Borrowers, (ii) that portion of obligations with respect to Capital Leases which
is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (y) due more than six months from the date of incurrence
of the obligation in respect thereof, or (z) evidenced by a note or similar
written instrument, but excluding trade payables incurred in the
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<PAGE> 19
ordinary course of business, (v) all indebtedness secured by any lien on any
property or asset owned by the Borrowers regardless of whether the indebtedness
secured thereby shall have been assumed by the Borrowers or is non-recourse to
the credit of the Borrowers but only to the extent of the fair market value of
any such property or assets, and (vi) all other Contingent Obligations of the
Borrowers not otherwise included in clauses (i) through (v) of this Section. In
calculating Indebtedness for purposes of determining any financial ratio that
must be met herein, the calculation of Indebtedness shall be reduced by an
amount equal to the difference (if positive) between (i) the Borrowers' cash and
marketable securities and (ii) $10,000,000.
1.66 "Indenture" means the Indenture under which the Convertible
Subordinated Notes were issued.
1.67 "Interest Expense" means, for the period in question, total
interest expense (including that attributable to capital leases in conformity
with GAAP) of the Borrowers with respect to all outstanding Indebtedness of the
Borrowers, including, without limitation, all capitalized interest, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs and benefits under
Interest Rate Agreements, whether payable in cash or accrued (including
amortization of discount), all as determined on a consolidated basis in
accordance with GAAP.
1.68 "Interest Payment Date" means, (i) with respect to each Base Rate
Loan, the last day of each calendar quarter during which such Base Rate Loan is
outstanding in whole or in part, (ii) with respect to each Euro-Rate Loan, the
ninetieth (90th) day of the Interest Period applicable to such Euro-Rate Loan,
and/or the last day of the Interest Period applicable to such Euro-Rate Loan,
and (iii) with respect to each Swing Line Loan, the last day of each calendar
quarter during which such Swing Line Loan is outstanding in whole or in part,
and (iv) with respect to all Revolving Credit Loans and Swing Line Loans, the
date of maturity thereof.
1.69 "Interest Period" means any interest period applicable to a
Euro-Rate Loan, as determined pursuant to Section 2.2B hereof.
1.70 "Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement.
1.71 "Interest Rate Determination Date" means each date for calculating
the Euro-Rate for purposes of determining the interest rate in respect of an
Interest Period. The Interest Rate Determination Date shall be the date which is
two (2) Business Days prior to the related Interest Period for a Euro-Rate Loan.
1.72 "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended to the date hereof and from time to time hereafter.
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1.73 "Letters of Credit" means all letters of credit or similar
instruments issued by PNC for the account of the Borrowers pursuant to Section
2.7 of the Loan Agreement for the purpose of securing the performance, payment,
deposit or surety obligations of Res-Care or a Subsidiary (including any such
obligations of Res-Care or a Subsidiary under applicable workers compensation
laws).
1.74 "Letter of Credit Subfacility" means the commitment of PNC, to
issue Letters of Credit for the account for Res-Care or a Subsidiary up to an
aggregate amount at any one time outstanding of Twenty Million Dollars
($20,000,000). The Letter of Credit Subfacility is a sublimit of Revolving
Credit Facility A.
1.75 "Letter of Credit Fee" has the meaning assigned to that term in
Section 2.7F(i) hereof.
1.76 "Letter of Credit Fronting Fee" has the meaning assigned to that
term in Section 2.7F(v) hereof.
1.77 "Letter of Credit Usage" means, as at any date, the sum of (i) the
maximum aggregate amount which is or at any time thereafter may become available
for drawing under all Letters of Credit then outstanding, plus (ii) the
aggregate amount of all drawings under all Letters of Credit honored by PNC and
not theretofore reimbursed by the Borrowers to PNC, whether by virtue of the
Banks making a Revolving Credit Loan to the Borrowers to enable the Borrowers to
reimburse PNC for such drawing or otherwise.
1.78 "Loan Agreement" means this Loan Agreement as further amended,
supplemented or otherwise modified from time to time.
1.79 "Loan Instruments" means this Loan Agreement, the Revolving Credit
Notes, the Swing Line Note, each Application and Agreement for Letter of Credit,
the Stock Pledge Agreements, the Security Agreements and all other agreements,
documents and instruments now or hereafter evidencing and/or pertaining to this
Loan Agreement and/or the other Obligations, and as may be further amended,
supplemented or otherwise modified from time to time.
1.80 "Loan Year" means July 1 of a calendar year through June 30 of the
following calendar year.
1.81 "Majority Banks" has the meaning set forth in Section 15.11
hereof.
1.82 "Maximum Consolidated Subsidiary Borrower Amount" means the excess
of (A) the aggregate Fair Saleable Value of the assets of a Borrower that is a
Consolidated Subsidiary on the Enforcement Date over (B) the amount of "Debts"
of such Consolidated Subsidiary on the Enforcement Date. For purposes of
calculating the Maximum Consolidated Subsidiary Borrower Amount, "Debts" means
the present value, as of the Enforcement Date, of known probable liabilities of
any Borrower, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent (other than (i) any liabilities under this Loan
Agreement, (ii) any guaranty that is
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subordinated in right of payment to obligations of such Borrower under this Loan
Agreement, and (iii) all intercompany indebtedness owed by such Borrower to
Res-Care or another Borrower, as such term is defined in the Loan Agreement, to
the extent that such intercompany indebtedness owed by such Borrower may be
discharged by offsetting the amount paid by such Borrower under this Loan
Agreement against such intercompany indebtedness, whether such offset may be
effected by operation of law, pursuant to implied or express contractual rights,
whether relating to intercompany accounts or rights of contribution or
subrogation, or otherwise), with contingent or unliquidated liabilities being
measured at the amount which, in light of all the facts and circumstances
existing as of the Enforcement Date, represents the amount which could
reasonably be expected to become an actual or matured liability.
1.83 "Net Income" means, for the period in question, the net income (or
loss) of the Borrowers for such period taken as a single accounting period,
determined on a consolidated basis in accordance with GAAP and excluding any
extraordinary items and changes due to changes in accounting principles;
provided, however, that Net Income shall include the reversal of reserves that
had previously been charged against Net Income.
1.84 "Net Worth" means, as at any date on which the amount thereof
shall be determined, the shareholders' equity of Res-Care as determined on a
consolidated basis in accordance with GAAP.
1.85 "New Borrowers" means certain Subsidiaries created or acquired
since March 12, 1998, specifically identified as all of the entities on SCHEDULE
II..A hereto.
1.86 "Normal Life" means Normal Life, Inc., a subsidiary of Res-Care.
1.87 "Notice of Conversion/Continuation" means the Notice in the form
of EXHIBIT D annexed hereto with respect to the conversion and/or continuation
of the interest rate(s) applicable to the Revolving Credit Loans.
1.88 "Obligations" means, collectively, (i) the entire unpaid principal
balance of and all interest now accrued or hereafter to accrue on the Revolving
Credit Notes, (ii) the entire unpaid principal balance of and all interest now
accrued or hereafter to accrue on the Swing Line Note, (iii) the obligation of
the Borrowers to reimburse PNC for all drafts honored by PNC under Letters of
Credit together with accrued interest thereon, (iv) the obligation of the
Borrowers to pay all rent and all other amounts now or hereafter due under all
Capital Leases now or hereafter entered into by the Borrowers, (v) the
performance of all of the covenants, agreements and obligations of the Borrowers
hereunder and under the other Loan Instruments, and (vi) all other liabilities,
obligations, covenants and duties owing by the Borrowers to any Bank arising
under or pursuant to this Loan Agreement or the other Loan Instruments of any
kind or nature, present or future, and whether or not evidenced by any note,
guaranty or other instrument. The term "Obligations" includes, without
limitation, all interest, charges, expenses, reasonable attorneys' fees and any
other sums chargeable to the Borrowers under this Loan Agreement and/or any
other Loan Instrument.
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1.89 "Offered Rate" means the interest rate quoted from time to time by
PNC to the Borrowers as applicable to Swing Line Loans made or to be made by PNC
to the Borrowers for an Offered Rate Period. The Offered Rate shall constitute,
on each Funding Date of a Swing Line Loan, the Administrative Bank's fully
absorbed cost of funds on such date plus the Applicable Euro-Rate Margin
(including any applicable surcharge referred to in Section 2.2A(iii) hereof) in
effect on the Funding Date of such Swing Line Loan.
1.90 "Offered Rate Period" means the time period from one (1) to seven
(7) consecutive calendar days for which the Administrative Bank offers an
Offered Rate for a Swing Line Loan under Section 3.1 hereof.
1.91 "Operating Lease/Rental Expense" means that portion of obligations
with respect to non-capital leases.
1.92 "Permitted Business Combination" means a Business Combination that
meets all of the requirements of Section 8.11 hereof.
1.93 "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
other entity or group, institution, party or government, whether federal, state,
county, city, municipal or other, or any agency or division thereof.
1.94 "Potential Default" means the occurrence of any act or event
which, with the giving of notice and/or the passage of time, or both, would
become an Event of Default.
1.95 "Pricing Level" means, for any Pricing Period, Pricing Level I,
Pricing Level II, Pricing Level III, Pricing Level IV, Pricing Level V, Pricing
Level VI or Pricing Level VII, as may be in effect for such Pricing Period;
PROVIDED that, the Default Rate shall be in effect upon the occurrence and
during the continuation of any Event of Default.
1.96 "Pricing Level I" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is less than 1.50 to 1.00.
1.97 "Pricing Level II" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 1.50 to 1.00, but is less
than 2.00 to 1.00.
1.98 "Pricing Level III" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as at the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as
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measured on such Date of Determination, is equal to or greater than 2.00 to
1.00, but is less than 2.50 to 1.00.
1.99 "Pricing Level IV" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as of the relevant Date of Determination,
the ratio of the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 2.50 to 1.00, but less than
3.00 to 1.00.
1.100 "Pricing Level V" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as of the relevant Date of Determination,
the Borrowers' Indebtedness as measured on such Date of Determination, to the
Borrowers' Cash Flow from Operations as measured on such Date of Determination,
is equal to or greater than 3.00 to 1.00, but less than 3.50 to 1.00.
1.101 "Pricing Level VI" means the Pricing Level that will be in effect
for the applicable Pricing Period if, as of the relevant Date of Determination,
the Borrowers' Indebtedness as measured on such Date of Determination, to the
Borrowers' Cash Flow from Operations as measured on such Date of Determination,
is equal to or greater than 3.50 to 1.00, but less than 4.00 to 1.00.
1.102 "Pricing Level VII" means the Pricing Level that will be in
effect for the applicable Pricing Period if, as of the relevant Date of
Determination, the Borrowers' Indebtedness as measured on such Date of
Determination, to the Borrowers' Cash Flow from Operations as measured on such
Date of Determination, is equal to or greater than 4.00 to 1.00.
1.103 "Pricing Level Calculation Date" means the date of the delivery
to the Banks of a Compliance Certificate in the form of EXHIBIT G hereto
demonstrating the appropriate Pricing Level, which delivery can occur on any
date from the prior Date of Determination to the date of delivery of the
Borrowers' financial statements for the particular month then ended required
pursuant to Section 7.3(ii) hereof.
1.104 "Pricing Period" means, with respect to any Date of
Determination, the one month period commencing on the day immediately after such
Date of Determination and ending on the next Date of Determination.
1.105 "Prime Rate" means at any time the interest rate per annum most
recently designated or announced by the Administrative Bank as its "Prime Rate"
in effect at its principal office in Louisville, Kentucky, it being expressly
understood and agreed to by the Borrower that the "Prime Rate" is the rate of
interest designated by the Administrative Bank as its "Prime Rate" and such term
does not necessarily mean or imply that it is the lowest or best rate then
available from the Administrative Bank.
1.106 "Request for Revolving Credit Loan" means a Request in the form
of EXHIBIT E-1 annexed hereto with respect to a proposed Revolving Credit Loan
under Revolving Credit Facility A
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to be delivered by the Borrowers to the Administrative Bank pursuant to Sections
2.lC and 6.2A hereof or a Request in the form of EXHIBIT E-2 annexed hereto with
respect to a proposed Revolving Credit Loan under Revolving Credit Facility B to
be delivered by the Borrowers to the Administrative Bank pursuant to Sections
2.lC and 6.2A hereof.
1.107 "Request for Swing Line Loan" means the Request in the form of
EXHIBIT F annexed hereto with respect to a proposed Swing Line Loan to be
delivered by the Borrowers to the Administrative Bank pursuant to Sections 3.l
and 6.2A hereof.
1.108 "Revolving Credit A Notes" means collectively those Amended and
Restated Revolving Credit Promissory Notes and Revolving Credit Promissory Notes
made by the Borrower in favor of the Banks, substantially in the form of the
exhibit found at EXHIBIT A hereto, as the same may hereafter be amended,
modified, renewed, replaced and/or restated from time to time, and each future
Revolving Credit Promissory Note, if any, made by the Borrowers pursuant to
Revolving Credit Facility A.
1.109 "Revolving Credit B Notes" means collectively those Amended and
Restated Revolving Credit Promissory Notes and Revolving Credit Promissory Notes
made by the Borrower in favor of the Banks, substantially in the form of the
exhibit found at EXHIBIT B hereto, as the same may hereafter be amended,
modified, renewed, replaced and/or restated from time to time, and each future
Revolving Credit Promissory Note, if any, made by the Borrowers pursuant to
Revolving Credit Facility B.
1.110 "Revolving Credit Facilities" means, collectively, Revolving
Credit Facility A and Revolving Credit Facility B. All references to the
"aggregate principal balance of the Revolving Credit Loans outstanding" or
similar phrases in this Loan Agreement or in the Revolving Credit Notes shall
mean, as of the date of determination thereof, the sum of (i) the entire
aggregate outstanding principal balance of all Revolving Credit Loans made by
the Banks pursuant to this Loan Agreement, (ii) the then existing Letter of
Credit Usage and (iii) the then existing Swing Line Usage. .
1.111 "Revolving Credit Facility A" means the revolving line of credit
established by the Banks in favor of the Borrowers in the principal amount of
One Hundred Seventy Five Million Dollars ($175,000,000) pursuant to which the
Borrowers may obtain Revolving Credit Loans from the Banks and/or Letters of
Credit from PNC during the term of Revolving Credit Facility A upon the terms
and conditions set forth in this Loan Agreement. Revolving Credit Facility A
includes as a sublimit the Letter of Credit Subfacility and the Swing Line
Credit Facility.
1.112 "Revolving Credit Facility A Commitment Fees" shall have the
meaning set forth in Section 2.3B(i) hereof.
1.113 "Revolving Credit Facility A Loan Commitments" means each Bank's
commitment to maintain or make Revolving Credit Loans under Revolving Credit
Facility A and/or to issue Letters of Credit under Revolving Credit Facility A
as set forth in Section 2.1 hereof.
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1.114 "Revolving Credit Facility A Termination Date" means the
Revolving Credit Facility A Termination Date then in effect, which shall be the
earliest of (i) June 30, 2003, subject to extension thereof as provided in
Section 2.1C hereof, (ii) the date as of which the Obligations shall have become
immediately due and payable pursuant to Section 9 of the Loan Agreement and
(iii) the date on which all of the Obligations are paid in full (including,
without limitation, the repayment, expiration, termination or cash
collateralization of Letters of Credit pursuant to this Loan Agreement) and the
Revolving Credit Facility A Loan Commitments are reduced to zero.
1.115 "Revolving Credit Facility B" means the revolving line of credit
established by the Banks in favor of the Borrowers in the principal amount of
Twenty Five Million Dollars ($25,000,000) pursuant to which the Borrowers may
obtain Revolving Credit Loans from the Banks during the term of Revolving Credit
Facility B upon the terms and conditions set forth in this Loan Agreement.
1.116 "Revolving Credit Facility B Commitment Fees" shall have the
meaning set forth in Section 2.3B(ii) hereof.
1.117 "Revolving Credit Facility B Loan Commitments" means each Bank's
commitment to maintain or make Revolving Credit Loans under Revolving Credit
Facility B as set forth in Section 2.2 hereof.
1.118 "Revolving Credit Facility B Termination Date" means the
Revolving Credit Facility B Termination Date then in effect, which shall be the
earliest of (i) June 28, 1999, subject to extension thereof as provided in
Section 2.1C hereof, (ii) the date as of which the Obligations shall have become
immediately due and payable pursuant to Section 9 of the Loan Agreement and
(iii) the date on which all of the Obligations are paid in full (including,
without limitation, the repayment, expiration, termination or cash
collateralization of Letters of Credit pursuant to this Loan Agreement) and the
Revolving Credit Facility B Loan Commitments are reduced to zero.
1.119 "Revolving Credit Facility Commitment Fees" shall mean,
collectively, the Revolving Credit Facility A Commitment Fees and the Revolving
Credit Facility B Commitment Fees.
1.120 "Revolving Credit Facility Pro Rata Shares" means, with respect
to each Revolving Loan Commitment of each Bank, the percentage set forth
opposite that Bank's name on SCHEDULE 2.1 annexed hereto; provided that SCHEDULE
2.1 shall be amended and each Bank's Revolving Credit Facility Pro Rata Share
shall be adjusted from time to time to give effect to the addition or removal of
any Bank as provided herein or by assignment pursuant to Section 12 hereof.
1.121 "Revolving Credit Loans" means advances of principal of Revolving
Credit Facility A and/or advances of principal of Revolving Credit Facility B
made pursuant to Section 2 hereof by the Banks to the Borrowers from time to
time pursuant to, and subject to the terms and conditions set
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forth in, this Loan Agreement to support the working capital needs of the
Borrowers and for the other purposes described in Section 2.5A hereof.
1.122 "Revolving Credit Notes" means collectively the Revolving Credit
A Notes and the Revolving Credit B Notes.
1.123 "Revolving Loan Commitments" means, collectively, the Revolving
Credit Facility A Loan Commitments and the Revolving Credit Facility B Loan
Commitments.
1.124 "Security Agreement" means any of the Security Agreements entered
into between the Administrative Bank and the Borrowers, for the benefit of the
Banks, as the same may hereafter be amended, modified, renewed, replaced and/or
restated from time to time, whether entered into prior to the Closing Date, as
of the Closing Date, or subsequent thereto.
1.125 "Senior Indebtedness" means, with respect to the Borrowers on a
consolidated basis in accordance with GAAP, all Indebtedness, excluding,
however, all (i) Convertible Subordinated Notes, (ii) Convertible Subordinated
Notes (Normal Life) and (iii) other convertible subordinated indebtedness which
may be excluded from the calculation of "Senior Indebtedness" by written consent
of the Administrative Bank.
1.126 "Stock Pledge Agreements" means, collectively, the Stock Pledge
Agreement (Res-Care), the Stock Pledge Agreement (Alternative Youth Services),
the Stock Pledge Agreement (Bald Eagle Enterprises), the Stock Pledge Agreement
(Community Alternatives Missouri) and the Stock Pledge Agreement (Normal Life).
1.127 "Stock Pledge Agreement (Alternative Youth Services)" means that
certain Amended and Restated Stock Pledge Agreement, dated as of the date of
this Agreement, between Alternative Youth Services, Inc. and the Administrative
Bank, for the benefit of the Banks, pursuant to which Alternative Youth
Services, Inc. has pledged to the Banks the stock of the Consolidated
Subsidiaries owned by Alternative Youth Services, Inc.
1.128 "Stock Pledge Agreement (Bald Eagle Enterprises)" means that
certain Amended and Restated Stock Pledge Agreement, dated as of the date of
this Agreement, between Bald Eagle Enterprises, Inc. and the Administrative
Bank, for the benefit of the Banks, pursuant to which Bald Eagle Enterprises,
Inc. has pledged to the Banks the stock of the Consolidated Subsidiaries owned
by Bald Eagle Enterprises, Inc.
1.129 "Stock Pledge Agreement (Community Alternatives Missouri)" means
that certain Amended and Restated Stock Pledge Agreement, dated as of the date
of this Agreement, between Community Alternatives Missouri, Inc. and the
Administrative Bank, for the benefit of the Banks, pursuant to which Community
Alternatives Missouri, Inc. has pledged to the Banks the stock of the
Consolidated Subsidiaries owned by Community Alternatives Missouri, Inc.
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1.130 "Stock Pledge Agreement (Normal Life)" means that certain Amended
and Restated Stock Pledge Agreement, dated as of the date of this Agreement,
between Normal Life, Inc. and the Administrative Bank, for the benefit of the
Banks, pursuant to which Normal Life, Inc. has pledged to the Banks the stock of
the Consolidated Subsidiaries owned by Normal Life, Inc.
1.131 "Stock Pledge Agreement (Res-Care)" means that certain Amended
and Restated Stock Pledge Agreement in the form of EXHIBIT J hereto, dated as of
the date of this Agreement, between Res-Care and the Administrative Bank, for
the benefit of the Banks, pursuant to which Res-Care has pledged to the Banks
the stock of the Subsidiaries owned by Res-Care.
1.132 "Subsidiary" means, with respect to Res-Care, (i) any corporation
of which more than 50% of the outstanding Voting Stock is at the time owned by
Res-Care or by one or more of its Subsidiaries, and (ii) any Person controlled
by Res-Care or by one or more of its Subsidiaries, whether by virtue of voting
interest, other beneficial interest or by voting agreement, contract, proxy or
otherwise.
1.133 "Swing Line Commitment Period" means the period from the Closing
Date through the Swing Line Commitment Termination Date.
1.134 "Swing Line Commitment Termination Date" shall mean the same date
as the Revolving Credit Facility A Termination Date.
1.135 "Swing Line Credit Facility" means the sums advanced or to be
advanced by the Administrative Bank as described in Section 3 hereof.
1.136 "Swing Line Loan" means advances of principal of the Swing Line
Credit Facility made by PNC to the Borrowers from time to time pursuant to, and
subject to the terms and conditions set forth in, this Loan Agreement for the
other purposes described in Section 3 hereof.
1.137 "Swing Line Note" means that certain Amended and Restated Swing
Line Promissory Note dated of even date with this Loan Agreement, made by the
Borrowers, payable to the order of PNC, and in the face principal amount of
Fifteen Million Dollars ($15,000,000), a form of which is annexed to this Loan
Agreement as EXHIBIT C, as the same may hereafter be amended, modified, renewed,
replaced and/or restated from time to time.
1.138 "Swing Line Usage" means, as at any date of determination
thereof, the sum of the maximum aggregate principal amount of all outstanding
Swing Line Loans, which amount shall never exceed $15,000,000.
1.139 "Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, governmental fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; PROVIDED that "Tax on the overall net income"
of a Person shall be construed as a reference to a tax imposed by the
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jurisdiction in which that Person's principal office (and/or, in the case of any
Bank, its lending office) is located on all or part of the net income, profits
or gains of that Person (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
1.140 "Tax Transferee" means any Person who acquires any interest in
the Revolving Credit Loans (whether or not by operation of law) or the office to
which any Bank has transferred its Revolving Credit Loans for purposes of
determining where such Bank's Revolving Credit Loans are made, accounted for or
booked.
1.141 "Total Utilization of Revolving Credit Facility A Loan
Commitments" means, as at any date of determination thereof, the sum of (i) the
aggregate principal amount of all outstanding Revolving Credit Loans under
Revolving Credit Facility A, (ii) the Letter of Credit Usage and (iii) the Swing
Line Usage.
1.142 "Total Utilization of Revolving Credit Facility B Loan
Commitments" means, as at any date of determination thereof, the aggregate
principal amount of all outstanding Revolving Credit Loans under Revolving
Credit Facility B.
1.143 "Total Utilization of Revolving Loan Commitments" means,
collectively, the Total Utilization of Revolving Credit Facility A Loan
Commitments and the Total Utilization of Revolving Credit Facility B Loan
Commitments.
1.144 "Voting Stock" means the shares of capital stock or other
securities of the Borrowers entitled to vote generally in the election of the
directors of the Borrowers.
1.145 ACCOUNTING TERMS AND FINANCIAL INFORMATION.
A. ACCOUNTING TERMS. For purposes of this Loan Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP and all financial statements and certificates
and reports as to financial matters required to be delivered to the
Administrative Bank hereunder shall (unless otherwise disclosed to the
Administrative Bank in writing at the time of delivery thereof in the manner
described in paragraph B of this Section) be prepared in accordance with GAAP
applied on a basis consistent with GAAP as applied in the preparation of the
latest financial statements furnished to the Administrative Bank hereunder.
B. ACCOUNTING VARIANCES. Res-Care, for itself and the other
Borrowers, shall deliver to the Administrative Bank at the same time as the
delivery of any annual or quarterly financial statement under Section 7.3
hereof, (i) a description in reasonable detail of any variation between the
application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements
(which variation materially affects the presentation of the financial position
or
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results of operations of Res-Care and the other Borrowers on a consolidated
basis in accordance with GAAP) and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
1.146 OTHER DEFINITIONAL PROVISIONS. Any reference in this Loan
Agreement (i) to a Section, a Schedule or an Exhibit is a reference to a section
hereof, a schedule hereto or an exhibit hereto, respectively; and (ii) to a
subsection or a clause is, unless otherwise stated, a reference to a subsection
or a clause of the Section or subsection in which the reference appears. In this
Loan Agreement the singular includes the plural and the plural the singular;
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Loan Agreement as a whole and not merely to the specific section, paragraph or
clause in which the respective word appears; words importing any gender include
the other genders; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; references to "writing" include printing, typing, lithography and other
means of reproducing words in a tangible visible form; the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments, supplements, assignments and other
modifications thereto, but only to the extent such modifications are not
prohibited by the terms of this Loan Agreement, and references to Persons
include their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons.
SECTION 2
REVOLVING CREDIT FACILITIES
---------------------------
Subject to the terms and conditions of this Loan Agreement, the Banks
hereby establish (i) Revolving Credit Facility A in favor of the Borrowers in
the principal amount of One Hundred Seventy Five Million Dollars ($175,000,000)
and (ii) Revolving Credit Facility B in favor of the Borrowers in the principal
amount of Twenty Five Million Dollars ($25,000,000). Pursuant to the Revolving
Credit Facilities, the Borrowers may obtain Revolving Credit Loans and/or
Letters of Credit pursuant to, and subject to the terms and conditions set forth
in, this Loan Agreement for the purposes set forth in Sections 2.5A and 2.7
hereof. The Revolving Credit Facilities are subject to the following terms and
conditions:
2.1 REVOLVING LOAN COMMITMENTS, REVOLVING CREDIT LOANS.
A. REVOLVING CREDIT FACILITY A - REVOLVING CREDIT FACILITY A
LOAN COMMITMENTS. Each Bank severally agrees, subject to the limitations set
forth below with respect to the maximum amount of Revolving Credit Loans
permitted to be outstanding from time to time under Revolving Credit Facility A,
to lend to the Borrowers from time to time during the period from the Closing
Date to but excluding the Revolving Credit Facility A Termination Date an
aggregate amount not exceeding its Revolving Credit Facility Pro Rata Share of
the aggregate Revolving Credit Facility A Loan
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Commitments. The amount of each Bank's Revolving Credit Facility A Loan
Commitment is set forth opposite its name on SCHEDULE 2.1 annexed to this Loan
Agreement and the aggregate amount of the Revolving Credit Facility A Loan
Commitments is One Hundred Seventy Five Million Dollars ($175,000,000);
PROVIDED, the amount of the Revolving Credit Facility A Loan Commitments shall
be reduced from time to time by the amount of any reductions that are made
pursuant to Section 2.4C hereof (it being understood that all references to the
Revolving Credit Facility A Loan Commitments of the Banks set forth in this Loan
Agreement shall mean the initial Revolving Credit Facility A Loan Commitments of
the Banks set forth on SCHEDULE 2.1 annexed to this Loan Agreement as reduced by
the voluntary reductions of the Revolving Credit Facility A Loan Commitments
effected by the Borrowers pursuant to Section 2.4C of the Loan Agreement). Each
Bank's Revolving Credit Facility A Loan Commitment shall expire on the Revolving
Credit Facility A Termination Date and all Revolving Credit Loans under
Revolving Credit Facility A shall be paid in full no later than that date.
Amounts borrowed under this Section 2.lA may be repaid and reborrowed to but
excluding the Revolving Credit Facility A Termination Date, subject to the
provisions of Section 2.4C hereof.
Anything contained in this Loan Agreement to the contrary
notwithstanding, the Revolving Credit Loans under Revolving Credit Facility A
and the Revolving Credit Facility A Loan Commitments shall be subject to the
following limitations:
(i) The Letter of Credit Subfacility is a sublimit
under Revolving Credit Facility A. The amount otherwise available for borrowing
under the Revolving Credit Facility A Loan Commitments as of the time of
determination thereof (other than to reimburse PNC for the amount of any
drawings under any Letters of Credit honored by PNC and not theretofore
reimbursed by the Borrowers) shall be reduced by an amount equal to the Letter
of Credit Usage as of such time of determination;
(ii) The Swing Line Credit Facility is a sublimit
under Revolving Credit Facility A. The amount otherwise available for borrowing
under the Revolving Credit Facility A Loan Commitments as of the time of
determination thereof shall be reduced by an amount equal to the Swing Line
Usage;
(iii) The Total Utilization of Revolving Credit
Facility A Loan Commitments shall not exceed the aggregate Revolving Credit
Facility A Loan Commitments; and
(iv) At no time shall the Banks be required to make
Revolving Loans under Revolving Credit Facility A if the making of such
Revolving Loans would cause the ratio of Indebtedness to Cash Flow from
Operations of the Borrowers to exceed 4.5 to 1.0.
B. REVOLVING CREDIT FACILITY B - REVOLVING CREDIT FACILITY B
LOAN COMMITMENTS. Each Bank severally agrees, subject to the limitations set
forth below with respect to the maximum amount of Revolving Credit Loans
permitted to be outstanding from time to time under Revolving Credit Facility B,
to lend to the Borrowers from time to time during the period from the Closing
Date to but excluding the Revolving Credit Facility B Termination Date an
aggregate amount not exceeding
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its Revolving Credit Facility Pro Rata Share of the aggregate Revolving Credit
Facility B Loan Commitments. The amount of each Bank's Revolving Credit Facility
B Loan Commitment is set forth opposite its name on SCHEDULE 2.1 annexed to this
Loan Agreement and the aggregate amount of the Revolving Credit Facility B Loan
Commitments is Twenty Five Million Dollars ($25,000,000); PROVIDED, the amount
of the Revolving Credit Facility B Loan Commitments shall be reduced from time
to time by the amount of any reductions that are made pursuant to Section 2.4C
hereof (it being understood that all references to the Revolving Credit Facility
B Loan Commitments of the Banks set forth in this Loan Agreement shall mean the
initial Revolving Credit Facility B Loan Commitments of the Banks set forth on
SCHEDULE 2.1 annexed to this Loan Agreement as reduced by the voluntary
reductions of the Revolving Credit Facility B Loan Commitments effected by the
Borrowers pursuant to Section 2.4C of the Loan Agreement). Each Bank's Revolving
Credit Facility B Loan Commitment shall expire on the Revolving Credit Facility
B Termination Date and all Revolving Credit Loans under Revolving Credit
Facility B shall be paid in full no later than that date. Amounts borrowed under
this Section 2.lB may be repaid and reborrowed to but excluding the Revolving
Credit Facility B Termination Date, subject to the provisions of Section 2.4C
hereof.
Anything contained in this Loan Agreement to the contrary
notwithstanding, the Revolving Credit Loans under Revolving Credit Facility B
and the Revolving Credit Facility B Loan Commitments shall be subject to the
following limitations:
(i) The Total Utilization of Revolving Credit
Facility B Loan Commitments shall not exceed the aggregate Revolving Credit
Facility B Loan Commitments; and
(ii) At no time shall the Banks be required to make
Revolving Loans under Revolving Credit Facility B if the making of such
Revolving Loans would cause the ratio of Indebtedness to Cash Flow from
Operations of the Borrowers to exceed 4.5 to 1.0.
C. TERM OF REVOLVING LOAN COMMITMENTS. The Revolving Loan
Commitments shall become effective immediately as of the Closing Date, and as of
the Closing Date, the Borrowers may obtain Revolving Credit Loans and Letters of
Credit subject to the terms and conditions contained herein.
(i) REVOLVING CREDIT FACILITY A LOAN COMMITMENTS. The
Revolving Credit Facility A Loan Commitments shall continue in effect until the
Revolving Credit Facility A Termination Date, unless sooner terminated (i) by
the Banks upon the occurrence and during the continuation of an Event of
Default, or (ii) by the Borrowers at any time in their sole and absolute
discretion. The Borrowers may request to the Administrative Bank, not less than
sixty (60) days prior to each anniversary of the Closing Date, that the
Revolving Credit Facility A Termination Date be extended for a period of an
additional twelve (12) months beyond the then current Revolving Credit Facility
A Termination Date. The Administrative Bank shall notify the Borrowers in
writing, within thirty (30) days after receipt of such request, whether the
Banks have elected to so extend the Revolving Credit Facility A Termination
Date. In the event the Administrative Bank fails to give such written notice to
the Borrowers within such thirty (30) day period as such period may be
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extended with the consent of the Borrower and the Administrative Bank, such
failure shall constitute an affirmative election by the Banks not to so extend
the Revolving Credit Facility A Termination Date. The Revolving Credit Facility
A Termination Date may only be extended by the unanimous written consent of all
of the Banks in their sole and absolute discretion. Upon termination of the
Revolving Credit Facility A Loan Commitments by the Banks upon the occurrence
and during the continuation of an Event of Default, or by the Borrowers at any
time in their sole and absolute discretion, the entire unpaid principal balance
of and all accrued and unpaid interest on the Revolving Credit Loans under
Revolving Credit Facility A and all other Obligations shall be respectively due
and payable in full to the Banks. The termination of the Revolving Credit
Facility A Loan Commitments, for whatever reason, shall not in any way release
or relieve the Borrowers from their obligations incurred hereunder or in
connection herewith or under the Revolving Credit Notes, the Swing Line Note,
the Applications and Agreements For Letters of Credit, or the other Loan
Instruments and the provisions hereof and of the Revolving Credit Notes, the
Swing Line Note, the Applications and Agreements For Letters of Credit, and the
other Loan Instruments shall continue in full force and effect until the
Revolving Credit Notes, the Swing Line Note, the Applications and Agreements For
Letters of Credit, and all other Obligations have been respectively paid in full
to the Banks. In the event the Borrowers terminate the Revolving Credit Facility
A Loan Commitments, which the Borrowers have the right to do at any time in
their sole and absolute discretion, the Borrowers shall be obligated to pay the
Revolving Credit Notes, the Swing Line Note, the Applications and Agreements For
Letters of Credit, and all other Obligations in full to the Banks, respectively.
(ii) REVOLVING CREDIT FACILITY B LOAN COMMITMENTS.
The Revolving Credit Facility B Loan Commitments shall continue in effect until
the Revolving Credit Facility B Termination Date, unless sooner terminated (i)
by the Banks upon the occurrence and during the continuation of an Event of
Default, or (ii) by the Borrowers at any time in their sole and absolute
discretion. The Borrowers may request to the Administrative Bank, not less than
sixty (60) days prior to each anniversary of the Closing Date, that the
Revolving Credit Facility B Termination Date be extended for a period of an
additional 364 days beyond the then current Revolving Credit Facility B
Termination Date. The Administrative Bank shall notify the Borrowers in writing,
within thirty (30) days after receipt of such request, whether the Banks have
elected to so extend the Revolving Credit Facility B Termination Date. In the
event the Administrative Bank fails to give such written notice to the Borrowers
within such thirty (30) day period as such period may be extended with the
consent of the Borrower and the Administrative Bank, such failure shall
constitute an affirmative election by the Banks not to so extend the Revolving
Credit Facility B Termination Date. The Revolving Credit Facility B Termination
Date may only be extended by the unanimous written consent of all of the Banks
in their sole and absolute discretion. Upon termination of the Revolving Credit
Facility B Loan Commitments by the Banks upon the occurrence and during the
continuation of an Event of Default, or by the Borrowers at any time in their
sole and absolute discretion, the entire unpaid principal balance of and all
accrued and unpaid interest on the Revolving Credit Loans under Revolving Credit
Facility B shall be due and payable in full to the Banks. The termination of the
Revolving Credit Facility B Loan Commitments, for whatever reason, shall not in
any way release or relieve the Borrowers from their obligations incurred
hereunder or in connection herewith or under the Revolving
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Credit Notes, the Swing Line Note, the Applications and Agreements For Letters
of Credit, or the other Loan Instruments and the provisions hereof and of the
Revolving Credit Notes, the Swing Line Note, the Applications and Agreements For
Letters of Credit, and the other Loan Instruments shall continue in full force
and effect until the Revolving Credit Notes, the Swing Line Note, the
Applications and Agreements For Letters of Credit, and all other Obligations
have been respectively paid in full to the Banks. In the event the Borrowers
terminate the Revolving Credit Facility B Loan Commitments, which the Borrowers
have the right to do at any time in their sole and absolute discretion, the
Borrowers shall be obligated to pay the Revolving Credit B Notes .
D. BORROWING MECHANICS FOR REVOLVING CREDIT LOANS MADE TO THE
BORROWERS. Revolving Credit Loans (except Swing Line Loans under the Swing Line
Credit Facility discussed in Section 3 hereof) made to the Borrowers on any
Funding Date shall be in an aggregate minimum amount of (i) Two Hundred Fifty
Thousand Dollars ($250,000.00) and integral multiples of Fifty Thousand Dollars
($50,000.00) in excess of that amount in the case of Base Rate Loans, and (ii)
Five Hundred Thousand Dollars ($500,000.00) and integral multiples of One
Hundred Thousand Dollars ($100,000.00) in excess of that amount in the case of
Euro-Rate Loans. Whenever the Borrowers desire that the Banks make a Revolving
Credit Loan to the Borrowers, the Borrowers shall deliver to the Administrative
Bank a written Request For Revolving Credit Loan no later than 11:00 A.M.
(Louisville, Kentucky time) at least three (3) Business Days in advance of the
proposed Funding Date in the case of a Euro-Rate Loan and on the proposed
Funding Date in the case of a Base Rate Loan. The Request For Revolving Credit
Loan shall be in the form of EXHIBIT E-1 annexed hereto with respect to
Revolving Credit Loans under Revolving Credit Facility A or in the form of
EXHIBIT E-2 annexed hereto with respect to Revolving Credit Loans under
Revolving Credit Facility B and shall specify (i) the proposed Funding Date,
(ii) the amount of the Revolving Credit Loan, (iii) whether the Revolving Credit
Loan shall be a Base Rate Loan or a Euro-Rate Loan, (iv) in the case of any
Revolving Credit Loan requested to be made as a Euro-Rate Loan, the initial
Interest Period applicable thereto, (v) that the amount of a proposed Revolving
Credit Loan under Revolving Credit Facility A will not cause the Total
Utilization of Revolving Credit Facility A Loan Commitments to exceed the
aggregate Revolving Credit Facility A Loan Commitments or that the amount of a
proposed Revolving Credit Loan under Revolving Credit Facility B will not cause
the Total Utilization of Revolving Credit Facility B Loan Commitments to exceed
the aggregate Revolving Credit Facility B Loan Commitments, as applicable, and
(vi) that the amount of the proposed Revolving Credit Loan will not cause the
ratio of the Borrowers' Indebtedness to Cash Flow from Operations to exceed 4.5
to 1.0. Revolving Credit Loans made to the Borrowers may be continued as or
converted into Base Rate Loans or Euro-Rate Loans in the manner provided in
Section 2.2D hereof. In lieu of delivering the above described Request For
Revolving Credit Loan, the Borrowers may give the Administrative Bank telephonic
notice by the required time of the requested Revolving Credit Loan under this
Section 2.lD; provided that such notice shall be promptly confirmed in writing
by delivery of a Request For Revolving Credit Loan to the Administrative Bank on
or before the applicable Funding Date.
No Bank shall incur any liability to the Borrowers in acting upon any
telephonic notice referred to above which the Administrative Bank believes in
good faith to have been given by a duly
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<PAGE> 34
Authorized Officer or other Person authorized to borrow on behalf of the
Borrowers or for otherwise acting in good faith under this Section 2.lD and,
upon funding of any Revolving Credit Loan by the Banks in accordance with this
Loan Agreement pursuant to any telephonic notice, the Borrowers shall have
effected such Revolving Credit Loan hereunder.
Except as provided in Sections 2.6B, 2.6C and 2.6G hereof, a Request
For Revolving Credit Loan for a Euro-Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the Borrowers shall be bound to obtain the Euro-Rate
Loan in accordance therewith.
E. DISBURSEMENT OF REVOLVING CREDIT LOANS TO THE BORROWERS.
All Revolving Credit Loans made to the Borrowers under this Loan Agreement shall
be made by the Banks simultaneously and proportionately in accordance with their
respective Revolving Credit Facility Pro Rata Shares, it being understood that
no Bank shall be responsible for any default by the other Bank in funding its
Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan requested
hereunder by the Borrowers, nor shall the Revolving Loan Commitment of any Bank
be increased or decreased as a result of the default by the other Bank in
funding its Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan
requested hereunder by the Borrowers. Each Bank shall make its Revolving Credit
Facility Pro Rata Share of each Revolving Credit Loan to be made to the
Borrowers available to the Administrative Bank, in same day funds, at the office
of the Administrative Bank located at 500 West Jefferson Street, Louisville,
Kentucky not later than 1:00 P.M. (Louisville, Kentucky time) on the Funding
Date. Except with respect to the reimbursement to PNC for a drawing under a
Letter of Credit issued by PNC as provided in Section 2.7 hereof, upon
satisfaction or waiver of the conditions precedent specified in Section 5.1 in
the case of the initial Revolving Credit Loan on the initial Funding Date and
Section 5.2 in the case of a Revolving Credit Loan on any subsequent Funding
Date, the Administrative Bank shall make the proceeds of each Revolving Credit
Loan requested by the Borrowers available to the Borrowers on the Funding Date
by causing an amount of same day funds equal to the proceeds of the Banks'
respective Revolving Credit Facility Pro Rata Shares of such Revolving Credit
Loan received by the Administrative Bank at its office located at the address
set forth in the preceding sentence to be credited to the Borrowers' Loan
Account maintained at such office of the Administrative Bank or wired to an
account designated by the Borrowers. All Revolving Credit Loans shall be
respectively paid in full to the Banks on the Revolving Credit Facility B
Termination Date.
Nothing in this Section 2.1E shall be deemed to relieve any Bank from
its obligation to fulfill its Revolving Loan Commitment hereunder or to
prejudice any rights that the Borrowers may have against any Bank as a result of
any default by such Bank hereunder.
F. RECORDS. Each Bank shall record the Revolving Credit Loans
made to the Borrowers from time to time and each repayment or prepayment in
respect of the principal amount of such Revolving Credit Loans in the Bank's
electronic records. Any such recordation in accordance with the terms of this
Loan Agreement shall be conclusive and binding on the Borrowers absent manifest
error; PROVIDED, the failure to make any such recordation, or any error in such
recordation,
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<PAGE> 35
shall not affect the Borrowers' obligation to repay all Revolving Credit Loans
to the Banks in accordance with this Loan Agreement and the Revolving Credit
Notes.
G. BORROWERS' LOAN ACCOUNTS.
(i) Each Bank shall enter all Revolving Credit Loans made to
the Borrowers as debits in the Borrowers' Loan Account maintained with such
Bank. Each Bank shall also record in the Borrowers' Loan Account maintained with
such Bank in accordance with customary accounting practice all other charges,
expenses and other items properly chargeable to the Borrowers; all payments made
by the Borrowers on account of the Revolving Credit Loans made by such Bank; and
other appropriate debits and credits. The debit balance of the Borrowers' Loan
Account maintained with such Bank shall reflect the unpaid principal balance of
the Revolving Credit Loans from time to time maintained with such Bank. At least
once each month the Administrative Bank shall render a statement of account for
the Borrowers' Loan Accounts maintained with PNC and the other Banks, which
statement shall be considered correct and accepted by the Borrowers and
conclusively binding upon the Borrowers in the absence of manifest error unless
the Borrowers notify the Administrative Bank to the contrary within thirty (30)
days from the receipt of said statement by the Borrowers.
(ii) Any and all principal, interest, charges and expenses,
attorneys' fees and taxes now or hereafter due and owing under the Revolving
Credit Notes and any of the other Loan Instruments may be charged to any deposit
account of the Borrowers with a Bank or to the Borrowers' Loan Account
maintained with such Bank.
2.2 INTEREST ON THE REVOLVING CREDIT LOANS.
A. RATES OF INTEREST. Subject to the provisions of Sections
2.2E and 4 hereof, each Revolving Credit Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at the Base Rate plus the Applicable Base Rate Margin
or the Euro-Rate plus the Applicable Euro-Rate Margin, as the case may be. The
applicable rate of interest with respect to Revolving Credit Loans shall be
selected by the Borrowers initially at the time a Request For Revolving Credit
Loan is delivered to the Administrative Bank pursuant to Section 2.1D hereof.
The interest rate with respect to any Revolving Credit Loan may be changed by
the Borrowers from time to time pursuant to Section 2.2D hereof. If on any day a
Revolving Credit Loan is outstanding with respect to which notice has not been
delivered to the Administrative Bank or the Banks in accordance with the terms
of this Loan Agreement specifying the applicable interest rate, then, for that
day, that Revolving Credit Loan shall bear interest at the Base Rate plus the
Applicable Base Rate Margin.
Subject to the provisions of Section 2.2E and 4 hereof, Revolving
Credit Loans shall bear interest through maturity as follows:
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<PAGE> 36
(i) If a Base Rate Loan, at a rate equal to the
higher of (a) the Federal Funds Effective Rate plus one half
percent (0.5%) per annum plus the Applicable Base Rate Margin
or (b) the Prime Rate plus the Applicable Base Rate Margin;
PROVIDED THAT, on each Date of Determination, commencing with
the first Date of Determination to occur after the Closing
Date, the Applicable Base Rate Margin in effect for the
Pricing Period commencing on such Date of Determination and
continuing for the term of the Pricing Period that begins on
such Date of Determination shall be the Applicable Base Rate
Margin corresponding to the Pricing Level in effect for such
Pricing Period, as follows:
<TABLE>
<CAPTION>
PRICING LEVEL APPLICABLE BASE RATE MARGIN
------------- ---------------------------
<S> <C>
Level I 0.00%
Level II 0.00%
Level III 0.00%
Level IV 0.00%
Level V 0.00%
Level VI 0.125%
Level VII 0.375%
</TABLE>
(ii) If a Euro-Rate Loan, at a rate per annum equal
to the sum of the Euro-Rate plus the Applicable Euro-Rate
Margin; PROVIDED THAT, on each Date of Determination,
commencing with the first Date of Determination to occur after
the Closing Date, the Applicable Euro-Rate Margin in effect
for the Pricing Period commencing on such Date of
Determination and continuing for the term of the Pricing
Period that begins on such Date of Determination shall be the
Applicable Euro-Rate Margin corresponding to the Pricing Level
in effect for such Pricing Period, as follows:
<TABLE>
<CAPTION>
PRICING LEVEL APPLICABLE EURO-RATE MARGIN
------------- ---------------------------
<S> <C>
Level I 0.500%
Level II 0.750%
Level III 1.000%
Level IV 1.250%
Level V 1.375%
Level VI 1.625%
Level VII 1.875%
</TABLE>
(iii) If EITHER a Base Rate Loan or a Euro-Rate Loan, during any
Pricing Period during which the ratio of the Borrowers' Debt to Capitalization
exceeds 0.65 to 1.00, a surcharge of 0.25% shall be added to the applicable
Pricing Level, such surcharge to be applied at the end of any Pricing
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<PAGE> 37
Period during which the ratio of the Borrowers' Debt to Capitalization exceeds
0.65 to 1.00, retroactive to the beginning of such Pricing Period.
(iv) Notwithstanding that the Pricing Level Calculation Date of the
applicable Pricing Level for a Pricing Period occurs after the relevant Date of
Determination, upon the actual calculation of the applicable Pricing Level for
such Pricing Period, adjustments to the amount of accrued interest on the Base
Rate Loans and/or Euro-Rate Loans, as applicable, shall be made to reflect
retroactive application of the applicable Pricing Level to the first day of such
Pricing Period.
Notwithstanding anything in the foregoing to the contrary, if any
Compliance Certificate delivered by the Borrowers demonstrating the appropriate
Pricing Level shall prove to be incorrect (as determined by reference to a
subsequent Compliance Certificate or subsequent publicly filed financial
statements of the Borrowers or otherwise), such Compliance Certificate shall no
longer be in effect, and the Administrative Bank shall notify the Borrowers of
such incorrectness and shall calculate the difference between the amount of
interest actually paid by the Borrowers on the Base Rate Loans and the Euro-Rate
Loans on the basis of such incorrect Compliance Certificate and the amount of
interest which would have been due on the Base Rate Loans and the Euro-Rate
Loans had such incorrect Compliance Certificate not been delivered. The
Administrative Bank shall notify the Borrowers of the amount of such difference,
if any, in a statement setting forth the method of calculation of such amount
(which calculation, in the absence of demonstrable error, shall be deemed
correct) and the Borrowers shall pay such amount to the Administrative Bank for
the benefit of the Banks within three (3) Business Days of such notice.
B. INTEREST PERIODS. In connection with each Euro-Rate Loan,
the Borrowers may, pursuant to the applicable Request For Revolving Credit Loan,
select the Interest Period to be applicable to such Euro-Rate Loan, which
Interest Period shall be at the Borrowers' option either a one, two, three or
six month period. The following provisions are applicable to Interest Periods
generally:
(i) the initial Interest Period for any Euro-Rate
Loan shall commence on the Funding Date of such Euro-Rate Loan, in the case of a
Revolving Credit Loan initially made as a Euro-Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the case of a
Revolving Credit Loan converted to a Euro-Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Euro-Rate Loan continued as such pursuant to Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on
a day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED THAT, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
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<PAGE> 38
(iv) any Interest Period of a Euro-Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) of this Section 2.2B, end on the
last Business Day of a calendar month;
(v) in the event the Borrowers fail to specify an
Interest Period with respect to a Euro-Rate Loan in the applicable Request For
Revolving Credit Loan or Notice of Conversion/Continuation, the Borrowers shall
be deemed to have selected an Interest Period of one month; and
(vi) no Interest Period with respect to Revolving
Loans under Revolving Credit Facility A shall extend beyond the Revolving Credit
Facility A Termination Date and no Interest Period with respect to Revolving
Loans under Revolving Credit Facility B shall extend beyond the Revolving Credit
Facility B Termination Date. .
C. INTEREST PAYMENTS. Subject to the provisions of
Section 2.2E hereof, interest shall be payable on the Revolving Credit Loans as
follows:
(i) interest on each Base Rate Loan shall be payable
in arrears on and to the last day of each calendar quarter, upon any prepayment
or repayment of such Base Rate Loan (to the extent accrued on the amount being
prepaid or repaid) and at maturity (including final maturity); and
(ii) interest on each Euro-Rate Loan shall be payable
in arrears on and to the ninetieth (90th) day during each Interest Period
applicable to that Euro-Rate Loan, the last day of each Interest Period
applicable to that Euro-Rate Loan, and upon any prepayment or repayment of that
Euro-Rate Loan (to the extent accrued on the amount being prepaid or repaid) and
at maturity (including final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of
Section 2.6 hereof, the Borrowers shall have the option (i) to convert at any
time all or any part of outstanding Revolving Credit Loans from Revolving Credit
Loans bearing interest as Base Rate Loans to Revolving Credit Loans bearing
interest as Euro-Rate Loans, and (ii) upon the expiration of any Interest Period
applicable to a Euro-Rate Loan, to continue all or any portion of such Revolving
Credit Loan as a Euro-Rate Loan, and the succeeding Interest Period of such
continued Euro-Rate Loan shall commence on the most recent Interest Payment Date
thereof; provided however that a Euro-Rate Loan may only be converted into a
Revolving Credit Loan bearing interest as a Base Rate Loan on the expiration
date of the Interest Period applicable thereto.
The Borrowers shall deliver a Notice of Conversion/Continuation to the
Administrative Bank no later than 11:00 A.M. (Louisville, Kentucky time) at
least three (3) Business Days in advance of
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<PAGE> 39
the proposed conversion/continuation date. A Notice of Conversion/ Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Revolving Credit Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or continuation of, a Euro-Rate Loan, the
requested Interest Period, and (v) in the case of a conversion to, or a
continuation of, a Euro-Rate Loan or a Base Rate Loan, that no Event of Default
has occurred and is continuing. In lieu of delivering the above-described Notice
of Conversion/Continuation, the Borrowers may give the Administrative Bank
telephonic notice by the required time of any proposed conversion/continuation
under this section 2.2D; provided that such notice shall be promptly confirmed
in writing by delivery of a Notice of Conversion/Continuation to the
Administrative Bank on or before the proposed conversion/continuation date.
The Banks shall not incur any liability to the Borrowers in acting upon
any telephonic notice referred to above that the Administrative Bank believes in
good faith to have been given by a duly Authorized Officer or other Person
authorized to act on behalf of the Borrowers or for otherwise acting in good
faith under this Section 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Revolving
Credit Loans in accordance with this Loan Agreement pursuant to any such
telephonic notice, the Borrowers shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in Sections 2.6B, 2.6C and 2.6G hereof, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Euro-Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date and the Borrowers shall
be bound to effect a conversion or continuation in accordance therewith.
E. POST-MATURITY INTEREST. Any principal payments on the
Revolving Credit Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Revolving Credit Loans or any fees
or other amounts owed by the Borrowers hereunder not paid when due, in each case
whether at stated maturity, by notice of prepayment, by acceleration or
otherwise, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate equal to the Default Rate. Payment or acceptance of
the increased rates of interest provided for in this Section 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of the
Banks.
F. COMPUTATION OF INTEREST. Interest on the Euro-Rate Loans
shall be computed on the basis of a 360-day year, and interest on the Base Rate
Loans shall be computed on the basis of an actual 365 or 366-day year, as
applicable, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Revolving Credit Loan, the
date of the making of such Revolving Credit Loan or the first day of an Interest
Period applicable to such Revolving Credit Loan, as the case may be, shall be
included, and the date of payment of such Revolving Credit Loan or the
expiration date of an Interest Period applicable to such Revolving Credit Loan
or, with respect to a Revolving Credit Loan being converted to a Euro-Rate Loan
or Base Rate
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<PAGE> 40
Loan, the date of conversion of such Revolving Credit Loan to such Euro-Rate
Loan or Base Rate Loan shall be excluded; provided that if a Revolving Credit
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Revolving Credit Loan.
G. LIMITATION ON LOAN TRANCHES. At no time shall the number of
Euro-Rate Loans and Base Rate Loans outstanding at any time outstanding eleven
(11).
2.3 FEES.
A. CLOSING FEES AND EXPENSES. The Borrowers agree to pay to
the Administrative Bank on the Closing Date, for the benefit of the Banks,
Closing Fees in the total amount set forth in Section III of SCHEDULE 2.3A
hereto. Upon receipt of such moneys, the Administrative Bank shall remit the
Closing Fees set forth in Sections I and II of SCHEDULE 2.3A to the Banks. The
Borrowers shall have no liability to any Bank for any Closing Fees paid to the
Administrative Bank which the Administrative Bank does not properly remit to
such Bank pursuant to Sections I and II of SCHEDULE 2.3A, and such Bank's sole
remedy in respect thereof shall be against the Administrative Bank. Pursuant to
this Section 2.3A and Section 15.10 hereof, the Borrowers also agree to pay to
the Administrative Bank on the Closing Date the reasonable fees and expenses of
the Administrative Bank's counsel in negotiating, drafting and closing this Loan
Agreement and related documents.
B. COMMITMENT FEES.
(i) REVOLVING CREDIT FACILITY A. The Borrowers agree to pay to
the Administrative Bank, for the benefit of the Banks in proportion to their
respective Revolving Credit Facility Pro Rata Shares with respect to Revolving
Credit Facility A, commitment fees (the "Revolving Credit Facility A Commitment
Fees") for the period from and including the Closing Date to and excluding the
Revolving Credit Facility A Termination Date, equal to the average of the daily
excess of the Revolving Credit Facility A Loan Commitments (as they may be
reduced pursuant to Section 2.4C hereof) over the aggregate outstanding
principal amount of Revolving Credit Loans under Revolving Credit Facility A and
the Letter of Credit Usage multiplied by the Applicable Commitment Fee
Percentage set forth below; PROVIDED THAT, on each Date of Determination,
commencing with the first Date of Determination to occur after the Closing Date,
the Applicable Commitment Fee Percentage in effect for the Pricing Period
commencing on such Date of Determination and continuing for the term of the
Pricing Period that begins on such Date of Determination shall be the Applicable
Commitment Fee Percentage corresponding to the Pricing Level in effect for such
Pricing Period, as follows:
<TABLE>
<CAPTION>
PRICING LEVEL APPLICABLE COMMITMENT FEE PERCENTAGE
------------- ------------------------------------
<S> <C>
Level I, II, III 0.25%
Level IV, V 0.30%
Level VI, VII 0.35%
</TABLE>
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<PAGE> 41
Provided, further, that, in the case of PNC only, the
calculation of the Revolving Credit Facility A Commitment Fee shall be adjusted
to add the aggregate outstanding principal amount of Swing Line Loans to the
aggregate outstanding principal amount of Revolving Credit Loans under Revolving
Credit Facility A and the Letter of Credit Usage allocable to PNC, before the
calculation of the Revolving Credit Facility A Commitment Fee payable to PNC is
performed.
The Revolving Credit Facility A Commitment Fees shall be
calculated on the basis of a 360-day year and the actual number of days elapsed
and shall be payable quarterly in arrears on the last day of each Fiscal
Quarter, commencing on the first such date to occur after the Closing Date, and
on the Revolving Credit Facility A Termination Date. The Borrowers shall have no
liability to the Banks for any Revolving Credit Facility A Commitment Fees paid
to the Administrative Bank which the Administrative Bank does not properly remit
to such Bank, and such Bank's sole remedy in respect thereof shall be against
the Administrative Bank.
(ii) REVOLVING CREDIT FACILITY B. The Borrowers agree to pay
to the Administrative Bank, for the benefit of the Banks in proportion to their
respective Revolving Credit Facility Pro Rata Shares with respect to Revolving
Credit Facility B, commitment fees (the "Revolving Credit Facility B Commitment
Fees") for the period from and including the Closing Date to and excluding the
Revolving Credit Facility B Termination Date, equal to the average of the daily
excess of the Revolving Credit Facility B Loan Commitments (as they may be
reduced pursuant to Section 2.4C hereof) over the aggregate outstanding
principal amount of Revolving Credit Loans under Revolving Credit Facility B
multiplied by the Applicable Commitment Fee Percentage set forth below; PROVIDED
THAT, on each Date of Determination, commencing with the first Date of
Determination to occur after the Closing Date, the Applicable Commitment Fee
Percentage in effect for the Pricing Period commencing on such Date of
Determination and continuing for the term of the Pricing Period that begins on
such Date of Determination shall be the Applicable Commitment Fee Percentage
corresponding to the Pricing Level in effect for such Pricing Period, as
follows:
<TABLE>
<CAPTION>
PRICING LEVEL APPLICABLE COMMITMENT FEE PERCENTAGE
------------- ------------------------------------
<S> <C>
Level I, II, III 0.175%
Level IV, V 0.20%
Level VI, VII 0.225%
</TABLE>
The Revolving Credit Facility B Commitment Fees shall be
calculated on the basis of a 360-day year and the actual number of days elapsed
and shall be payable quarterly in arrears on the last day of each Fiscal
Quarter, commencing on the first such date to occur after the Closing Date, and
on the Revolving Credit Facility B Termination Date. The Borrowers shall have no
liability to the Banks for any Revolving Credit Facility B Commitment Fees paid
to the Administrative Bank which the Administrative Bank does not properly remit
to such Bank, and such Bank's sole remedy in respect thereof shall be against
the Administrative Bank.
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<PAGE> 42
(iii) Notwithstanding that the Pricing Level Calculation Date
of the Applicable Pricing Level for a Pricing Period occurs after the relevant
Date of Determination, upon the actual calculation of the applicable Pricing
Level for such Pricing Period, adjustments to the Applicable Commitment Fee
Percentage and the amount of the Revolving Credit Facility Commitment Fees, as
applicable, shall be made to reflect retroactive application of the applicable
Pricing Level to the first day of such Pricing Period. Notwithstanding anything
in the foregoing to the contrary, if any Compliance Certificate delivered by the
Borrowers demonstrating the appropriate Pricing Level shall prove to be
incorrect (as determined by reference to a subsequent Compliance Certificate or
subsequent publicly filed financial statements of the Borrowers or otherwise),
such Compliance Certificate shall no longer be in effect, and the Administrative
Bank shall notify the Borrowers of such incorrectness and shall calculate the
difference between the amount of the Revolving Credit Facility Commitment Fees
actually paid by the Borrowers on the basis of such incorrect Compliance
Certificate and the amount of Revolving Credit Facility Commitment Fees which
would have been due had such incorrect Compliance Certificate not been
delivered. The Administrative Bank shall notify the Borrowers of the amount of
such difference, if any, in a statement setting forth the method of calculation
of such amount (which calculation, in the absence of demonstrable error, shall
be deemed correct) and the Borrowers shall pay such amount to the Administrative
Bank for the benefit of the Banks within three (3) Business Days of such notice.
C. OTHER FEES. The Borrowers agree to pay to the
Administrative Bank such fees for serving as the Administrative Bank hereunder
in the amounts and at the times agreed to in writing between the Borrowers and
the Administrative Bank.
2.4 PREPAYMENTS AND PAYMENTS; REDUCTIONS IN REVOLVING LOAN COMMITMENTS.
A. VOLUNTARY PREPAYMENTS. The Borrowers may, upon not less
than one (1) Business Day prior written or telephonic notice confirmed in
writing to the Administrative Bank, at any time and from time to time, prepay
any Revolving Credit Loans (other than Swing Line Loans) in whole or in part in
an aggregate minimum amount of Two Hundred Fifty Thousand Dollars ($250,000.00)
and integral multiples of Twenty Five Thousand Dollars ($25,000.00) in excess of
that amount; provided however that in the event that the Borrowers prepay a
Euro-Rate Loan pursuant to this Section 2.4B on a date that is other than the
expiration date of the Interest Period applicable thereto, the Borrowers shall
compensate the Banks in accordance with the provisions of Section 2.6D hereof.
If the Borrowers have given notice of prepayment as aforesaid, the principal
amount of the Revolving Credit Loans specified in such notice shall become due
and payable on the prepayment date specified therein. All prepayments of
principal of the Revolving Credit Loans shall be accompanied by the payment of
accrued interest on the principal amount being prepaid and shall be applied to
the payment of interest before application to principal. All prepayments of the
Revolving Credit Loans shall be applied first to Base Rate Loans to the full
extent thereof and then shall be applied to Euro-Rate Loans, in each case in a
manner which minimizes the amount of any payments required to be made by the
Borrowers pursuant to Section 2.6D hereof.
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<PAGE> 43
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments of
principal, interest and fees hereunder and under the Revolving Credit Notes by
the Borrowers shall be made without defense, setoff and counterclaim and in same
day funds and delivered to the Administrative Bank not later than 11:00 A.M.
(Louisville, Kentucky time) on the date due at its office located in Louisville,
Kentucky; funds received by the Administrative Bank after that time shall be
deemed to have been paid by the Borrowers on the next succeeding Business Day.
(ii) PAYMENTS ON BUSINESS DAYS. Whenever any payment
to be made hereunder or under the Revolving Credit Notes shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day (unless no further Business Day occurs in such month, in
which case payment shall be made on the next preceding Business Day) and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Revolving Credit Notes or of the Revolving
Credit Facility Commitment Fees, as the case may be.
C. VOLUNTARY REDUCTION OF REVOLVING LOAN COMMITMENTS. The
Borrowers shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Credit Facility A Loan Commitments and/or Revolving Credit Facility B
Loan Commitments. The Borrowers shall give not less than five (5) Business Days'
prior written notice to the Administrative Bank designating the date (which
shall be a Business Day) of such termination or reduction and the amount of any
partial reduction of the Revolving Loan Commitments. Such termination or partial
reduction of the Revolving Loan Commitments shall be effective on the date
specified in the Borrowers' notice and shall reduce the Revolving Loan
Commitment of each Bank in proportion to its Revolving Credit Facility Pro Rata
Share. Any such partial reduction of the Revolving Loan Commitments shall be in
a minimum amount of One Million Dollars ($1,000,000.00) and integral multiples
of One Hundred Thousand Dollars ($100,000.00) in excess of that amount.
2.5 USE OF PROCEEDS.
A. REVOLVING CREDIT LOANS. The proceeds of the Revolving
Credit Loans shall be used by the Borrowers to fund their working capital needs,
and to fund the purchase price of acquisitions of and investments in businesses
which are described in Section 8.5 hereof and all businesses incidental to or
related to the foregoing businesses of the Borrowers therein described.
B. MARGIN REGULATIONS. No portion of the proceeds of any
Revolving Credit Loans under this Loan Agreement shall be used by the Borrowers
in any manner which might cause the making of the Revolving Credit Loans or the
application of the proceeds thereof to violate Regulation G, Regulation U,
Regulation T, or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board or to violate the securities and
Exchange Act of 1934, in each case as in effect on the date or dates of the
making of any such Revolving Credit Loan
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and such use of the proceeds thereof. If requested by the Banks, the Borrowers
shall execute and deliver to the Banks a completed Federal Reserve Form U-1.
2.6 SPECIAL PROVISIONS GOVERNING EURO-RATE LOANS. Notwithstanding any
other provision of this Loan Agreement to the contrary, the following provisions
shall govern with respect to Euro-Rate Loans as to the matters covered:
A. DETERMINATION OF EURO-RATE. As soon as practicable after
10:00 A.M. Louisville, Kentucky time on each Interest Rate Determination Date
applicable to the particular Euro-Rate Loan, the Administrative Bank shall
furnish to the Borrowers a quote of the Euro-Rate to apply to the particular
Euro-Rate Loan. The Administrative Bank will in addition confirm to the
Borrowers in writing the actual Euro-Rate prior to the funding of the particular
Euro-Rate Loan, and the determination of each Euro-Rate by the Administrative
Bank, provided that the Administrative Bank shall have determined the Euro-Rate
in good faith, shall be final, conclusive and binding upon both the Borrowers
and the Banks in the absence of manifest or demonstrable error and shall apply
to the particular Euro-Rate Loan for the applicable Interest Period.
B. INABILITY TO DETERMINE EURO-RATE. In the event that the
Administrative Bank shall have determined in good faith (which determination
shall be final and conclusive and binding upon the Borrowers), on any Interest
Rate Determination Date or Funding Date with respect to any Euro-Rate Loans,
that by reason of circumstances occurring after the date of this Loan Agreement
affecting the London interbank market, adequate and fair means do not exist for
ascertaining the interest rate applicable to such Euro-Rate Loans on the basis
provided for in the definition of Euro-Rate, the Administrative Bank shall on
such date give notice (by telecopy or by telephone confirmed in writing) to the
Borrowers and the Banks of such determination, whereupon (i) no Revolving Credit
Loans may be made as, or converted to, Euro-Rate Loans until such time as the
Administrative Bank notifies the Borrowers and the Banks that the circumstances
giving rise to such notice no longer exist; (ii) any Request for Revolving
Credit Loan or Notice of Conversion/ Continuation given by the Borrowers with
respect to the Revolving Credit Loans in respect of which such determination was
made shall be deemed to be rescinded by the Borrowers, and (iii) any Request for
Revolving Credit Loan or Notice of Conversion/Continuation given by the
Borrowers with respect to the Revolving Credit Loans in respect of which such
determination was made shall be deemed to be a request to make Base Rate Loans.
C. ILLEGALITY OR IMPRACTICABILITY OF EURO-RATE LOANS. In the
event that on any date any Bank shall have determined in good faith (which
determination shall be final and conclusive and binding upon the parties hereto
but shall be made only after consultation with the Borrowers) that the making,
maintaining or continuation of its Euro-Rate Loans (i) has become unlawful as a
result of compliance by such Bank in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Bank material hardship, as
a result of contingencies occurring after the date of this Loan Agreement which
materially and adversely affect the London
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<PAGE> 45
interbank market or the position of such Bank in that market, then such Bank
shall on that day give notice (by telecopy or by telephone confirmed in writing)
to the Borrowers and the other Bank of such determination. Thereafter, (a) the
obligation of the Banks to make Revolving Credit Loans as, or to convert
Revolving Credit Loans to, Euro-Rate Loans shall be suspended until such notice
shall be withdrawn by the particular Bank, (b) to the extent such determination
by the particular Bank relates to a Euro-Rate Loan then being requested by the
Borrowers pursuant to a Request for Revolving Credit Loan or Notice of
Conversion/Continuation, the Banks shall make such Euro-Rate Loan as (or convert
such Euro-Rate Loan to, as the case may be) a Base Rate Loan, and (c) the Banks'
obligation to maintain their outstanding Euro-Rate Loans, as the case may be
(the "Affected Loans"), shall be terminated at the earlier to occur of the
expiration of the Interest Periods then in effect with respect to the Affected
Loans or when required by law, and the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. The Borrowers shall compensate the Banks, upon written request by the
Banks (which request shall set forth the basis for requesting such amounts), for
all reasonable losses, expenses and liabilities (including, without limitation,
any interest paid by the Banks to lenders of funds borrowed by them to make or
carry the Euro-Rate Loans and any reasonable loss, expense or liability
sustained by the Banks in connection with the liquidation or re-employment of
such funds) which the Banks may sustain: (i) if for any reason (other than a
default by the Banks or the conversion of the Borrowers' Request for Revolving
Credit Loan or Notice of Conversion/Continuation from a request to make
Euro-Rate Loans into a request to make Base Rate Loans pursuant to Sections 2.6B
or 2.6C hereof) a borrowing of any Euro-Rate Loan does not occur on a date
specified therefor in a Request for Revolving Credit Loan or Notice of
Conversion/Continuation or a telephonic request for borrowing, or a conversion
to or continuation of any Euro-Rate Loan does not occur on a date specified
therefor in a Request for Revolving Credit Loan or Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment or conversion of any of the Euro-Rate Loans occurs on a
date that is not the last day of the Interest Period applicable to that
Euro-Rate Loan, (iii) if any prepayment of any of the Euro-Rate Loans is not
made on any date specified in a notice of prepayment given by the Borrowers, or
(iv) as a consequence of any other default by the Borrowers to repay the
Euro-Rate Loans when required by the terms of this Loan Agreement. The Banks
shall deliver to the Borrowers a certificate setting forth the calculation of
the compensation claimed to be due to the Banks within thirty (30) days after
the occurrence of the event giving rise to such claim for compensation, which
calculations shall be binding upon the Borrowers in the absence of manifest or
demonstrable error.
E. BOOKING OF EURO-RATE LOANS. Each Bank may make, carry or
transfer its Revolving Credit Facility Pro Rata Share of Euro-Rate Loans at, to,
or for the account of any of its branch offices or the office of an Affiliate of
such Bank; provided however that if any transfer of a Bank's Revolving Credit
Pro Rata Share of Euro-Rate Loans from the office where such Bank's Revolving
Credit Facility Pro Rata Share of Euro-Rate Loans originated shall materially
and unreasonably increase the cost to the Borrowers of such Euro-Rate Loans,
such transfer may occur only if required (i) by the introduction of or any
change (including, without limitation, any change by
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<PAGE> 46
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) to comply with any guideline or
request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not such guideline or request shall have the
force of law).
F. ASSUMPTIONS CONCERNING FUNDING OF EURO-RATE LOANS. The
calculation of all amounts payable to the Banks under this Section 2.6 and under
Section 4.1 hereof shall be made as though each Bank had actually funded each
Euro-Rate Loan through the purchase of a deposit bearing interest at the rate
obtained pursuant to clause (i) of the definition of Euro-Rate in an amount
equal to such Bank's Revolving Credit Facility Pro Rata Share of the amount of
such Euro-Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such deposit from an offshore office of such
Bank to a domestic office of such Bank in the United States of America; provided
however that each Bank may fund its Revolving Credit Facility Pro Rata Share of
the Euro-Rate Loans in any manner it sees fit and the foregoing assumptions
shall be utilized only for the purposes of calculating amounts payable under
this Section 2.6 and under Section 4.1 hereof.
G. EURO-RATE LOANS AFTER EVENT OF DEFAULT. After the
occurrence and during the continuation of an Event of Default, (i) the Borrowers
may not elect to have a Revolving Credit Loan made or maintained as, or
converted to, a Euro-Rate Loan after the expiration of any Interest Period then
in effect for that Revolving Credit Loan, (ii) subject to the provisions of
Section 2.6E hereof, any Request for Revolving Credit Loan or Notice of
Conversion/Continuation given by the Borrowers with respect to a requested
borrowing or conversion/continuation, as applicable, that has not yet occurred
shall be deemed to be rescinded by the Borrowers, and (iii) all Euro-Rate Loans
shall thereupon bear interest at the Default Rate until the Event of Default is
cured or the Revolving Credit Loans are respectfully paid in full to the Banks
and the Revolving Loan Commitments have expired or have been terminated by the
Borrowers or the Banks.
2.7 LETTERS OF CREDIT.
A. LETTERS OF CREDIT. Subject to the terms and conditions of
this Loan Agreement and in reliance upon the representations and warranties of
the Borrowers set forth herein, the Borrowers may request, in accordance with
the provisions of this Section 2.7A, that on and after the Closing Date, PNC
issue Letters of Credit for the account of the Borrowers denominated in Dollars.
Issuances of Letters of Credit shall be subject to the following limitations:
(i) The Borrowers may not request that PNC issue any
Letter of Credit if, after giving effect to such issuance, (y) the total Letter
of Credit Usage would exceed Twenty Million Dollars ($20,000,000.00), or (z) the
Total Utilization of Revolving Credit Facility A Loan Commitments would exceed
the Revolving Credit Facility A Loan Commitments, as the amount available under
such Revolving Credit Facility A Loan Commitments may be reduced from time to
time pursuant to Section 2.4C hereof.
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<PAGE> 47
(ii) In no event shall PNC issue, reissue, amend or
permit the extension of: (y) any Letter of Credit having an expiration date
later than the Revolving Credit Facility A Termination Date in effect at the
time of issuance, reissuance, amendment or extension (automatic or otherwise)
thereof; or (z) subject to the foregoing clause (y), any Letter of Credit having
an expiration date more than one year after its date of issuance; provided that
subject to the foregoing clause (y), this clause (z) shall not prevent PNC from
agreeing that a Letter of Credit will automatically be extended annually for one
or more periods each not to exceed one year if PNC does not cancel such
extension, subject to the Banks extending the Revolving Credit Facility A
Termination Date.
It shall be a condition precedent to the issuance of any Letter of
Credit in accordance with the provisions of this Section 2.7 that each condition
set forth in Sections 5.1 and 5.2A and B of this Loan Agreement shall have been
satisfied.
Immediately upon the issuance of each Letter of Credit, each Bank shall
be deemed to, and hereby agrees to, have irrevocably purchased from PNC a
participation in such Letter of Credit and drawings thereunder in an amount
equal to such Bank's Revolving Credit Facility Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
Each Letter of Credit shall provide that it shall be subject to the
Uniform Customs and Practice of Documentary Credits (1993 Revision),
International Chamber of Commerce Brochure No. 500, or any successor thereto.
Each Letter of Credit may provide that PNC may (but shall not be required to)
pay the beneficiary thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Revolving Loans or, if payment is not then
due to the beneficiary, provide for the deposit of funds in an account to secure
payment to the beneficiary and that any funds so deposited shall be paid to the
beneficiary of the Letter of Credit if conditions to such payment are satisfied
or returned to PNC for distribution to the Banks (or, if all Obligations shall
have been indefeasibly paid in full, to the Borrowers) if no payment to the
beneficiary has been made and thirty (30) days after the final date available
for drawings under the Letter of Credit has passed. Each payment or deposit of
funds by PNC as provided in this paragraph shall be treated for all purposes of
this Loan Agreement as a drawing duly honored by PNC under the related Letter of
Credit.
B. NOTICE OF ISSUANCE. Whenever a Borrower desires the
issuance of a Letter of Credit, Res-Care, as agent for such Borrower, shall
deliver to PNC an Application and Agreement for Letter of Credit in the form of
EXHIBIT Q annexed hereto no later than 10:00 A.M. (Louisville, Kentucky time) at
least ten (10) Business Days, or in each case such shorter period as may be
agreed to by PNC in any particular instance, in advance of the proposed date of
issuance. The Application and Agreement for Letter of Credit shall specify (i)
the proposed date of issuance (which shall be a Business Day under the laws of
the Commonwealth of Kentucky), (ii) the face amount of the Letter of Credit,
(iii) the expiration date of the Letter of Credit, (iv) the name and address of
the beneficiary of the Letter of Credit, and (v) a summary of the purpose and
contemplated terms of the Letter of Credit. Prior to the date of issuance of
any Letter of Credit, Res-Care shall specify a precise description of the
documents and the proposed text of any certificate to be presented by the
beneficiary under such Letter of Credit which, if presented by the beneficiary
prior to the expiration date of the
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Letter of Credit, would require PNC to make payment under the Letter of Credit;
PROVIDED that PNC, in its sole reasonable judgment, may require changes in any
such documents and certificates; PROVIDED FURTHER that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the same
Business Day (under the laws of the Commonwealth of Kentucky) that such draft is
presented if such presentation is made after 11:00 A.M. (Louisville, Kentucky
time) on such Business Day. In determining whether to pay under any Letter of
Credit, PNC shall be responsible only to determine that the documents and
certificates required to be delivered under that Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit; PROVIDED, FURTHER, nothing contained in this Section 2.7B
shall be deemed to prejudice the right of the Borrowers to recover from PNC in
respect of any amounts paid by PNC under any Letter of Credit in the event that
it is determined by a court of competent jurisdiction that the payment with
respect to such Letter of Credit by PNC constituted gross negligence or willful
misconduct on the part of PNC.
C. DELIVERY OF COPIES OF LETTERS OF CREDIT AND LETTER OF
CREDIT AMENDMENTS. PNC shall, promptly after the issuance of each Letter of
Credit, or any amendment or cancellation thereto, furnish to the Banks a copy of
such Letter of Credit or of such amendment or cancellation, as the case may be,
together with, in the case of the issuance of any Letter of Credit, the amount
of its risk participation therein, which shall be such Bank's Revolving Credit
Facility Pro Rata Share of the stated amount of such Letter of Credit.
D. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the
event of any drawing under any Letter of Credit by the beneficiary thereof, PNC
shall promptly notify the Borrowers and the Banks of such drawing, and the
Borrowers shall reimburse PNC on the date on which such drawing is honored in an
amount in same day funds equal to the amount of such drawing. The Borrowers
shall have the right to obtain a Revolving Credit Loan under either Revolving
Credit Facility A or Revolving Credit Facility B (subject to the limitations set
forth in Sections 2.lA and 2.1B hereof and in the absence of any Event of
Default hereunder) in an amount sufficient to repay in full any such drawing
honored by PNC under a Letter of Credit.
E. PAYMENT BY BANKS WITH RESPECT TO LETTERS OF CREDIT. In the
event that the Borrowers shall fail to reimburse PNC as provided in Section 2.7D
hereof in an amount equal to the amount of any drawing honored by PNC under a
Letter of Credit issued by PNC, PNC shall promptly notify each of the other
Banks of the unreimbursed amount of such drawing and of each Bank's
participation therein, which participation shall be equal to such Bank's
Revolving Credit Facility Pro Rata Share of the unreimbursed amount of such
drawing. Each Bank shall make available to PNC an amount equal to its
participation in same day funds, at the offices of PNC located at 500 West
Jefferson Street, Louisville, Kentucky not later than 1:00 P.M. (Louisville,
Kentucky time) on the Business Day (under the laws of Commonwealth of Kentucky)
after the date notified by PNC, and each such amount so made available by each
Bank will be deemed a Revolving Credit Loan under Revolving Credit Facility A
made by such Bank to the Borrowers under this Loan Agreement as of the date such
amount is so made available to PNC. In the event that any Bank fails to make
available to PNC the amount of such Bank's participation in such Letter of
Credit as provided in this Section
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<PAGE> 49
2.7E, PNC shall be entitled to recover such amount on demand from such Bank
together with interest at the customary rate set by PNC for the correction of
errors among banks for three Business Days and thereafter at the Federal Funds
Effective Rate. Nothing in this Section 2.7 shall be deemed to prejudice the
right of any Bank to recover from PNC any amounts made available by such Bank to
PNC pursuant to this Section 2.7E in the event that it is determined by a court
of competent jurisdiction that the payment made by PNC with respect to a Letter
of Credit in respect of which reimbursement was made by such Bank constituted
gross negligence or willful misconduct on the part of PNC. PNC shall distribute
to the each other Bank, to the extent that it has paid all amounts payable by it
under this Section 2.7E with respect to any Letter of Credit issued by PNC, such
Bank's Revolving Credit Facility Pro Rata Share of all payments received by PNC
from the Borrowers in reimbursement drawings honored by PNC under such Letter of
Credit, as the case may be, when such payments are received. Notwithstanding
anything to the contrary herein, each Bank shall have a direct right to
reimbursement of such amounts from the Borrowers, subject to the procedures for
reimbursing such Bank set forth in this Section 2.7.
F. COMPENSATION. The Borrowers agree to pay, without
duplication, the following amounts to PNC with respect to each such Letter of
Credit issued by PNC for the account of the Borrowers:
(i) With respect to each Letter of Credit, a letter
of credit fee (the "Letter of Credit Fee") payable to PNC for the account of the
Banks (and to be shared by the Banks pro rata in accordance with their
respective Revolving Credit Facility Pro Rata Shares) equal to the Applicable
Letter of Credit Percentage multiplied by the maximum amount available from time
to time to be drawn under such Letter of Credit; PROVIDED THAT, on each Date of
Determination, commencing with the first Date of Determination to occur after
the Closing Date, the applicable Letter of Credit Percentage in effect for the
Pricing Period commencing on such Date of Determination and continuing for the
term of the Pricing Period that begins on such Date of Determination shall be
the Applicable Letter of Credit Percentage corresponding to the Pricing Level in
effect for such Pricing Period, as follows:
<TABLE>
<CAPTION>
PRICING LEVEL APPLICABLE LETTER OF CREDIT PERCENTAGE
------------- --------------------------------------
<S> <C>
Level I 0.500%
Level II 0.750%
Level III 1.000%
Level IV 1.250%
Level V 1.375%
Level VI 1.625%
Level VII 1.875%
</TABLE>
provided, further, that during any Pricing Period during which the ratio of the
Borrowers' Debt to Capitalization exceeds 0.65 to 1.00, a surcharge of 0.25%
shall be added to the applicable Pricing Level, such surcharge to be applied at
the end of any Pricing Period during which the ratio of the
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Borrowers' Debt to Capitalization exceeds 0.65 to 1.00, retroactive to the
beginning of such Pricing Period, provided, further, that the Letter of Credit
Fee, as based on the Applicable Letter of Credit Percentage, shall be payable
quarterly in advance beginning on the date of issuance of such Letter of Credit
and quarterly in advance beginning on the date, if such should occur, of each
renewal or extension of such Letter of Credit;
(ii) With respect to drawings made under any Letter
of Credit, interest, payable in immediately available funds to PNC on demand, on
the amount paid by PNC in respect of each such drawing from the date of the
drawing through the date such amount is reimbursed by the Borrowers at a
variable rate equal to the Prime Rate;
(iii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made thereunder, documentary
and processing charges payable to PNC in accordance with PNC's standard schedule
for such charges in effect at the time of such issuance, amendment, transfer or
drawing, as the case may be;
(iv) promptly upon receipt by PNC of the amount
described in subdivisions (ii) and (iii) of this Section 2.7F, PNC shall
distribute to each Bank its Pro Rata Share of such amount; and
(v) with respect to each Letter of Credit, a letter
of credit fronting fee (the "Letter of Credit Fronting Fee") payable to PNC for
its own account, in a percentage amount agreed to in writing between PNC and
Res-Care multiplied by the aggregate face amount of Letters of Credit
outstanding during a Fiscal Quarter, payable quarterly in arrears.
(vi) The Letters of Credit issued under the Old Loan
Agreement and outstanding as of the Closing Date are deemed to be issued and
outstanding under this Loan Agreement. To the extent that fees have been paid
with respect to such Letters of Credit, no fees shall be due under this Section
2.7F for such Letters of Credit until the date on which fees would otherwise be
due for such Letters of Credit.
G. OBLIGATIONS ABSOLUTE; INDEMNIFICATION, NATURE OF PNC'S
DUTIES. Subject to the right of the Borrowers and the Banks to seek damages in
the event that a court of competent jurisdiction determines that PNC acted in
bad faith and/or committed gross negligence or willful misconduct in honoring
any draft presented under any Letter of Credit issued by PNC, the obligation of
the Borrowers to reimburse PNC for drawings made under such Letter of Credit and
the obligation of the Banks under Section 2.7E hereof to reimburse PNC in
accordance with their Pro Rata Shares for drawings made under such Letter of
Credit shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Loan Agreement under all circumstances
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of such
Letter of Credit;
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<PAGE> 51
(ii) the existence of any claim, set-off, defense or
other right which the Borrowers may have at any time against a beneficiary or
any transferee of such Letter of Credit (or any Persons for whom any such
transferee may be acting), the Administrative Bank, any Bank or any other
Person, whether in connection with this Loan Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between the Borrowers and the beneficiary for which such Letter of
Credit was procured);
(iii) any draft, demand, certificate or any other
document presented under such Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by PNC under such Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that an Event of Default or a Potential
Event of Default unde this Loan Agreement shall have occurred and be
continuing.
In addition to amounts payable as elsewhere provided in this Section 2,
the Borrower hereby agrees to protect, indemnify, pay and save PNC harmless from
and against any all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees but excluding
allocated costs of internal counsel), which PNC may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of the Letters of Credit,
other than as a result of bad faith, gross negligence or wilful misconduct of
PNC as determined by a court of competent jurisdiction, or (ii) the failure of
PNC to honor a drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority.
As between the Borrower and PNC, the Borrower assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued by PNC for the
account of the Borrowers by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, PNC shall not be
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of any such Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not
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they be in cipher; (v) for errors in interpretation of technical terms; (vi) for
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) for the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and (viii)
for any consequences arising from causes beyond the control of PNC, including,
without limitation, any act or omission, whether rightful or wrongful, of any
present or future government agency or authority. None of the above shall
affect, impair, or prevent the vesting of any of PNC's rights or powers
hereunder; PROVIDED HOWEVER, that PNC shall be responsible for any payment PNC
makes under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit in the event such payment constitutes bad faith, gross
negligence or willful misconduct of PNC as determined by a court of competent
jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by PNC under or in
connection with the Letters of Credit issued by it or the related certificates,
if taken or omitted in good faith and without bad faith, gross negligence or
willful misconduct, shall not put PNC under any resulting liability to the
Borrowers or the Banks.
Notwithstanding anything to the contrary contained in this Section 2.7,
the Borrowers shall have no obligation to indemnify PNC in respect of any
liability incurred by PNC arising out of the bad faith, gross negligence or
willful misconduct of PNC, as determined by a court of competent jurisdiction,
or out of the wrongful dishonor by PNC of proper demand for payment made under
the Letters of Credit issued by it.
H. COMPUTATION OF INTEREST. Interest payable pursuant to this
Section 2.7 shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which it accrues.
I. AMENDMENTS. The Borrowers may request that PNC enter into
one or more amendments of any Letter of Credit issued by PNC for the account of
the Borrowers by delivering to PNC an Application and Agreement For Letter of
Credit specifying (i) the proposed date of the amendment, and (ii) the requested
amendment. PNC shall be entitled to enter into amendments with respect to the
Letters of Credit issued by it; PROVIDED HOWEVER that any such amendment
extending the expiry date, changing the Letter of Credit Fee, or increasing the
stated amount of any Letter of Credit shall only be permitted if PNC would be
permitted to issue a new Letter of Credit having such an expiry date, different
Letter of Credit Fee, or stated amount under this Section 2.7 on the date of the
amendment.
J. ADDITIONAL PAYMENTS. If by reason of (i) any change in
applicable law, regulation, rule, decree or regulatory requirement or any change
in the interpretation or application by any judicial or regulatory authority of
any law, regulation, rule, decree or regulatory requirement or (ii) compliance
by PNC with any direction, request or requirement (whether or not having the
force of law) of any governmental or monetary authority including, without
limitation, Regulation D:
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(a) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit
issued by PNC; or
(b) there shall be imposed on PNC any other condition regarding this
Section 2.7 or any Letter of Credit;
and the result of the foregoing is to directly or indirectly increase the cost
to PNC of issuing, making or maintaining any Letter of Credit, or to reduce the
amount receivable in respect thereof by PNC (other than an increase in cost or
reduction in amounts receivable as consequence of any Tax, which shall be
governed by the provisions of Section 4 hereof), then and in any such case PNC
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify the Borrowers, and the
Borrowers shall pay on demand such amounts as PNC may specify to be necessary to
compensate PNC for such additional cost or reduced receipt, together with
interest on such amount from ten (10) days after the date of such demand until
payment in full thereof at a rate equal at all times to the Prime Rate. The
determination by PNC of any amount due pursuant to this Section 2.7J as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on the Borrowers.
SECTION 3
SWING LINE CREDIT FACILITY
--------------------------
Subject to the terms and conditions of this Loan Agreement, PNC hereby
agrees to make Swing Line Loans to the Borrowers under the Swing Line Credit
Facility.
3.1 SWING LINE CREDIT FACILITY. From the date hereof throughout the
Swing Line Commitment Period, and subject to the terms, conditions and other
provisions of this Agreement, PNC agrees to make Swing Line Loans to the
Borrowers from time to time in a total amount not exceeding Fifteen Million
Dollars ($15,000,000.00) in amounts of Twenty Five Thousand Dollars ($25,000)
and integral multiples of Five Thousand Dollars ($5,000) in excess thereof. The
Swing Line Credit Facility is established for the administrative convenience of
the Borrowers, PNC and the Banks. During the Swing Line Commitment Period the
Borrowers may borrow and repay advances under the Swing Line Credit Facility in
whole or in part, and reborrowing all in accordance with the terms, conditions
and other provisions of this Agreement. The making of each Swing Line Loan shall
be subject to the further provisions of this Section 3.1, and shall be subject
to all of the conditions of lending stated in Section 5.2 being fulfilled at the
time of each Swing Line Loan, and provided further that each Swing Line Loan
shall be on the terms and subject to the conditions hereinafter stated.
A. INTEREST. Swing Line Loans shall bear interest (calculated
on the basis that an entire year's interest is earned in 365 or 366 days as the
case may be) from the date of each such Swing Line Loan until repaid at an
annual rate equal to the Offered Rate. After maturity, whether by
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acceleration or scheduled maturity, until paid in full, or when and so long as
there shall exist any uncured Default, Swing Line Loans shall bear interest at
the applicable Default Rate. Interest shall be due and payable to PNC at the end
of each calendar quarter following receipt of a statement from PNC, and on the
Swing Line Commitment Termination Date.
B. PRINCIPAL. The Borrowers shall pay all principal of Swing
Line Loans on the Swing Line Commitment Termination Date.
C. SWING LINE NOTE. The obligations of the Borrowers to repay
Swing Line Loans shall be evidenced by a promissory note (the "Swing Line Note")
substantially in the form of EXHIBIT "C" attached hereto.
D. CONDITIONS FOR SWING LINE LOANS. So long as no Event of
Default or Default shall have occurred and be continuing, during the Swing Line
Commitment Period, the Borrowers may borrow, repay and reborrow under the Swing
Line Credit Facility on any Business Day, subject to the terms, conditions and
other provisions of this Agreement. The making of Swing Line Loans will be
conditioned upon receipt by PNC from the Borrowers of a Request for Swing Line
Loan by 12:00 noon Louisville, Kentucky, time on the Business Day of the
requested Swing Line Loan. Notwithstanding the foregoing, PNC may, in its sole
discretion, accept an oral or written request made on behalf of the Borrowers by
an Authorized Officer by telephone, telex, facsimile or some other form of
written electronic communication, in which case PNC shall be entitled to rely on
any such oral or written request received by PNC in good faith from anyone
reasonably believed by PNC to be an Authorized Officer. The Borrowers shall
promptly confirm any such communication by delivery of a Request for Swing Line
Loan upon request of PNC. Disbursements of, and payments of principal with
respect to Swing Line Loans may be evidenced by notations of PNC or its
electronic data processing equipment. The aggregate amount of all disbursements
of Swing Line Loans made and shown on PNC's electronic data processing
equipment, over all of the payments of principal made by the Borrowers and
recorded on PNC's electronic data processing equipment shall be PRIMA FACIE
evidence of the outstanding principal balance due under the Swing Line Note.
E. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments of
principal, interest and fees hereunder and under the Swing Line Note by the
Borrowers shall be made without defense, setoff and counterclaim and in same day
funds and delivered to PNC not later than 11:00 A.M. (Louisville, Kentucky time)
on the due date therefor at its office located in Louisville, Kentucky; funds
received by PNC after that time shall be deemed to have been paid by the
Borrowers on the next succeeding Business Day.
(ii) PAYMENTS ON BUSINESS DAYS. Whenever any payment
to be made hereunder or under the Swing Line Credit Facility shall be stated to
be due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day (unless no further Business Day occurs in such
month, in which case payment shall be made on the next preceding
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Business Day) and such extension of time shall be included in the computation
of the payment of interest hereunder or under the Swing Line Note.
F. VOLUNTARY REDUCTION OF SWING LINE LOAN COMMITMENT. The
Borrowers shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the Swing
Line Loan Commitment. The Borrowers shall give not less than five (5) Business
Days' prior written notice to PNC designating the date (which shall be a
Business Day) of such termination or reduction and the amount of any partial
reduction of the Swing Line Loan Commitment. Such termination or partial
reduction of the Swing Line Loan Commitment shall be effective on the date
specified in the Borrowers' notice. Any such partial reduction of the Swing Line
Loan Commitment shall be in a minimum amount of One Million Dollars
($1,000,000.00).
G. OTHER BANKS. Swing Line Loans will be made by PNC, in its
individual capacity. Upon a request to reduce the principal amount outstanding
Swing Line Loans from the Administrative Bank, the Banks shall make advances
based on their Revolving Credit Facility Pro Rate Shares in amounts sufficient
to effect the requested reduction in Swing Line Loans.
H. LIMITATION. The Borrowers may not request that PNC make any
Swing Line Loan if, after making such Swing Line Loan, (y) the total aggregate
principal amount of outstanding Swing Line Loans would exceed Fifteen Million
Dollars ($15,000,000.00), or (z) the Total Utilization of Revolving Facility A
Loan Commitments would exceed the Revolving Facility A Loan Commitments, as the
amount available under such Revolving Loan Commitments may be reduced from time
to time pursuant to Section 2.4C hereof.
3.2 USE OF PROCEEDS.
A. SWING LINE LOANS. The principal of the Swing Line Loans
shall be used by Borrowers for any lawful corporate purposes.
B. MARGIN REGULATIONS. No portion of the principal of the
Swing Line Loans shall be used by the Borrowers in any manner which might cause
the making of the Swing Line Loan or the application of the proceeds thereof to
violate Regulation G, Regulation U, Regulation T, or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Securities and Exchange Act of 1934, in each case as in effect
on the date or dates of each Swing Line Loan. If requested by PNC, the Borrowers
shall execute and deliver to PNC a completed Federal Reserve Form U-1.
SECTION 4
INCREASED COSTS; TAXES; CAPITAL ADEQUACY
----------------------------------------
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4.1 COMPENSATION FOR INCREASED COSTS AND TAXES. In the event that the
Banks shall determine in good faith (which determination shall, absent manifest
or demonstrable error, be final and conclusive and binding upon both the
Borrowers and the Banks) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the Closing
Date, or compliance by the Banks with any guideline, request or directive issued
or made after the date hereof by any central bank or other governmental or
quasi-governmental authority, and which has the force of law and first becomes
effective after the Closing Date:
(i) subjects any Bank (or its applicable lending
office) to any additional Covered Tax with respect to this Loan Agreement or any
of the Revolving Credit Loans or (in the case of PNC) the Swing Line Loans or
any of its other obligations hereunder, or changes the basis of taxation of
payments to such Bank (or its applicable lending office) of principal, interest,
fees or any other amount payable hereunder (but not changes in Excluded Taxes);
(ii) imposes, modifies or holds applicable any
additional reserve (including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any Bank (or its applicable
lending office) (other than any such reserve or other requirements with respect
to Euro-Rate Loans that are reflected in the definition of Euro-Rate); or
(iii) imposes any other condition on or affecting any
Bank (or its applicable lending office) or its obligations hereunder or the
London interbank market, other than with respect to Taxes;
and the result of any of the foregoing is to increase the cost to any Bank of
agreeing to make, making or maintaining Revolving Credit Loans or (in the case
of PNC) the Swing Line Loans hereunder or to reduce any amount received or
receivable by any Bank (or its applicable lending office) with respect thereto,
then, in any such case, the Borrowers shall promptly pay to such Bank, upon
demand, such additional amount or amounts (in the form of an increased rate of,
or a different method of calculating, interest as such Bank in its reasonable
discretion shall determine) as may be necessary to compensate such Bank on an
after-tax basis for any such increased cost or reduction in amounts received or
receivable hereunder; PROVIDED that any increased cost arising as a result of
any of the foregoing other than in respect of Taxes shall apply only to
Euro-Rate Loans to the extent the same bear interest by reference to the
Euro-Rate. The Bank seeking reimbursement for such amounts from the Borrowers
shall deliver to the Borrowers a written statement setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Bank under
this Section 4.1, which statement shall be conclusive and binding upon both
parties hereto absent manifest or demonstrable error.
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4.2 WITHHOLDING OF TAXES.
A. PAYMENTS TO BE FREE AND CLEAR. All sums payable by the
Borrowers under this Loan Agreement and the other Loan Instruments to or for the
benefit of any Bank or any Person who acquires any interest in the Revolving
Credit Loans pursuant to the provisions hereof shall be paid free and clear of
and (except to the extent required by law) without any deduction or withholding
on account of any Covered Tax imposed, levied, collected, withheld or assessed
by or within the United States of America or any political subdivision in or of
the United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of the Borrowers or by any federation or
organization of which the United States of America or any such jurisdiction is a
member at the time of payment.
B. GROSSING-UP OF PAYMENTS. If the Borrowers or any other
Person is required by law to make any deduction or withholding on account of any
Covered Tax from any sum paid or payable by the Borrowers to any Bank under any
of the Loan Instruments:
(i) The Borrowers shall notify such Bank of any such
requirement or any change in any such requirement as soon as the Borrowers
becomes aware of it;
(ii) The Borrowers shall pay any such Tax before the
date on which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on the Borrowers) for their own account or (if that
liability is imposed on such Bank) on behalf of and in the name of such Bank;
(iii) The sum payable by the Borrowers in respect of
which the relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of that
deduction, withholding or payment, such Bank receives on the due date and
retains (free from any liability in respect of any such deduction, withholding
or payment) a net sum equal to what it would have received and so retained had
no such deduction, withholding or payment in respect of Covered Taxes been
required or made; and
(iv) Within thirty (30) days after paying any sum
from which it is required by law to make any deduction or withholding, and
within thirty (30) days after the due date of payment of any Tax which it is
required to pay by clause (ii) above, the Borrowers shall deliver to such Bank
evidence satisfactory to such Bank of such deduction, withholding or payment and
of the remit thereof to the relevant taxing or other authority;
PROVIDED that no such additional amount shall be required to be paid to any Bank
under clause (iii) above except to the extent that any change after the date
hereof in any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Loan Agreement in
respect of payments to such Bank.
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C. TAX REFUND. If the Borrowers determine in good faith that a
reasonable basis exists for contesting a Covered Tax, the relevant Bank or Tax
Transferee, as applicable, shall cooperate with the Borrowers in challenging
such Tax at the Borrowers' expense if requested by the Borrowers (it being
understood and agreed that no Bank shall have any obligation to contest, or any
responsibility for contesting, any Tax). If any Tax Transferee or any Bank, as
applicable, receives a refund (whether by way of a direct payment or by offset
of any Covered Tax for which a payment has been made pursuant to this Section 4)
the amount of such refund (together with any interest received thereon) shall be
paid to the Borrowers to the extent payment has been made in full pursuant to
this Section 4.
4.3 CAPITAL ADEQUACY ADJUSTMENT. If any Bank shall have determined in
good faith that the adoption, effectiveness, phase-in or applicability of any
law, rule or regulation (or any provision thereof) regarding capital adequacy,
or any change therein or 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
applicable lending office) with any guideline, request or directive regarding
capital adequacy of any such governmental authority, central bank or comparable
agency, and which has the force of law and first becomes effective after the
Closing Date, has or will have the effect of reducing the rate of return on the
capital of such Bank or any corporation controlling such Bank as a consequence
of, or with reference to, such Bank's Revolving Credit Loans or Revolving Loan
Commitment or other obligations hereunder to a level below that which such Bank
or such controlling corporation would have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Bank or such controlling corporation with
regard to capital adequacy), then from time to time, within ten (10) Business
Days after demand by such Bank, the Borrowers shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such controlling
corporation on an after-tax basis for such reduction as and when incurred. Each
Bank, upon determining in good faith that any additional amounts will be payable
pursuant to this Section 4.3, will give prompt written notice thereof to the
Borrowers, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrowers' obligations to pay additional amounts
under this Section 4.3.
4.4 BANKS' OBLIGATION TO MITIGATE. Each Bank agrees that, as promptly
as practicable after the officer of such Bank responsible for administering the
Revolving Credit Loans under this Loan Agreement becomes aware of the occurrence
of an event or the existence of a condition that would entitle such Bank to
receive payments under Section 2.6 or Section 4 hereof, it will, to the extent
not inconsistent with its internal policies, use reasonable efforts (i) to make,
fund or maintain its Revolving Credit Loans through another lending office of
such Bank, or (ii) take such other reasonable measures if as a result thereof
the additional amounts which would otherwise be required to be paid to such Bank
pursuant to Section 2.6 or Section 4 hereof would be materially reduced and if,
as determined by such Bank in its sole discretion, the making, funding or
maintaining of such Revolving Credit Loans through such other lending office or
in accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Revolving Credit Loans or the interests of such
Bank; PROVIDED that such Bank will not be obligated to utilize such other
lending office
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pursuant to this Section 4.4 unless the Borrowers agree to pay all expenses
incurred by such Bank in utilizing such other lending office. A certificate as
to the amount of any such expenses payable by the Borrowers pursuant to this
Section 4.4 (setting forth in reasonable detail the basis for requesting such
amount) submitted by any Bank to the Borrowers shall be conclusive absent
manifest or demonstrable error.
SECTION 5
CLOSING CONDITIONS
------------------
The establishment of the Revolving Credit Facilities by the Banks in
favor of the Borrowers, the obtaining of Revolving Credit Loans and/or Letters
of Credit by the Borrowers thereunder, and the making of the Swing Line Loans by
PNC to the Borrowers are subject to the satisfaction of all of the following
conditions:
5.1 INITIAL CLOSING CONDITIONS. The obligation of the Banks to make the
initial Revolving Credit Loan to the Borrowers and to make the Swing Line Loans
to the Borrowers are subject to the condition that, in addition to the
satisfaction of the conditions precedent specified in Section 5.2 hereof and,
with respect to the Swing Line Loans, the conditions precedent specified in
Section 3.lD hereof, as of the Closing Date, the Banks shall have received the
following from the Borrowers, dated the Closing Date or such other date as shall
be acceptable to the Banks:
A. LOAN AGREEMENT. This Loan Agreement, duly executed and
delivered by the Borrowers.
B. REVOLVING CREDIT NOTES. The Revolving Credit A Notes and
the Revolving Credit B Notes, duly executed and delivered by the Borrowers.
C. SWING LINE NOTE. The Swing Line Note, duly executed and
delivered by the Borrowers.
D. AMENDMENT TO SECURITY AGREEMENTS. The Amendment to Security
Agreements, duly and respectively executed and delivered by each of the Existing
Borrowers, reaffirming the grant to the Banks a security interest in all of the
Accounts and General Intangibles of the Borrowers to secure all Obligations of
the Borrowers to the Banks.
E. SECURITY AGREEMENTS. The Security Agreements, duly and
respectively executed and delivered by each of Res-Care Washington, Inc. and
Res-Care Alabama, Inc., as New Borrowers, granting to the Banks a security
interest in all of the Accounts and General Intangibles of such New Borrowers to
secure all Obligations of the New Borrowers to the Banks.
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F. UCC-1 FINANCING STATEMENTS. UCC-1 financing statements,
duly and respectively executed and delivered by each of the New Borrowers,
which, upon filing in the proper UCC filing offices, will perfect the Banks'
security interest in all of the Accounts and General Intangibles of the New
Borrowers.
G. UCC-3 FINANCING STATEMENTS. UCC-3 financing statements, as
required by the Administrative Bank in order to properly reflect name changes of
Existing Borrowers and/or locations of collateral in new filing jurisdictions,
duly and respectively executed and delivered by the appropriate Existing
Borrowers.
H. STOCK PLEDGE AGREEMENT (RES-CARE). The Stock Pledge
Agreement (Res-Care), duly executed and delivered by Res-Care, together with the
stock certificates evidencing all of the issued and outstanding shares of common
stock of the Consolidated Subsidiaries owned by Res-Care and executed blank
stock powers appended thereto.
I. STOCK PLEDGE AGREEMENT (ALTERNATIVE YOUTH SERVICES). The
Stock Pledge Agreement (Alternative Youth Services), duly executed and delivered
by Alternative Youth Services, Inc., together with the stock certificates
evidencing all of the issued and outstanding shares of common stock of the
Consolidated Subsidiaries owned by Alternative Youth Services, Inc. and executed
blank stock powers appended thereto.
J. STOCK PLEDGE AGREEMENT (COMMUNITY ALTERNATIVES MISSOURI).
The Stock Pledge Agreement (Community Alternatives Missouri), duly executed and
delivered by Community Alternatives Missouri, Inc., together with the stock
certificates evidencing all of the issued and outstanding shares of common stock
of the Consolidated Subsidiaries owned by Community Alternatives Missouri, Inc.
and executed blank stock powers appended thereto.
K. STOCK PLEDGE AGREEMENT (BALD EAGLE ENTERPRISES). The Stock
Pledge Agreement (Bald Eagle Enterprises), duly executed and delivered by Bald
Eagle Enterprises, Inc., together with the stock certificates evidencing all of
the issued and outstanding shares of common stock of the Consolidated
Subsidiaries owned by Bald Eagle Enterprises, Inc. and executed blank stock
powers appended thereto.
L. STOCK PLEDGE AGREEMENT (NORMAL LIFE). The Stock Pledge
Agreement (Normal Life), duly executed and delivered by Normal Life together
with the stock certificates evidencing all of the issued and outstanding shares
of common stock of the Consolidated Subsidiaries owned by Normal Life and
executed blank stock powers appended thereto.
M. OPINION OF COUNSEL. A written opinion of counsel on behalf
of the Borrowers and the Consolidated Subsidiaries, in form and substance
satisfactory to the Banks.
N. CERTIFICATE OF SECRETARY OF RES-CARE. A Certificate of the
Secretary or Assistant Secretary of Res-Care (i) certifying as to the
authenticity, completeness and accuracy of, and attaching
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copies of, (a) the Articles of Incorporation and By-Laws of Res-Care, and (b)
Resolutions of the Board of Directors of Res-Care authorizing Res-Care's
execution, delivery and performance of the Loan Instruments to which Res-Care is
a party, and (ii) certifying the names and true signatures of the officers of
Res-Care authorized to execute and deliver the Loan Instruments to which
Res-Care is party, on behalf of Res-Care.
O. CERTIFICATE OF SECRETARY OF EACH EXISTING BORROWER OTHER
THAN RES-CARE. A Certificate of the Secretary or Assistant Secretary of each
Existing Borrower other than Res-Care (i) certifying (a) that there have been no
changes to the Certificate or Articles or Bylaws of such Existing Borrower since
the date of the Third Amendment to Loan Documents or, in the event of changes,
attaching copies of, the amended Articles of Incorporation and By-Laws of such
Existing Borrower, and (b) Resolutions of the Board of Directors of such
Existing Borrower authorizing the execution, delivery and performance of the
Loan Instruments to which the Existing Borrower is a party by such Existing
Borrower, and (ii) certifying the names and true signatures of the officers of
such Existing Borrower authorized to execute and deliver the Loan Instruments to
which such Existing Borrower is a party on behalf of such Existing Borrower.
P. CERTIFICATE OF SECRETARY OF EACH NEW BORROWER. A
Certificate of the Secretary or Assistant Secretary of each New Borrower (i)
certifying as to the authenticity, completeness and accuracy of, and attaching
copies of, (a) the Certificate or Articles of Incorporation and By-Laws of such
New Borrower, and (b) Resolutions of the Board of Directors of such New Borrower
authorizing the execution, delivery and performance of the Loan Instruments to
which the New Borrower is a party by such New Borrower, and (ii) certifying the
names and true signatures of the officers of such New Borrower authorized to
execute and deliver the Loan Instruments to which such New Borrower is a party
on behalf of such New Borrower.
Q. COMPLIANCE CERTIFICATE. A Compliance Certificate in the
form of EXHIBIT G hereto, completed by Res-Care, on behalf of itself and the
other Borrowers, and executed by the President or Financial Officer of Res-Care,
for itself and as agent for the other the Borrowers, certifying as to the
accuracy of the representations and warranties of the Borrowers set forth in
this Loan Agreement as of the date hereof.
R. OTHER DOCUMENTS. Such other documents as the Banks may
reasonably request.
5.2 CONDITIONS TO ALL REVOLVING CREDIT LOANS, LETTERS OF CREDIT AND
SWING LINE LOANS. The obligation of the Banks to make each Revolving Credit Loan
on each Funding Date and to issue, through PNC, each Letter of Credit, and the
obligation of PNC to make each Swing Line Loan pursuant to the Swing Line Credit
Facility, is in each case subject to the following additional conditions
precedent:
A. REQUEST FOR REVOLVING CREDIT LOAN. The Administrative Bank
shall have received with respect to each Revolving Credit Loan, in accordance
with the provisions of Section
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2.lD of this Loan Agreement, an originally executed Request For Revolving Credit
Loan, in each case signed by an Authorized Officer of the Borrowers.
B . LETTERS OF CREDIT. The Administrative Bank shall have
received with respect to each Letter of Credit, in accordance with the
provisions of Section 2.7B of this Loan Agreement, an originally executed
Application and Agreement For Letter of Credit relating to such Letter of
Credit, in each case signed by an Authorized Officer of the Borrowers.
C. REQUEST FOR SWING LINE LOAN. PNC shall have received with
respect to each Swing Line Loan, in accordance with the provisions of Section
3.1D of this Loan Agreement, an originally executed Request For Swing Line Loan,
in each case signed by an Authorized Officer of the Borrowers.
D. GENERAL CONDITIONS. As of the Funding Date of any Revolving
Credit Loan, the date of issuance or extension of the stated expiration date of
any Letter of Credit, or the date of any Swing Line Loan:
(i) The representations and warranties contained
herein shall be true and correct in all material respects on and as of that date
to the same extent as though made on and as of that date;
(ii) No event shall have occurred and be continuing
or would result from the funding of the Revolving Credit Loan contemplated by
such Request For Revolving Credit Loan, the issuance or extension of the stated
expiration date of such Letter of Credit contemplated by such Application and
Agreement For Letter of Credit, or the funding of the Swing Line Loan
contemplated by such Request for Swing Line Loan which would constitute an Event
of Default;
(iii) The Borrowers shall have performed in all
material respects all agreements and satisfied all conditions which this Loan
Agreement and the other Loan Instruments provide shall be performed by it on or
before such date;
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain the
Banks from making that Revolving Credit Loan or issuing, through PNC, that
Letter of Credit or PNC from making such Swing Line Loan; and
(v) There shall not be pending or, to the knowledge
of the Borrowers threatened, any action, suit, proceeding or arbitration or, to
the knowledge of the Borrowers, any governmental investigation pending or
threatened, against or affecting the Borrowers or any property of the Borrowers,
which has not been disclosed by the Borrowers pursuant to Sections 7.3 and 7.6
hereof prior to (a) the making of the last preceding Revolving Credit Loan (or,
in the case of the initial Revolving Credit Loan made hereunder, prior to the
execution of this Loan Agreement), (b) the issuing of the most recent Letter of
Credit (or in the case of the initial Letter of Credit issued hereunder, prior
to the execution of this Loan Agreement) or the most recent extension of the
stated
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maturity date of any Letter of Credit, or (c) the making of the last Swing Line
Loan (or in the case of the initial Swing Line Loan hereunder, prior to the
execution of this Loan Agreement). Further, there shall have occurred no
development not so disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, which, in either event, in the
opinion of the Banks, could reasonably be expected to have a material adverse
effect on the financial condition of the Borrowers. No injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of this Loan Agreement or the making of the Revolving Credit Loans,
the issuing or extension of the respective stated expiration dates of the
Letters of Credit, and/or the making of the Swing Line Loans hereunder.
E. GENERAL CONDITIONS. As of the Funding Date of any Revolving Credit
Loan, the date, the date of issuance or extension of the stated expiration date
of any Letter of Credit, or the date of any Swing Line Loan, the Administrative
Bank shall have received such other documentation as it may reasonably request.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrowers represent and warrant to the Banks as follows, which
representations and warranties shall be deemed to be continuing representations
and warranties until the Revolving Credit Notes, the Swing Line Note, and the
other obligations have been respectively paid in full to the Banks, the
Revolving Credit Facilities have been terminated by the Banks or the Borrowers,
the Swing Line Credit Facility has been terminated by PNC or the Borrowers, and
the Letter of Credit Subfacility has been terminated by PNC or the Borrowers,
and shall survive the execution and delivery of this Loan Agreement:
6.1 ORGANIZATION, STANDING, ETC, OF THE BORROWERS. Res-Care is a
corporation duly organized and validly existing under the laws of the
Commonwealth of Kentucky. The Consolidated Subsidiaries are each corporations
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of the Borrowers has all requisite power and authority
to own and operate its properties, to carry on its businesses as now conducted
and proposed to be conducted, and to execute and deliver this Loan Agreement and
the other Loan Instruments to which it is a party and to carry out the terms
hereof and thereof. The Borrowers have delivered to the Administrative Bank a
true and complete copy of their Articles of Incorporation and Certificates of
Incorporation (as applicable) and By-Laws as in effect on the date hereof.
6.2 QUALIFICATION. SCHEDULE 6.13 hereto sets forth a list of the
Consolidated Subsidiaries and locations in which those Consolidated Subsidiaries
are qualified to do business. No Borrower is presently required to be qualified
to transact business as a foreign corporation in any jurisdiction other
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than the states identified in SCHEDULE 6.13 hereto, and except where failure to
so qualify would not have a material adverse effect upon the business or
operations of such Borrower.
6.3 USE OF PROCEEDS. The Borrowers' uses of the proceeds of the
Revolving Credit Loans and the Swing Line Loans and the uses of the Letters of
Credit are and will continue to be legal and proper corporate uses duly
authorized by the Board of Directors of each of the Borrowers, and such uses are
consistent with all applicable laws and statutes as in effect as of the date
hereof.
6.4 INTELLECTUAL PROPERTY. To the best of the Borrowers' knowledge, the
Borrowers own or possess adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade names,
franchises, consents, authorizations and service marks and rights with respect
to the foregoing necessary for the conduct of their businesses as presently
conducted and as proposed to be conducted, without any known conflict with the
rights of others.
6.5 DISCLOSURE; SOLVENCY. Neither this Loan Agreement nor any other
document furnished to the Banks by or on behalf of the Borrowers in connection
with the Revolving Credit Facilities and/or the Swing Line Loans and/or the
other Obligations taken as a whole contains any statement of any material fact
which is untrue or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact known to
the Borrowers which materially adversely affects or in the future will (so far
as the Borrowers can now foresee) materially adversely affect the business,
operations, affairs or condition of the Borrowers or any of their properties
which has not been set forth in this Loan Agreement or in the other documents
furnished to the Banks by or on behalf of the Borrowers in connection with the
Revolving Credit Facilities, the Swing Line Loans and the other Obligations.
Res-Care and its Subsidiaries, on a consolidated basis in accordance with GAAP,
are currently solvent; and neither the issuance and delivery of the Revolving
Credit Notes to the Banks and the Swing Line Note to PNC, nor the obtaining of
the Letters of Credit, nor the performance of the transactions contemplated
hereunder or thereunder, will render Res-Care and its Subsidiaries, on a
consolidated basis in accordance with GAAP, insolvent, inadequately capitalized
to undertake the transactions contemplated hereunder or to undertake the
businesses in which they are presently engaged or about to engage or render the
any of Borrowers unable to pay their debts as they become due; the Borrowers are
not contemplating either the filing of a petition by them or the commencement of
a case by them under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of their property; and the Borrowers have
no knowledge of any Person contemplating the filing of any such petition or
commencement of any such case against the Borrowers.
6.6 TAX RETURNS AND PAYMENTS. To the best of the Borrowers' knowledge
after due inquiry, the Borrowers have filed all tax returns required by law to
be filed by them and have paid all taxes, assessments and other governmental
charges levied upon their properties, assets, income and franchises, other than
those not yet delinquent and those, not substantial in aggregate amount, being
or about to be contested as provided in Section 7.2A hereof. The charges,
accruals and reserves on the books of the Borrowers in respect of their taxes
are adequate in the opinion of the Borrowers. The Borrowers know of no material
unpaid assessment for additional taxes or of any basis therefor.
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6.7 INDEBTEDNESS, ETC. As of the date of this Loan Agreement, and
without regard to the transactions contemplated hereunder, there is no
outstanding Indebtedness of the Borrowers in respect of borrowed money, capital
leases or the deferred purchase price of property, existing guaranties issued by
the Borrowers or existing liens and security interests encumbering the assets of
the Borrowers other than as disclosed in the most recent annual and monthly
financial statements of the Borrowers delivered to the Banks or on SCHEDULE 6.7
attached hereto and made a part hereof.
6.8 TITLE TO PROPERTIES; LIENS; LEASES. The Borrowers have good and
marketable title to all of their properties and assets and none of such
properties or assets is subject to any mortgage, pledge, lien, security
interest, charge or encumbrance other than as described in Section 8.4 hereof.
The Borrowers enjoy quiet possession under all leases to which they are party as
lessee, and all of such leases are to the best knowledge of the Borrowers, after
due inquiry, validly existing and in full force and effect, and, to the best
knowledge of the Borrowers, after due inquiry, neither the lessor nor the
Borrowers as lessee is in default under any of such leases.
6.9 LITIGATION, ETC. Except for items disclosed in the Res-Care Annual
Report on Form 10-K for Fiscal Year 1997 and items disclosed in the Res-Care
Quarterly Report on Form 10-Q for the Fiscal Quarter ended March 31, 1998, and
(with respect to disclosures required to be made subsequent to the Closing Date)
items that may be subsequently disclosed pursuant to Form 10-Ks and Form 10-Qs
for periods ended after March 31, 1998, there is no action, proceeding or
investigation pending or, to the best knowledge of the Borrowers, threatened (or
any basis therefor known to the Borrowers) (i) which questions the validity of
this Loan Agreement, the Revolving Credit Notes, the Swing Line Note, the Stock
Pledge Agreements or the other Loan Instruments or any action taken or to be
taken pursuant hereto or thereto, (ii) which is not fully covered by insurance
other than any applicable deductible, or (iii) which might result, either in any
case or in the aggregate, in any material adverse change in the businesses,
operations, affairs or condition of the Borrowers or in any of their properties
or assets or in any material liability on the part of the Borrowers. Except for
items disclosed in the Res-Care Annual Report on Form 10-K for Fiscal Year 1997
and items disclosed in the Res-Care Quarterly Reports on Form 10-Q for the
Fiscal Quarter ended March 31, 1998, and (with respect to disclosures required
to be made subsequent to the Closing Date) items that may be subsequently
disclosed pursuant to Form 10-Ks and Form 10-Qs for periods ended after March
31, 1998, the Borrowers have provided the Administrative Bank with a list of all
pending actions, proceedings and investigations involving (y) claims against the
Borrowers seeking damages in excess of $1,000,000 in any individual case or in
excess of $2,500,000 in the aggregate which is not fully covered by insurance
other than any applicable deductible, and (z) claims of the Borrowers for
payment, reimbursement or under contracts in excess of $1,000,000 or in excess
of $2,500,000 in the aggregate.
6.10 AUTHORIZATION; COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The
execution, delivery and performance of this Loan Agreement, the Revolving Credit
Notes, the Swing Line Note, and the other Loan Instruments to which the
Borrowers are party have been duly authorized by all necessary corporate action
on the part of the Borrowers, will not result in any violation of or be in
conflict with or constitute a default under any term of the Articles of
Incorporation or Certificate of Incorporation,
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as applicable, or By-Laws of the Borrowers or of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
the Borrowers, or result in the creation of any mortgage, lien, charge or
encumbrance upon any of the properties or assets of the Borrowers pursuant to
any such term. The Borrowers are not in violation of any term of their Articles
of Incorporation or Certificate of Incorporation, as applicable, or By-Laws, or
of any material term of any agreement or instrument to which they are party, or,
to the Borrowers' best knowledge, of any judgment, decree, order, statute, rule
or governmental regulation applicable to the Borrowers. Without limiting the
generality of the foregoing, to the best knowledge of the Borrowers, the
Borrowers are in compliance in all material respects with all federal and state
laws and all rules, regulations and administrative orders of all state and local
commissions or authorities which are applicable to the Borrowers or to the
operation of their businesses.
6.11 ENFORCEABILITY. This Loan Agreement, the Revolving Credit Notes,
the Swing Line Note, the Stock Pledge Agreements and the other Loan Instruments
to which the Borrowers are party constitute legal, valid and binding obligations
of the Borrowers, enforceable against the Borrowers in accordance with their
respective terms, except to the extent the enforceability hereof and thereof may
be limited by applicable laws affecting creditors, rights generally and by
equitable principles.
6.12 GOVERNMENTAL CONSENT. To the best knowledge of the Borrowers, the
Borrowers are not required to obtain any order, consent, approval or
authorization of, and is not required to make any declaration or filing with,
any governmental authority in connection with the execution and delivery of this
Loan Agreement, the Revolving Credit Notes, the Swing Line Note, the Stock
Pledge Agreements or the other Loan Instruments to which the Borrowers are
party.
6.13 CONSOLIDATED SUBSIDIARIES. All of Res-Care's Consolidated
Subsidiaries as of the date of this Loan Agreement are listed on SCHEDULE 6.13
annexed hereto.
6.14. YEAR 2000. The Borrowers have reviewed the areas within their
businesses and operations which could be adversely affected by, and have
developed or are using reasonable business efforts to develop a program to
address on a timely basis, the risk that certain computer applications used by
the Borrowers or any of their respective material customers, suppliers or
vendors (other than Governmental Authorities and the Banks) may be unable to
recognize and perform properly date-sensitive functions involving dates prior
to, on or after December 31, 1999 (the "Year 2000 Problem"). The Year 2000
Problem, as herein defined, will not result in any set of circumstances or
events which has or could reasonably be expected to have any material adverse
effect upon (i) the validity or enforceability of this Agreement or any other
Loan Instrument, (ii) the business, properties, assets, financial condition,
results of operations or prospect of the Borrowers taken as a whole, (iii) the
ability of the Borrowers taken as a whole to pay or perform their Indebtedness,
or (iv) the ability of Administrative Bank, to the extent permitted, to enforce
its legal rights pursuant to this Agreement or any other Loan Instrument.
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SECTION 7
AFFIRMATIVE COVENANTS
---------------------
The Borrowers hereby covenant and agree that until the Revolving Credit
Notes and the other Obligations have been respectively paid in full to the
Banks, the Swing Line Note has been paid in full to PNC, the Revolving Credit
Facilities have been terminated by the Banks or the Borrowers, the Swing Line
Credit Facility has been terminated by PNC or the Borrowers, and the Letter of
Credit Subfacility has been terminated by PNC or the Borrowers, the Borrowers
will perform and observe all of the following provisions:
7.1 MAINTENANCE OF PROPERTIES, ETC. The Borrowers will, insofar as they
are not prevented by causes beyond their control, maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in the businesses of the Borrowers. The Borrowers will maintain or cause
to be maintained, with financially sound and reputable insurers, insurance with
respect to their properties and businesses against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, in such types and amounts
as are customarily carried under similar circumstances by such other
corporations. The Banks have no basis to conclude that the Borrowers' current
insurance, including their current worker compensation insurance, is deficient
in any material respect.
7.2 MONEY OBLIGATIONS, PAYMENT OF TAXES, ERISA, ETC.
A. GOVERNMENTAL OBLIGATIONS. The Borrowers will pay promptly
as they become due and payable all taxes, assessments and other governmental
charges levied upon it or their income or upon any of their properties or assets
or in respect of their franchises, businesses, income or profits, or upon any
part thereof, as well as all lawful claims of any kind (including claims for
labor, materials and supplies) which, if unpaid, might by law become a lien or a
charge upon their property before any of the same become delinquent; provided
that no such tax, assessment or charge need be paid if being contested in good
faith and by appropriate proceedings promptly initiated and diligently conducted
by the Borrowers and if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor. The Borrowers will
satisfy or cause to be satisfied the minimum annual funding standard within the
meaning of ERISA for any employee benefit plan established or maintained by the
Borrowers which is subject to ERISA, and the Borrowers will not permit any tax
or penalty to be incurred by it as a result of any failure to satisfy any such
minimum funding requirement or as a result of any violation of the provisions of
Section 4975 of the Code, or of any regulation issued thereunder.
B. OTHER OBLIGATIONS. The Borrowers will pay in full all their
other debts, obligations and liabilities allowed hereunder before the same
become delinquent, unless the same are being contested in good faith by the
Borrowers, the Borrowers have established adequate reserves for the payment of
the same in accordance with GAAP, and the contesting thereof does not involve
the risk of forfeiture or loss of any of the Borrowers' assets.
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7.3 FINANCIAL STATEMENTS AND REPORTS. The Borrowers will furnish to the
Administrative Bank:
(i) As soon as reasonably possible, and in any event within
one hundred twenty (120) days after the end of each Fiscal Year of the
Borrowers, the audited consolidated balance sheets of the Borrowers as at the
end of such Fiscal Year, and the related audited consolidated statements of
income, retained earnings and cash flows of the Borrowers for such Fiscal Year,
setting forth in comparative form the figures for the previous Fiscal Year, all
in reasonable detail and certified to be true, accurate and complete in all
material respects by the Financial Officer of Res-Care, for itself and as agent
for the other Borrowers, and accompanied by the opinion thereon of independent
certified public accountants selected by the Borrowers and reasonably acceptable
to the Administrative Bank, which opinion shall be in a form generally
recognized as unqualified and shall state that such financial statements have
been prepared in accordance with GAAP applied on a basis consistent with that of
the preceding Fiscal Year, as applicable (except for such changes, if any, as
shall be specified and approved by such accountants in such opinion) and that
the audit by such accountants in connection with such financial statements has
been made in accordance with GAAP relating to auditing;
(ii) As soon as reasonably possible, and in any event within
thirty (30) days after the end of each month, an unaudited consolidated balance
sheet of Res-Care and its Consolidated Subsidiaries as at the end of such month,
and related unaudited divisional and consolidated statements of income, and cash
flows of Res-Care and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP for such month, compared to budget, all in reasonable
detail, prepared in accordance with GAAP consistently applied and certified to
be true, accurate and complete in all material respects by the Financial Officer
of Res-Care, for itself and as agent for the other Borrowers;
(iii) Within five Business Days after filing such documents
with the Securities Exchange Commission, copies of 10-Ks, 10-Qs and 8-Ks.
(iv) Together with the delivery to the Administrative Bank of
the financial statements referred to in subparts (i) and (ii) above (AND,
THEREFORE, AT LEAST ONCE EACH MONTH), Res-Care, for itself and as agent for the
other Borrowers, shall deliver to the Administrative Bank a Compliance
Certificate (a) stating that the Authorized Officer of Res-Care, for itself and
as agent for the other Borrowers, signing the Compliance Certificate has
reviewed the relevant terms of this Loan Agreement, the Revolving Credit Notes,
the Swing Line Note, the Stock Pledge Agreements and the other Loan Instruments
to which the Borrowers are party, and such Authorized Officer has no actual
knowledge (after making such inquiry as is consistent with the scope of his or
her duties) of any event or condition which constitutes an Event of Default
hereunder, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Borrowers have taken
or are taking or propose to take with respect thereto, (b) demonstrating in
reasonable detail compliance at the end of such accounting period with Sections
8.6 through 8.10 of this Loan Agreement to the extent applicable to such period,
and (c) demonstrating to the reasonable satisfaction of the Administrative Bank
that any Permitted Business Combination has not, on a pro-forma basis (and
giving credit where appropriate for the previous twelve month Cash Flow from
Operations and
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EBIT from the entity acquired, adjusted in the discretion of the Administrative
Bank) violated any of the financial covenants set forth in Sections 8.6 through
8.10 hereof.
(v) Forthwith upon any Authorized Officer of Res-Care
obtaining knowledge of, or receiving notice of any claim of or action taken with
respect to, any condition or event which constitutes a Potential Default or an
Event of Default hereunder, a certificate specifying the nature and period of
existence thereof and what action the Borrowers have taken or are taking or
propose to take with respect thereto;
(vi) Promptly upon receipt thereof, copies of any reports
(including management letters, if any) submitted to the Borrowers by independent
certified public accountants in connection with the examination of the financial
statements of the Borrowers made by such accountants;
(vii) With reasonable promptness after the preparation
thereof, a 3 year strategic plan containing budgets and forecasts of the
Borrowers; and
(viii) With reasonable promptness, such other information and
data with respect to the Borrowers as from time to time may be reasonably
requested by the Banks.
The Banks shall keep confidential all of the financial statements and
other information furnished to the Banks pursuant to this Loan Agreement, except
that each Bank shall have the right to furnish copies of such financial
statements and other information furnished to such Bank to financial
institutions which purchase interests in the Revolving Credit Facilities
pursuant to Section 12 hereof and governmental agencies having jurisdiction over
such Bank and which request copies of such financial statements and/or other
information. Such Bank will promptly inform the Borrowers each time such Bank is
obligated or required to deliver any such financial statements and other
information to any such governmental agency having jurisdiction over such Bank.
7.4 FINANCIAL RECORDS; INSPECTION.
A. SYSTEM OF ACCOUNTANTS. The Borrowers will maintain a system
of accounting established and administered in accordance with GAAP consistently
applied, and will set aside on their books all such proper reserves as shall be
required by GAAP.
B. ACCESS TO BOOKS AND RECORDS. The Borrowers will permit any
authorized representative designated by any Bank to inspect any of the
properties of the Borrowers, including their books of account (and to make
copies thereof and to take extracts therefrom), and to discuss their affairs,
finances and accounts with their officers and with their independent
accountants, all at such reasonable times and as often as may be reasonably
requested. Such inspection shall be for the information and benefit of the Banks
and, unless otherwise publicly available, any information obtained thereby or
otherwise pursuant thereto shall not be divulged to others except in connection
with the enforcement of the rights of the Banks upon the occurrence of an Event
of Default hereunder or to financial institutions which purchase interests in
the Revolving Credit Facilities pursuant to
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Section 12 hereof and except as may be required by law or by any governmental
agency having jurisdiction over any Bank. Each Bank will promptly inform the
Borrowers each time such Bank is obligated or required to deliver any such
information to any governmental agency having jurisdiction over such Bank.
7.5 PERMITS, CERTIFICATES, LEASES, LICENSES. The Borrowers will obtain,
maintain and comply at all times with all permits, certificates, licenses,
approvals, authorizations, leases and other instruments necessary or appropriate
for the conduct of their businesses as presently conducted or as contemplated to
be conducted in the future.
7.6 NOTICE. The Borrowers will notify the Banks in writing, within no
more than ten (10) calendar days (and without the benefit of any grace period
afforded in any provision of this Loan Agreement or the other Loan Instruments)
after any Authorized Officer of Res-Care learns of any of the following: (i) the
existence or occurrence of any Event of Default under this Loan Agreement, (ii)
that any representation or warranty made herein or in any other Loan Instrument
shall, for any reason, not be or shall cease in any material respect to be true
and complete and not misleading, (iii) the institution of, or adverse
determination in, any arbitration proceeding, including, without limitation, an
audit or examination by the Internal Revenue Service, involving the Borrowers
and describing the nature thereof, what happened with respect thereto and what
steps are being taken by the Borrowers with respect thereto, or (iv) the
institution of, or adverse determination in, any litigation involving a claim
against the Borrowers in excess of the sum of Five Hundred Thousand Dollars
($500,000.00) not covered by applicable insurance, describing the nature
thereof, what happened with respect thereto, and what steps are being taken by
the Borrowers with respect thereto.
7.7 PAYMENT OF OBLIGATIONS. The Borrowers will pay the Revolving Credit
Notes, the Swing Line Note and the other Obligations timely in accordance with
their respective terms in legal tender of the United States of America. All
payments on the Revolving Credit Notes, the Swing Line Note and the other
Obligations shall be made to the Banks, respectively, in "good and collected
funds," at the principal office of the Administrative Bank or PNC, as
applicable, not later than 11:00 A.M., Louisville, Kentucky time, on the date
due; funds received by the Administrative Bank or PNC, as applicable, after that
hour shall be deemed to have been received on the next following Business Day.
7.8 ENVIRONMENTAL MATTERS. The Borrowers hereby warrant that, to the
best of their knowledge, the Borrowers' assets are now and so long as the
Revolving Credit Facilities, the Swing Line Loans, and the Letters of Credit
continue in effect will remain materially free of contamination by hazardous,
dangerous, contaminating, noxious or unsafe materials. Subject to the right of
the Borrowers to contest any alleged violation of any environmental law,
regulation and requirement in good faith and with due diligence, and provided
that no such contesting will result in the loss or forfeiture of any assets of
the Borrowers or otherwise have a material adverse effect on the financial
condition of the Borrowers, the Borrowers further covenant to comply with all
applicable environmental laws, regulations and requirements, and the Borrowers
covenant and agree to remedy any violation of any environmental law, regulation
and requirement, promptly upon the Borrowers' learning of such violation. The
Borrowers further hereby agree to indemnify and hold the Banks
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harmless from any expense, loss, claim, suit or fee arising out of any such
contamination or noncompliance or the Borrowers' breach of the provisions of
this Section 7.8.
7.9 CONSOLIDATED SUBSIDIARIES AND INTERESTS IN PERSONS THAT ARE NOT
CONSOLIDATED SUBSIDIARIES. Res-Care shall promptly notify the Administrative
Bank in writing of each new Consolidated Subsidiary hereafter created or
acquired by Res-Care or a Consolidated Subsidiary and each acquisition by
Res-Care or a Consolidated Subsidiary of interests in a Person that will not be
treated as a Consolidated Subsidiary of Res-Care subsequent to such acquisition
of interests.
Unless the requirement to do so is waived in writing by the
Administrative Bank (and, in the case of a waiver with respect to any New
Consolidated Subsidiary that contributes 5% or more of the Borrowers' Cash Flow
from Operations, consented to in writing by the Majority Banks), within nine (9)
days after the advance of any moneys by Res-Care or another Borrower to or for
the benefit of a New Consolidated Subsidiary, Res-Care (i) shall cause each such
new Consolidated Subsidiary of Res-Care to execute and deliver to the
Administrative Bank for the benefit of the Banks (a) an Assumption Agreement in
the form of EXHIBIT M hereto, (b) a Security Agreement in the form of EXHIBIT K
hereto, (c) UCC-1 financing statement(s) in the form of EXHIBIT L hereto for
filing in the Commonwealth of Kentucky, the state of Delaware and the state(s)
in which the Consolidated Subsidiary has assets or operations, (d) a borrowing
resolution of the Consolidated Subsidiary and (e) copies of the Articles of
Incorporation or Certificate of Incorporation, as applicable, and Bylaws of the
Consolidated Subsidiary, all in form and substance satisfactory to the
Administrative Bank, and (ii) shall pledge all of the issued and outstanding
shares of stock of such Consolidated Subsidiary owned by Res-Care or a
Consolidated Subsidiary of Res-Care to the Administrative Bank for the benefit
of the Banks by (a) executing and delivering an Amendment to Stock Pledge
Agreement, in the form of EXHIBIT N hereto and (b) delivering the share
certificates in the Consolidated Subsidiary to the Administrative Bank. At such
times as may be required by the Administrative Bank, Res-Care shall cause any
new Consolidated Subsidiary and the existing Consolidated Subsidiaries to
execute amendment(s) to this Agreement, the Revolving Credit Notes, the Swing
Line Note, to reflect the addition of the new Consolidated Subsidiaries. The
Borrowers shall cause all existing and future Consolidated Subsidiaries to
observe and perform the covenants set forth in Sections 7 and 8 of this Loan
Agreement.
Unless the requirement to do so is waived in writing by the
Administrative Bank, within nine (9) days after the advance of any moneys by
Res-Care or another Borrower to or for the benefit of a Person that will not
treated be as a Consolidated Subsidiary of Res-Care subsequent to an acquisition
of interests in such Person, Res-Care shall cause itself or the Consolidated
Subsidiary acquiring the interests, as applicable, to pledge all of the issued
and outstanding shares of stock, partnership interests, limited partnership
interests, limited liability company interests or other interests of such Person
acquired by Res-Care or such Consolidated Subsidiary to the Administrative Bank,
for the benefit of the Banks, by (a) executing and delivering a Stock Pledge
Agreement, in the form of EXHIBIT O hereto and (b) (1), if the acquired
interests are represented by certificated shares, by delivering the share
certificates to the Administrative Bank or (2), if the acquired interests are
not represented by
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certificated shares, by causing the security interest of the
Administrative Bank to be recorded in the records of the partnership, limited
partnership or limited liability company, as applicable.
SECTION 8
NEGATIVE COVENANTS
------------------
The Borrowers hereby covenant and agree that until the Revolving Credit
Notes and the other Obligations have been respectively paid in full to the
Banks, the Swing Line Note has been paid in full to PNC, the Revolving Credit
Facilities have been terminated by the Banks or the Borrowers, the Swing Line
Credit Facility has been terminated by the Administrative Bank or the Borrowers,
and the Letter of Credit Subfacility has been terminated by PNC or the
Borrowers, the Borrowers will perform and observe all of the following
provisions:
8.1 MERGERS AND OTHER EXTRAORDINARY EVENTS. The Borrowers will not,
without the prior written consent of the Majority Banks (as defined in Section
15.11 hereof) (in every specified instance:
(i) Except for Permitted Business Combinations that meet the
requirements of Section 8.11 hereof, be or become a party to any consolidation,
reorganization (including, without limitation, the types referred to in Section
368 of the Internal Revenue Code of 1986, as amended) merger or
recapitalization; or
(ii) Sell, lease, assign, transfer or dispose of or suffer the
non-insurable loss of ten percent (10%) or more of the fair market value of
their properties or assets on a consolidated basis in accordance with GAAP in
any period of twelve (12) consecutive months, other than if such assets or
properties are replaced promptly by assets or properties of comparable utility
to the Borrowers.
8.2 INDEBTEDNESS, ETC. The Borrowers will not, without the prior
written consent of the Majority Banks, directly or indirectly, create, incur,
assume, guarantee, agree to purchase or repurchase or provide funds in respect
of, or otherwise become liable with respect to any Indebtedness other than:
(i) The Revolving Credit Facilities;
(ii) The Swing Line Credit Facility;
(iii) The Capital Leases in the aggregate amount not
exceeding Two Million Five Hundred Thousand Dollars
($2,500,000);
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(iv) Current liabilities of the Borrowers (other than
for borrowed money) incurred in the ordinary course of their
businesses and in accordance with customary trade practices;
(v) Purchase money indebtedness incurred or assumed
by the Borrowers in connection with acquisition of tangible
and intangible personal and real property (acquired in a
Permitted Business Combination that meets the requirements of
Section 8.11 hereof or in circumstances other than in
connection with a Permitted Business Combination), to the
extent that such tangible and intangible personal and real
property are to be used by the Borrowers in businesses
permitted under Section 8.5 hereof, in an aggregate principal
amount not to exceed Seven Million Five Hundred Thousand
Dollars ($7,500,000);
(vi) Unsubordinated promissory notes or other
evidence of unsubordinated indebtedness issued by one or more
of the Borrowers as all or part of the Business Combination
Consideration in connection with a Permitted Business
Combination that meets the requirements of Section 8.11 hereof
in an aggregate principal amount not to exceed Twelve Million
Five Hundred Thousand Dollars ($12,500,000);
(vii) Promissory notes or other evidence of
indebtedness that has been subordinated to the Obligations
owed to the Banks, in a form acceptable to the Administrative
Bank, issued by one or more of the Borrowers as all or part of
the Business Combination Consideration in connection with a
Permitted Business Combination that meets the requirements of
Section 8.11 hereof;
(viii) The advances, loans and guarantees permitted
under Section 8.12 hereof;
(ix) Convertible Subordinated Notes that meet all of
the following criteria:
(a) The principal amount of such Convertible
Subordinated Notes may not exceed $115,000,000; and
(b) Neither the Convertible Subordinated Notes nor
the Indenture may be amended in any manner that could
reasonably be expected to be adverse to the interests
of the Banks without prior written consent of the
Administrative Bank; and
(x) the Convertible Subordinated Notes (Normal Life)
that meet the following criteria:
(a) The principal amount of such Convertible
Subordinated Notes (Normal Life) may not, in the
aggregate, exceed $22,000,000; and
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(b) The Convertible Subordinated Notes (Normal Life)
may not be amended in any manner that could
reasonably be expected to be adverse to the interests
of the Banks without prior written consent of the
Administrative Bank.
8.3 USE OF ASSETS. The Borrowers will not use, or cause or permit the
use of, any of their assets in any manner prohibited by law, governmental
regulations or applicable insurance policies.
8.4 MORTGAGES, LIENS, ENCUMBRANCES, SECURITY INTERESTS, ETC. The
Borrowers will not, without the prior written consent of the Majority Banks (as
defined in Section 15.11 hereof), directly or indirectly create, incur, assume
or permit to continue in existence any mortgage, lien, charge or encumbrance on,
or security interest in, or pledge or deposit of, or conditional sale or other
title retention agreement (including any lease which in accordance with GAAP
would constitute Indebtedness) with respect to, any property or asset now owned
or hereafter acquired by the Borrowers, provided that the restrictions in this
Section 8.4 shall not prohibit:
(i) Liens and security interests granted to the Banks pursuant
to the Security Agreements;
(ii) Liens for taxes, assessments or governmental charges the
payment of which is not at the time required for the reasons set forth by the
proviso to the first sentence of Section 7.2A;
(iii) Statutory liens of landlords and liens of carriers,
warehousemen, mechanics, contractors and materialmen incurred in the ordinary
course of business for sums not yet due or being contested in good faith and by
appropriate proceedings promptly initiated and diligently conducted, if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(iv) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other types of social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) for sums not yet due or being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(v) Liens, charges, encumbrances and priority claims which (a)
are incidental to the conduct of the businesses of the Borrowers and the
ownership of their properties and assets, (b) were not incurred in connection
with the borrowing of money or the obtaining of advances of credit, and (c) do
not in the aggregate materially detract from the value of the property of the
Borrowers or materially impair the use thereof in the operation of their
businesses;
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(vi) Liens created under operating leases and capital leases
entered into or assumed by the Borrowers in the ordinary course of business for
fair and adequate consideration, to the extent such liens only secure the
performance by the Borrowers of their obligations under such operating leases
and capital leases;
(vii) Subject to the provisions of Section 8.11 hereof,
purchase money security interests; provided that each such purchase money
security interest shall only encumber the assets acquired by the Borrowers with
the proceeds of the Indebtedness secured by such purchase money security
interest, and each such purchase money security interest shall not secure more
than 100% of the Indebtedness incurred by the Borrowers in connection with the
acquisition of the assets encumbered by such purchase money security interest;
provided further that the aggregate amount of all purchase money indebtedness
incurred under Section 8.2(v) hereof and the aggregate amount of all purchase
money indebtedness incurred under this Section 8.4(vii) shall not exceed Seven
Million Five Hundred Thousand Dollars ($7,500,000); and
(viii) Mortgage liens and security interests assumed by the
Borrowers in connection with any Permitted Business Combination of the type
described in Section 8.11 hereof which are hereafter made by the Borrowers, or
which the Borrowers otherwise takes subject to as part of any such Permitted
Business Combination, provided that no such lien or security interest shall
secure Indebtedness in an amount which exceeds the fair market value of the
assets acquired by the Borrowers in connection with any such Permitted Business
Combination;
(ix) The existing liens and security interests identified on
SCHEDULE 8.4 annexed hereto; and
(x) Mortgage liens and security interests securing
indebtedness of a Subsidiary to a Borrower.
Further, no Borrowers will grant to any Person other than the Administrative
Bank, for the benefit of the Banks, a negative pledge on such Borrower's assets.
8.5 NATURE OF BUSINESSES. The Borrowers will not, without the prior
written consent of the Majority Banks (as defined in Section 15.11 hereof) in
every specified instance, engage in any businesses other than (i) providing
residential, vocational and other training, education, support and related
programs and services (including habilitation, rehabilitation and required
medical services) to (a) persons with developmental and other neurological
disabilities (including individuals with mental retardation, dual diagnosis,
acquired brain injury and other special needs), and (b) at-risk youth, juveniles
and others (including individuals who are adjudicated or court-referred), in a
variety of settings, ranging from single placements to large congregate
settings, some of which may be secured, or pursuant to management or operating
agreements with other parties, and (ii) all businesses incidental thereto.
8.6 MINIMUM NET WORTH. Res-Care and its Subsidiaries on a consolidated
basis in accordance with GAAP will not permit their Net Worth to be less than
the sum of (a)$100,000,000,
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plus (b) 75% of Net Income (if positive), on an ongoing basis for each fiscal
month beginning with the month ended June 30, 1998, plus (c) the aggregate
amount of all increases, if any, in its capital accounts resulting from the
issuance of capital stock of Res-Care or conversion of debt into capital stock
of Res-Care or other securities properly classified as equity in accordance with
generally accepted accounting principles, or from the sale or other disposition
of treasury shares, from the date of this Agreement through the date of
determination, plus (d) without duplication, any addition to Net Worth resulting
from the issuance by Res-Care of its capital stock to pay in whole or in part
the purchase price of any entity or assets acquired by the Borrowers during the
month then ended.
For purposes of this Section 8.6, any net losses hereafter incurred by
the Borrowers will not reduce the amount of the minimum Net Worth required to be
maintained by the Borrowers pursuant to this Section 8.6.
8.7 RATIO OF INDEBTEDNESS TO CASH FLOW FROM OPERATIONS. The Borrowers
shall not permit, for any rolling twelve (12) month period, the ratio of
Indebtedness as of the end of such rolling twelve (12) month period to Cash Flow
from Operations for such rolling twelve (12) month period to exceed 4.5 to 1.0.
8.8 RATIO OF SENIOR INDEBTEDNESS TO CASH FLOW FROM OPERATIONS. The
Borrowers shall not permit, for any rolling twelve (12) month period, the ratio
of Senior Indebtedness as of the end of such rolling twelve (12) month period to
Cash Flow from Operations for such rolling twelve (12) month period to exceed
3.0 to 1.0.
8.9 RATIO OF DEBT TO CAPITALIZATION. The Borrowers shall not permit,
for any calendar month, the ratio of Debt to Capitalization as of the end of
such calendar month to exceed the applicable ratios set forth below:
<TABLE>
<CAPTION>
PERIOD APPLICABLE RATIO
------ ----------------
<S> <C>
6/30/98-9/30/99 .70 to 1.0
10/01/99-9/30/00 .60 to 1.0
10/01/00 and thereafter .55 to 1.0
</TABLE>
8.10 FIXED CHARGE COVERAGE RATIO. The Borrowers shall not permit, for
any rolling twelve (12) month period, the Fixed Charge Coverage Ratio for such
rolling twelve (12) month period to be less than 1.75 to 1.0.
8.11 PERMITTED BUSINESS COMBINATIONS. Res-Care and its Subsidiaries
shall not, without the prior written consent of the Majority Banks (as defined
in Section 15.11 hereof), engage in any Business Combination unless all of the
following conditions are met, in which case the proposed Business Combination
shall be deemed a "Permitted Business Combination":
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(i) the Business Combination shall be with a Person
that is engaged in a business of the type described in Section 8.5 hereof;
(ii) the Business Combination shall be accomplished
through consensual (non-hostile) agreement with the seller;
(iii) the Business Combination shall result in
Res-Care being the surviving entity such that it reports the results of the
acquisition on a consolidated basis in accordance with GAAP or the equity basis
of accounting in accordance with GAAP;
(iv) the Business Combination Consideration
associated with the proposed Business Combination plus the aggregate Business
Combination Consideration associated with Permitted Business Combinations that
have been completed in the current Loan Year does not exceed One Hundred Million
Dollars ($100,000,000);
(v) the Business Combination Consideration associated
with the proposed Business Combination does not exceed Fifteen Million Dollars
($15,000,000); and
(vi) if the Business Combination involves acquisition
of interests in a Person that will not treated be as a Consolidated Subsidiary
of Res-Care subsequent to the Business Combination, the aggregate amount of
Business Combination Consideration associated with all such Business
Combinations in any Fiscal Year cannot exceed Three Million Dollars
($3,000,000).
8.12 LOANS, ADVANCES AND GUARANTIES BY BORROWERS. Without the prior
written consent of the Majority Banks (as defined in Section 15.11 hereof), no
Borrower will make loans or capital contributions, or guaranty the repayment of
obligations of another Person, or otherwise become liable in any respect to the
obligations and liabilities of another Person in an aggregate amount exceeding
One Million Five Hundred Thousand Dollars ($1,500,000.00), except for the
following:
(i) loans and advances from one Borrower to a Subsidiary; and
(ii) endorsement of instruments or items of payment in the
ordinary course of business.
Provided, any Borrower may, without violating the provisions of this Section
8.12, assume or guarantee minimum working capital obligations of owners and/or
lessees of Facilities which such Borrower has been engaged to manage under duly
executed management agreements, but only to the extent such Borrower has been
granted a perfected security interest in or otherwise has valid and effective
control over the accounts receivable arising in respect of services furnished to
the occupants of such Facilities and to the extent that all such assumptions and
guarantees by Borrowers in the aggregate do not exceed Seven Million Five
Hundred Thousand Dollars ($7,500,000). The Borrowers agree that all existing
security interests granted to any Borrower in the accounts receivable of owners
of Facilities which such Borrower manages, to the extent the same have been
previously assigned to PNC, shall continue to be assigned to the Administrative
Bank to secure the payment of the
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Obligations. The Borrowers further covenant and agree that, (a) to the extent
any Borrower in its sole discretion elects to hereafter acquire perfected
security interests in the accounts receivable of owners of Facilities which such
Borrower now or hereafter manages, such Borrower will assign of record all such
security interests to the Administrative Bank to secure the payment of the
obligations, and (b) such Borrower will assign of record to the Administrative
Bank, to secure the payment of the Obligations, the perfected security interest
in the accounts receivable of Salem Village MRDD, Inc. granted to the Borrower.
Notwithstanding the foregoing, the Borrowers may, without violating the
provisions of Section 8.12, (i) deliver a guaranty in favor of Bank One, in the
maximum principal amount of $2,861,000 with respect to reimbursement obligations
of Normal Life and its subsidiaries in favor of Bank One for letters of credit
issued by it (the "Bank One Guaranty"), and (ii) deliver a guaranty in favor of
Charles W. Hames and Robbie Lesa Hames with respect to obligations of RF
Holdings, LLC in the maximum principal amount of $1,500,000 (the "Hames
Guaranty"). Neither the Bank One Guaranty nor the Hames Guaranty shall be
considered "Indebtedness" for purposes of calculating "Indebtedness" for use in
connection with Pricing Levels and financial covenants herein.
8.13 PAYMENT OF DIVIDENDS. Res-Care shall not pay any dividends to its
shareholders if an Event of Default has occurred and is continuing or if the
payment of dividends would result in the Borrowers ceasing to be in compliance
with the financial covenants set forth in Sections 8.6 through 8.10 of this Loan
Agreement.
8.14 INTEREST RATE AGREEMENTS. The Borrowers will not, and will not
permit any Subsidiary to, enter into any Interest Rate Agreement unless (i) such
Interest Rate Agreement is intended to fix or establish a maximum interest rate
in respect of Indebtedness with a notional amount not in excess of the Revolving
Loan Commitments and is embodied in a standard ISDA form of agreement which is
acceptable to the Administrative Bank with respect to any intercreditor issues,
(ii) the counterparty is a lender or another financial institution reasonably
acceptable to the Administrative Bank, (iii) the counterparty calculates its
credit exposure in a reasonable and customary manner and (iv) the Borrower
promptly provides a true and complete copy of such Interest Rate Agreement to
the Administrative Bank, on behalf of itself and the Banks. To the extent that
an Interest Rate Agreement meets the foregoing criteria, the Borrowers may enter
into such Interest Rate Agreement and grant a security interest in the
Collateral to counterparty on a pari-passu basis with that granted to the
Administrative Bank on behalf of the Banks. At or following the effective date
of any such Interest Rate Agreement, the Administrative Bank may, upon written
notification to the Borrowers and the Banks and such counterparty, designate the
credit exposure of such counterparty under such Interest Rate Agreement as an
obligation entitled to share, pari passu with the Obligations, in respect to the
benefits provided by the collateral under the Security Agreements, in accordance
with the applicable provisions of the Security Agreements, and if the
Administrative Bank so designates such credit exposure, the applicable Interest
Rate Agreement of such counterparty shall be considered a "Designated Interest
Rate Agreement".
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Section 8.15 REDEMPTION OF CONVERTIBLE SUBORDINATED NOTES. Without
prior written consent of the Majority Banks, the Convertible Subordinated Notes
may not be redeemed unless (i) Res-Care has entered into a standby underwriting
agreement with a nationally-recognized underwriter acceptable to Administrative
Bank, which underwriting agreement provides for the issuance of additional
common or preferred shares or indebtedness subordinated to the Obligations in an
amount sufficient to redeem the Convertible Subordinated Notes or (ii)
Res-Care's common stock has traded at a price at least equal to or exceeding
140% of the then applicable conversion price for the Convertible Subordinated
Notes for at least 20 consecutive trading days ending within five days prior to
the notice of redemption.
SECTION 9
EVENTS OF DEFAULT; ACCELERATION
-------------------------------
The following events shall constitute Events of Default under this Loan
Agreement:
(i) The failure by the Borrowers to pay any interest on and/or
any principal of any Revolving Credit Note or any fees due under this Loan
Agreement when the same becomes due and payable or within five (5) days
thereafter; or
(ii) The failure by the Borrowers to reimburse PNC upon demand
for any draft honored by PNC under any Letter of Credit now or hereafter issued
by PNC for the account of the Borrowers; or
(iii) The failure by the Borrowers to pay any interest on
and/or any principal of the Swing Line Note when the same becomes due and
payable or within five (5) days thereafter; or
(iv) The failure by the Borrowers to pay any rent or other
amounts under any Capital Lease when due or within any grace period provided
therein for the payment of the same; or
(v) The failure by the Borrowers to perform or observe any of
the provisions of Sections 8.2, 8.3, 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof, and
such default continues for thirty (30) days after written notice of such default
shall have been delivered to the Borrowers; or
(vi) The failure by the Borrowers to perform or observe any of
the provisions of Sections 7.9, 8.1, 8.4, 8.11, 8.12, 8.13, 8.14 or 8.15; or
(vii) The Borrowers shall default in the performance of or
compliance with any covenant, obligation or provision contained in this Loan
Agreement (other than those referred to above in this Section 9), and any such
default shall not have been remedied (a) within (1) thirty (30) days after
written notice of such default shall have been delivered to the Borrowers or (2)
where such default would have a material adverse effect upon the ability of the
Borrowers taken as a whole to pay
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or perform their Indebtedness or upon the ability of the Administrative Bank to
enforce the rights of the Banks under this Loan Agreement and the Loan
Instruments, thirty (30) days from the date on which the Borrowers shall have
other notice of such default, or (b) if such default cannot be cured within such
thirty (30) day period, within sixty (60) days after written notice of such
default shall have been delivered to the Borrowers, provided that the Borrowers
commence to cure the particular default within such thirty (30) day period and
prosecutes the cure to completion with due diligence within such sixty (60) day
period; or
(viii) If any material representation or warranty made in
writing by or on behalf of the Borrowers herein or pursuant hereto or otherwise
in connection with the Revolving Credit Facilities, the Swing Line Credit
Facility, and/or the Letter of Credit Subfacility shall have been materially
false or misleading or incorrect when made and the Authorized Officer of
Res-Care on behalf of itself and the other Borrowers knew or should have known
of the falsity, misleading nature of or incorrectness of such representation or
warranty when it was made, and the Borrowers fail to cause such representation
or warranty to cease to be materially false, misleading or incorrect within
thirty (30) days after written notice of such materially false, misleading or
incorrect representation or warranty shall have been delivered to the Borrowers;
or
(ix) The failure of the Borrowers to pay any of their other
Indebtedness, not otherwise referred to in this Section 9, and which in the
aggregate exceeds Fifty Thousand Dollars ($50,000.00) to any one Person, when
due or within any grace period afforded the Borrowers for paying the same, or
the acceleration of the maturity of any such Indebtedness by the holder thereof,
other than any such Indebtedness with respect to which the Borrowers are
contesting in good faith the validity, amount and/or the Borrowers' liability
therefor and for which adequate reserves have been established on the books of
the Borrowers in accordance with GAAP; or
(x) If the Borrowers shall discontinue their businesses
(except for the discontinuation of business by a Borrower whose business is
combined with that of one or more other Borrowers, whether by merger, transfer
of assets, etc.) or shall make an assignment for the benefit of creditors, or
shall fail generally to pay their debts as such debts become due, or shall apply
for or consent to the appointment of or taking possession by a trustee, receiver
or liquidator (or other similar official) of any substantial part of their
property, or shall commence a case or have an order for relief entered against
it under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if the Borrowers or the shareholders of the Borrowers shall take any action
in furtherance of the dissolution or liquidation of the Borrowers; or
(xi) If, within thirty (30) days after the commencement
against the Borrowers of a case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, such case shall have been consented to or shall
not have been dismissed or all orders or proceedings thereunder affecting the
operations or the businesses of the Borrowers shall not have been stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if
within sixty (60) days after the entry of a decree appointing a trustee,
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receiver or liquidator (or other similar official) of any substantial part of
the property of the Borrowers, such appointment shall not have been vacated; or
(xii) If a final uninsured judgment shall be rendered against
any of the Borrowers which causes the Borrowers to be in breach of any of the
covenants set forth in Sections 8.6 through 8.10 hereof and (i) if, prior to the
availability of any execution thereon, such judgment shall not have been
discharged or execution thereof shall not have been stayed pending appeal, or
if, after the expiration of any such stay, such judgment shall not have been
discharged, or (ii) the Borrowers shall not have established adequate reserves
on their books in respect of such final uninsurable judgment or judgments; or
(xiii) In the event Res-Care experiences a Change in Control
without the prior written consent of the Banks.
Upon the occurrence of any Event of Default described in clauses (x) or (xi) of
this Section 9 with respect to the Borrowers, the unpaid principal balance of
each of the Revolving Credit Notes, the Swing Line Note and the other
Obligations, together with all accrued interest thereon, shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Borrowers. Upon the occurrence of any other Event of Default referred to in this
Section 9, the Banks may at any time at their option, by written notice to the
Borrowers, declare the unpaid principal balance of and all accrued and unpaid
interest on each of the Revolving Credit Notes, the Swing Line Note and the
other Obligations to be immediately due and payable in full to the Banks, as
applicable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby waived by the Borrowers.
SECTION 10
REMEDIES UPON DEFAULT, ETC.
---------------------------
10.1 DEFAULTS. Upon the occurrence and during the continuation of any
Event of Default, the Banks may proceed to protect and enforce their rights by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in the Revolving
Credit Notes or the Swing Line Note or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any right,
power or remedy granted hereby or thereby or by law or pursuant to the other
Loan Instruments. In case of a default in the payment of any principal of or
interest on the Revolving Credit Notes, the Swing Line Note and/or the other
obligations, or upon acceleration thereof, the Borrowers will pay to the Banks
such further amount as shall be sufficient to cover the reasonable costs and
expenses of collection thereof, including (to the extent permitted by law),
without limitation, reasonable attorneys' fees, expenses and disbursements.
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10.2 OFFSET. If any Event of Default shall occur and be continuing and
regardless of whether or not the Banks have accelerated the maturity date of the
Revolving Credit Notes, the Swing Line Note and/or the other Obligations, each
Bank shall have the right then, or at any time thereafter, to set off against
any and all deposit balances and other sums and Indebtedness and other property
then held or owned by such Bank to or for the credit or account of the
Borrowers, all without notice to or demand upon the Borrowers or any other
Person, all such notices and demands being hereby expressly waived by the
Borrowers.
10.3 RIGHTS CUMULATIVE. All of the rights and remedies of the Banks
upon the occurrence of an Event of Default hereunder shall be cumulative to the
greatest extent permitted by law, and shall be in addition to all those rights
and remedies afforded the Banks at law or in equity.
10.4 PAYMENT OF COSTS AND EXPENSES. All of the reasonable costs,
expenses, damages and liabilities, including, without limitation, all reasonable
attorneys' fees, incurred by and imposed upon any Bank with respect to, in
connection with the enforcement of this Loan Agreement or any other Loan
Instrument or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Loan Agreement or any other Loan
Instrument, whether in bankruptcy or receivership proceedings or otherwise, and
in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Instrument or in connection with any
foreclosure, collection or bankruptcy proceedings, in connection with or as a
result of any action taken or omitted to be taken pursuant to this Loan
Agreement, the Revolving Credit Notes, the Swing Line Note or the other Loan
Instruments shall be paid by, and shall be the sole responsibility of, the
Borrowers.
SECTION 11
THE ADMINISTRATIVE BANK
-----------------------
11.1 APPOINTMENT. Each Bank hereby irrevocably designates, appoints and
authorizes PNC to act as the Administrative Bank under this Loan Agreement and
to execute and deliver or accept on behalf of each of the Banks the other Loan
Instruments. Each Bank hereby irrevocably authorizes, and each holder of any
Revolving Credit Note by the acceptance of such Revolving Credit Note shall be
deemed irrevocably to authorize, the Administrative Bank to take such action on
behalf of such Bank and such holder under the provisions of this Loan Agreement
and the other Loan Instruments and any other instruments and agreements referred
to herein, and to exercise such powers and to perform such duties hereunder as
are specifically delegated to or required of the Administrative Bank by the
terms hereof, together with such powers as are reasonably incidental thereto.
PNC agrees to act as the Administrative Bank to the extent provided in this Loan
Agreement.
11.2 DELEGATION OF DUTIES. The Administrative Bank may perform any of
its duties hereunder by or through agents or employees (PROVIDED such delegation
is exercised with reasonable care and does not constitute a relinquishment of
its duties as Administrative Bank) and, subject to
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Sections 11.5, 11.6 and 11.7 hereof, shall be entitled to engage and pay for the
advice or services of any attorneys, accountants or other experts concerning all
matters pertaining to its duties hereunder and to rely upon any advice so
obtained, PROVIDED reasonable care is used in the selection of the foregoing
experts.
11.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION. The
Administrative Bank shall have no duties or responsibilities except those
expressly set forth in this Loan Agreement and the other Loan Instruments and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Loan Agreement or shall otherwise exist. The
duties of the Administrative Bank shall be mechanical and administrative in
nature and shall include the duty to provide to each Bank an executed original
of such Bank's Revolving Credit Note and an executed original of this Loan
Agreement and a copy of the other Loan Instruments; the Administrative Bank
shall not have by reason of this Loan Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this Loan Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Bank any obligations in respect of this Loan Agreement except
as expressly set forth herein. Each Bank expressly acknowledges (i) that the
Administrative Bank has not made any representations or warranties to it and
that no act which the Administrative Bank hereafter takes, including any review
of the affairs of the Borrowers, shall be deemed to constitute any
representation or warranty by the Administrative Bank to any Bank; (ii) that it
has made and will continue to make, without reliance upon the Administrative
Bank, its own independent investigation of the financial condition and affairs
and its own appraisal of the creditworthiness of the Borrowers in connection
with this Loan Agreement and the making and continuance of the Revolving Credit
Loans hereunder; and (iii) except as expressly provided herein, that the
Administrative Bank shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Revolving Credit Loan or at any time or times thereafter.
11.4 ACTIONS IN DISCRETION OF THE ADMINISTRATIVE BANK: INSTRUCTIONS
FROM THE BANKS. The Administrative Bank agrees, upon the written request of the
Majority Banks, to take or refrain from taking any action of the type specified
as being within the Administrative Bank's rights, powers or discretion herein;
PROVIDED that the Administrative Bank shall not be required to take any action
which exposes the Administrative Bank to legal liability or which is contrary to
this Loan Agreement or any other Loan Instrument or applicable law. In the
absence of a request by the Majority Banks, the Administrative Bank shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Loan Agreement specifically requires the consent of the Majority
Banks. Any action taken or failure to act pursuant to such instructions or
discretion shall be binding on the Banks, subject to the provisions of Section
11.6 hereof. Subject to the provisions of Section 11.6 hereof, no Bank shall
have any right of action whatsoever against the Administrative Bank as a result
of the Administrative Bank acting or refraining from acting hereunder in
accordance with the instructions of the Banks or, in the absence of such
instructions, in the absolute discretion of the Administrative Bank.
11.5 REIMBURSEMENT AND INDEMNIFICATION OF THE ADMINISTRATIVE BANK AND
THE BANKS BY THE BORROWERS. The Borrowers unconditionally agree to pay or
reimburse the Administrative Bank and
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hold the Administrative Bank harmless against liability for the payment of all
reasonable and necessary out-of-pocket costs, expenses and disbursements for
which reimbursement is customarily obtained, including fees and expenses of
counsel and consultants incurred by the Administrative Bank (a) in connection
with the preparation, negotiation, printing, execution, administration,
interpretation and performance of this Loan Agreement and the other Loan
Instruments and (b) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof. The Borrowers unconditionally agree to pay or
reimburse the Administrative Bank and hold each Bank harmless against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Bank and/or any
Bank, in its capacity as such, in any way relating to or arising out of this
Loan Agreement or any other Loan Instrument or any action taken or omitted by
the Administrative Bank and/or any Bank hereunder or thereunder; PROVIDED that
the Borrowers shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from the bad faith, gross
negligence or willful misconduct of the Administrative Bank or any Bank, or (B)
if the Borrowers were not given notice of the subject claim and the opportunity
to participate in the defense thereof, at its expense, or (C) if the same
results from a compromise or settlement agreement entered into without the
consent of the Borrowers, which consent shall not be unreasonably withheld.
11.6 EXCULPATORY PROVISIONS. Neither the Administrative Bank nor any of
its directors, officers, employees, agents or affiliates shall (i) be liable to
any Bank for any action taken or omitted to be taken by it or them hereunder, or
in connection herewith including pursuant to any other Loan Instruments, unless
caused by its or their own gross negligence or willful misconduct, (ii) be
responsible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this Loan
Agreement or any other Loan Instrument or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Loan Agreement or any other Loan Instrument, or
(iii) be under any obligation to any of the Banks to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Borrowers, or the financial condition of
the Borrowers, or the existence or possible existence of any Event of Default or
Potential Default under the Loan Instruments. Neither the Administrative Bank
nor any Bank nor any of their respective directors, officers, employees, agents,
attorneys or affiliates shall be liable to the Borrowers or any other Person for
consequential damages resulting from any breach of contract, tort or other wrong
in connection with the negotiation, documentation or administration of the Loan
Instruments or the collection of the obligations.
11.7 REIMBURSEMENT AND INDEMNIFICATION OF THE ADMINISTRATIVE BANK BY
THE BANKS. Each Bank agrees to reimburse and indemnify the Administrative Bank
(to the extent not reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so) in proportion to its Revolving Credit
Facility Pro Rata Share from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Bank, in its capacity as such, in any way
relating to or arising out of this Loan Agreement or any other Loan Instrument
or
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any action taken or omitted by the Administrative Bank hereunder or thereunder,
PROVIDED that no such reimbursement shall be required with respect to expenses
incurred by the Administrative Bank during the time period through the Closing
Date and no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (i) if the same relates to or arises out of the
Administrative Bank's gross negligence or willful misconduct, or (ii) if such
Bank was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense, or (iii) if the same results
from a compromise and settlement agreement entered into without the consent of
the Bank, which consent shall not be unreasonably withheld.
11.8 RELIANCE BY THE ADMINISTRATIVE BANK. The Administrative Bank shall
be entitled to rely upon any writing, telegram, telex or teletype message,
facsimile, resolution, notice, consent, certificate, letter, cablegram,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel and
other professional advisers selected by the Administrative Bank. The
Administrative Bank shall be fully justified in failing or refusing to take any
action hereunder unless it shall first be indemnified to its satisfaction by the
Banks in accordance with their respective Revolving Credit Facility Pro Rata
Shares against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
11.9 NOTICE OF DEFAULT. The Administrative Bank shall not be deemed to
have knowledge or notice of the occurrence of any Potential Default or Event of
Default unless the Administrative Bank has received written notice from a Bank
or the Borrowers referring to this Loan Agreement, specifically describing such
Potential Default or Event of Default.
11.10 THE BANKS IN THEIR INDIVIDUAL CAPACITIES. With respect to its
Revolving Loan Commitment, the Administrative Bank shall have the same rights
and powers hereunder as any other Bank and may exercise the same as though it
were not the Administrative Bank, and the term "Banks" shall, unless the context
otherwise indicates, include the Administrative Bank in its individual capacity.
Each Bank and its Affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for, act
as trustee under indentures of, and generally engage in any kind of banking or
trust business with, Res-Care and its Affiliates, in the case of the
Administrative Bank, as though it were not acting as Administrative Bank
hereunder and in the case of each Bank, as though such Bank were not a Bank
hereunder.
11.11 HOLDERS OF REVOLVING CREDIT NOTES. The Administrative Bank may
deem and treat any payee of any Revolving Credit Note as the owner thereof for
all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Administrative Bank. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Revolving
Credit Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Revolving Credit Note or of any Revolving Credit Note issued
in exchange therefor.
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11.12 EQUALIZATION OF THE BANKS. The Banks and the holders of any
participations in any Revolving Credit Notes agree among themselves that, with
respect to all amounts received by any Bank or any such holder for application
to any Revolving Credit Note or under any such participation, whether received
by voluntary payment, by realization upon security, by the exercise of the right
of setoff or banker's lien, by counterclaim or by any other non-pro rata source,
equitable adjustment will be made in the manner stated in the following sentence
so that, in effect, all such excess amounts will be shared ratably among the
Banks and such holders in proportion to their interests in payments under the
Revolving Credit Notes. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks an interest in such Bank's
Revolving Credit Loans in such amount as shall result in a ratable participation
by the Banks and each holder in the aggregate unpaid amount under the Revolving
Credit Notes, PROVIDED that if all or any portion of such excess amount is
thereafter recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Bank or the holder making such
purchase.
11.13 SUCCESSOR ADMINISTRATIVE BANK. The Administrative Bank may resign
as Administrative Bank with the consent of the Borrowers, such consent not to be
unreasonably withheld, upon not less than thirty (30) days prior written notice
given to the Borrowers and the other Bank(s). If the Administrative Bank
undergoes an Administrative Bank Change in Control and Res-Care shall request
that the Administrative Bank resign as Administrative Bank, the Administrative
Bank shall resign, upon not less than thirty (30) days prior written notice
given to the other Bank(s). If the Administrative Bank shall resign under this
Section 11.13, then either (i) the Banks shall appoint a successor
administrative bank, subject to the consent to such successor administrative
bank by the Borrowers, such consent not to be unreasonably withheld, or (ii) if
a successor administrative bank shall not be so appointed and approved within
the thirty (30) day period following the Administrative Bank's notice to the
Banks of its resignation, then the Administrative Bank shall appoint, with the
consent of the Borrowers, such consent not to be unreasonably withheld, a
successor administrative bank who shall serve as Administrative Bank until such
time as the Banks appoint, and the Borrowers consent, which consent shall not be
unreasonably withheld, to the appointment of a successor administrative bank.
Upon its appointment pursuant to either clause (i) or (ii) above, such successor
administrative bank shall succeed to the rights, powers and duties of the
Administrative Bank and the term "Administrative Bank" shall mean such successor
administrative bank, effective upon its appointment, and the former
Administrative Bank's rights, powers and duties as Administrative Bank shall be
terminated without any other or further act or deed on the part of such former
Administrative Bank or any of the other parties to this Loan Agreement. After
the resignation of any Administrative Bank hereunder, the provisions of this
Section 11 shall not by reason of such resignation be deemed to release the
Administrative Bank from liability for any actions taken or not taken by it
while it was the Administrative Bank under this Loan Agreement.
11.14 CALCULATIONS. In the absence of gross negligence or willful
misconduct, the Administrative Bank shall not be liable for any error in
computing the amount payable to any Bank whether in respect of the Revolving
Credit Loans or the fees or other amounts due to the Banks under
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this Loan Agreement. In the event an error in computing any amount payable to
any Bank is made, the Administrative Bank, the Borrowers and each affected Bank
shall, forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.
11.15 BENEFICIARIES. Except as set forth in Sections 11.5 and 11.13
hereof, the provisions of this section 11 are solely for the benefit of the
Administrative Bank and the Banks, and the Borrowers shall not have any right to
rely on or enforce any of the provisions hereof. In performing its functions and
duties under this Loan Agreement, the Administrative Bank shall act solely as
agent of the Banks and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for the
Borrowers or any other Person.
SECTION 12
ASSIGNMENTS AND PARTICIPATIONS
------------------------------
12.1 ASSIGNMENTS TO ELIGIBLE ASSIGNEES. Each Bank shall have the right
at any time, with the prior consent of the Administrative Bank, which shall not
be unreasonably withheld, to sell, assign, transfer or negotiate all or any part
of its Revolving Loan Commitment and Revolving Credit Loans (i) prior to an
uncured Event of Default, with the consent of the Borrowers, which shall not be
unreasonably withheld, in a minimum amount of Seven Million Five Hundred
Thousand Dollars ($7,500,000) and (ii) during an Event of Default, without the
consent of the Borrowers, in any amount, to one or more commercial banks,
insurance companies, savings and loan associations, savings banks or other
financial institutions, pension funds or mutual funds or other accredited
investors ("Eligible Assignees"); PROVIDED that prior to receiving any
confidential or other material information regarding the Borrowers or the
transactions contemplated by this Loan Agreement, any Eligible Assignee shall
have entered into a Confidentiality Agreement substantially in the form of
EXHIBIT I hereto; PROVIDED FURTHER that any such assignment shall become
effective five (5) Business Days after an Assignment Agreement is executed by
the Eligible Assignee. In the case of any sale, assignment, transfer or
negotiation of all or part of the Revolving Loan Commitment or Revolving Credit
Loans authorized under this Section 12, the assignee, transferee or recipient
shall have, to the extent of such sale, assignment, transfer or negotiation, the
same rights, benefits and obligations as it would if it were a Bank hereunder,
including, without limitation (x) the right to approve or disapprove actions
which, in accordance with the terms hereof, require the approval of the Banks,
and (y) the obligation to fund Revolving Credit Loans pursuant to Section 2
hereof. The Bank assigning a portion or all of its Revolving Loan Commitment and
Revolving Credit Loans pursuant to this Section 12, or the bank purchasing the
interest of the Assigning Bank, shall pay a fee to the Administrative Bank of
$3,500.
12.2 PARTICIPATIONS. Notwithstanding Section 12.1 hereof, each Bank may
grant participations in all or any part of its Revolving Loan Commitment and
Revolving Credit Loans to one or more Eligible Assignees; PROVIDED that prior to
receiving any confidential or other material information regarding the Borrowers
or the transactions contemplated by this Loan Agreement, any
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Eligible Assignee shall have entered into a Confidentiality Agreement
substantially in the form of EXHIBIT I hereto; PROVIDED FURTHER that (i) any
such disposition shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to qualify the Revolving Credit Loans or the Revolving
Credit Notes under the blue sky law of any state; and (ii) the holder of any
such participation, other than an Affiliate of such Bank, shall not be entitled
to require the Banks to take or omit to take any action hereunder except action
directly extending the final maturity of any portion of the principal amount of
or interest on a Revolving Credit Loan allocated to such participation or a
reduction of the principal amount of or the rate of interest payable on the
Revolving Credit Loans allocated to such participation.
12.3 ASSIGNMENTS TO AFFILIATES. Notwithstanding the foregoing
provisions of this Section 12, each Bank may at any time sell, assign, transfer,
or negotiate all or any part of its Revolving Loan Commitment and Revolving
Credit Loans to any Affiliate of such Bank; PROVIDED that an Affiliate to whom
such disposition has been made shall not be considered a "Bank" for purposes of
this Loan Agreement other than for purposes of Section 10.2 hereof; PROVIDED
FURTHER that the Borrowers shall not incur any additional expenses solely as a
result of such sale, assignment, transfer or negotiation.
12.4 NO RELEASE OF OBLIGATIONS. No Bank shall, as between the Borrowers
and such Bank, be relieved of any of its obligations hereunder as a result of
any granting of participations in all or any part of its Revolving Loan
Commitment and Revolving Credit Loans. Each Bank shall, as between the Borrowers
and such Bank, be relieved of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of all or any part of its Revolving Loan
Commitment and Revolving Credit Loans made in accordance with Section 12.1
hereof.
SECTION 13
INDEMNITY
---------
The Borrowers shall indemnify and hold harmless each Bank and its
successors, assigns, agents and employees from and against any and all claims,
actions, suits, proceedings, costs, expenses, damages, fines, penalties and
liabilities, including, without limitation, reasonable attorneys' fees and
costs, arising out of, connected with or resulting from the operation of the
business of the Borrowers.
SECTION 14
NOTICES
-------
All notices required or permitted to be given hereunder shall be given
in writing and shall be personally delivered or sent by facsimile transmission
or by registered or certified United States mail, return receipt requested,
postage prepaid, addressed as follows (or to such other address as to which any
party hereto shall have given the other parties written notice):
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If to Res-Care and
the Other Borrowers: Res-Care, Inc.
10140 Linn Station Road
Louisville, KY 40223
Attn: Mr. Ronald G. Geary
If to the
Administrative Bank: PNC Bank, National Association
500 West Jefferson Street
Louisville, KY 40202
Attn: Mr. Benjamin A. Willingham
If to the Banks: At the addresses set forth in SCHEDULE I
to the Loan Agreement
All notices hereunder shall be deemed given upon the earlier of (i)
actual delivery in person or by facsimile transmission, or (ii) two (2) Business
Days after having been deposited in the United States mails, in accordance with
the foregoing.
SECTION 15
MISCELLANEOUS
-------------
15.1 JOINT AND SEVERAL LIABILITY OF BORROWERS; LIMITATION ON LIABILITY
OF CONSOLIDATED SUBSIDIARY BORROWERS. The obligation of each of the Borrowers
for repayment of all unpaid principal of and interest on Revolving Credit Loans
and all other Obligations to the Banks and for repayment of all unpaid principal
of and interest on the Swing Line Loans and all other Obligations to PNC shall
be joint and several; provided, however, that the obligation of any particular
Borrower that is a Consolidated Subsidiary for repayment of all unpaid principal
of and interest on Revolving Credit Loans and all other Obligations to the Banks
and for repayment of all unpaid principal of and interest on the Swing Line
Loans and all other Obligations to PNC shall be limited to an amount not to
exceed the greater of (a) the aggregate amount of the outstanding Advances to
such Consolidated Subsidiary as of the Enforcement Date, or (b) ninety-five
percent (95%) of the Maximum Consolidated Subsidiary Borrower Amount as of the
Enforcement Date. The foregoing limitation on the obligation of the Borrowers
for repayment of all unpaid principal of and interest on Revolving Credit Loans
and all other Obligations to the Banks and for repayment of all unpaid principal
of and interest on the Swing Line Loans and all other Obligations to PNC shall
not be applicable to Res-Care, whose liability therefor shall not be limited.
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15.2 RATABLE SHARING. Each Bank agrees with the other Bank that (i)
with respect to all amounts received by it which are applicable to the payment
of principal of or interest on the Revolving Credit Loans and the Revolving
Credit Facility Commitment Fees, including, without limitation, all amounts
received by such Bank pursuant to the exercise of the right of setoff pursuant
to Section 11.2 hereof, equitable adjustment will be made so that, in effect,
all such amounts will be shared among the Banks proportionately in accordance
with their respective Revolving Credit Facility Pro Rata Shares, whether
received by voluntary payment, by the exercise of the right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any or
all of the Obligations, and (ii) if any of them shall exercise any right of
counterclaim, set-off, banker's lien or similar right with respect to amounts
owed by the Borrowers hereunder, that Bank shall apportion the amount recovered
as a result of the exercise of such right pro rata in accordance with (a) all
amounts outstanding at such time owed by the Borrowers to it hereunder with
respect to the Revolving Credit Loans, and (b) all amounts otherwise owed by the
Borrowers to it, and (iii) if any of them shall thereby through the exercise of
any right of counterclaim, set-off, banker's lien or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal and interest due with respect to the Revolving Credit Loans made by
that Bank or any participation therein, or any other amount payable hereunder
(collectively, the "Aggregate Amount Due" to such Bank), which is greater than
the proportion received by any other Bank in respect of the Aggregate Amount Due
to such other Bank, then the Bank receiving such proportionately greater payment
shall (y) notify each other Bank and the Administrative Bank of such receipt and
(z) purchase participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the Aggregate Amounts Due to
the other Banks so that all recoveries of Aggregate Amounts Due shall be shared
by the Banks in proportion to their respective Revolving Credit Facility Pro
Rata Shares; PROVIDED that if all or part of such proportionately greater
payment received by such purchasing Bank is thereafter recovered from such Bank,
those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to that Bank to the extent of such recovery,
but without interest. The Borrowers expressly consent to the foregoing
arrangements and agree that any participant in respect of any Revolving Credit
Loan may exercise any and all rights of banker's lien, set-off or counterclaim
with respect to any and all rights of banker's lien, set-off or counterclaim
with respect to any and all monies owing by the Borrowers to that participant as
fully as if that participant were a Bank in the amount of such participation
held by that participant.
15.3 WAIVER. No course of dealing in respect of, nor any omission or
delay in the exercise of, any right, power, remedy or privilege by the Banks
shall operate as a wavier thereof, nor shall any right, power, remedy or
privilege of the Banks be exclusive of any other right, power, remedy or
privilege referred to herein or in any related document or now or hereafter
available at law, in equity, in bankruptcy, by statute or otherwise. Each such
right, power, remedy or privilege may be exercised by the Banks, either
independently or concurrently with others, and as often and in such order as the
Banks may deem expedient. No waiver or consent granted by the Banks in respect
of this Loan Agreement or the other Loan Instruments shall be binding upon the
Banks unless specifically granted in writing by a duly authorized officer of
each Bank, which writing shall be strictly construed.
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15.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants of the Borrowers and each Bank contained herein or made
pursuant hereto shall survive the execution and delivery of this Loan Agreement
and shall continue throughout the term hereof. Further, the indemnities set
forth in Section 13 hereof shall survive the payment of the Revolving Credit
Notes and the other Obligations to the Banks, as applicable.
15.5 INVALIDITY. If any part of this Loan Agreement shall be adjudged
invalid or unenforceable, whether in general or in any particular circumstance,
then such partial invalidity or enforceability shall not cause the remainder of
this Loan Agreement to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall remain in
effect in all valid applications that are severable from the invalid or
unenforceable application or applications.
15.6 ASSIGNMENT. This Loan Agreement may not be assigned by the
Borrowers without the prior written consent of the Banks. This Loan Agreement
may be assigned by the Banks as provided in Section 12 hereof. All rights of the
Banks hereunder shall inure to the benefit of their respective successors and
assigns, and all obligations, covenants and agreements of the Borrowers shall
bind their permitted successors and assigns, if any.
15.7 GOVERNING LAW. This Loan Agreement and the rights and obligations
of the parties hereunder shall, in all respects, be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky.
15.8 SECTION HEADINGS. The section headings of this Loan Agreement are
inserted herein solely for convenience of reference and shall not affect the
construction or interpretation of the provisions hereof.
15.9 ENTIRE AGREEMENT. This Loan Agreement and the other Loan
Instruments constitute the entire agreement between the Borrowers and the Banks
with respect to the subject matter hereof.
15.10 TIME OF THE ESSENCE. Time shall be of the essence in the payment
and performance of all of the Borrowers' obligations under this Loan Agreement,
the Revolving Credit Note and the other Loan Instruments to which the Borrowers
are party.
15.11 MODIFICATIONS. This Loan Agreement may be modified only in
writing executed by the Borrowers and the Banks. Neither this Loan Agreement nor
the other Loan Instruments nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by Banks holding at least fifty one percent
(51%) of the aggregate of the Revolving Credit Facility Pro Rata Shares (the
"Majority Banks"); PROVIDED, HOWEVER, that no such change, waiver, discharge or
termination, shall, without the consent of each Bank, (i) extend the Revolving
Credit Facility A Termination Date or the Revolving Loan Credit Facility B
Termination Date or the final maturity of the Revolving Credit Note of such
Bank, or change the rate or extend the time of payment of interest, principal or
fees, or reduce the principal
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amount thereof, or increase the aggregate amount of the Revolving Loan
Commitments above the maximum amount provided for in Section 2.1 hereof, or
increase any Bank's commitment to disburse its Revolving Loan Pro Rata Share of
Revolving Credit Loans requested by the Borrowers as set forth in Section 2.1
hereof, or (ii) release any Collateral except as it shall otherwise be provided
in any Loan Instrument, or (iii) amend, modify or waive any provisions of this
Section 15.11 (Modifications), Section 2 (Revolving Credit Facilities), Section
3 (Swing Line Credit Facility), Section 10 (Events of Default; Acceleration),
Section 11 (Remedies Upon Default, Etc.), Section 12 (The Administrative Bank),
Section 15.2 (Ratable Sharing), or Section 15.10 (Costs and Expenses), or (iv)
amend, modify or waive any provision requiring consent of all Banks, or (v)
reduce the percentages specified in this Section 15.11 or (vi) consent to the
assignment or transfer by the Borrowers of any of their rights and obligations
under this Agreement.
15.12 SUBMISSION TO JURISDICTION, ETC. The Borrowers hereby irrevocably
agree that any legal action, suit or proceeding against the Borrowers with
respect to the obligations and liabilities of the Borrowers hereunder or any
other matter under or arising out of or in connection with this Loan Agreement,
the Revolving Credit Notes, the Swing Line Note or any other Loan Instrument or
for recognition or enforcement of any judgment rendered in any such action, suit
or proceeding may be brought in the United States District Court of the Western
District of Kentucky or in the courts of the Commonwealth of Kentucky, as the
Banks may elect, and, by execution and delivery of this Loan Agreement, the
Borrowers hereby irrevocably accept and submit to the non-exclusive jurisdiction
of each of the aforesaid courts IN PERSONAM generally and unconditionally with
respect to any such action, suit or proceeding involving the Borrowers and in
respect of the Borrowers' property. The Borrowers further agree that final
judgment against the Borrowers in any action, suit or proceeding referred to
herein shall be conclusive after all appeals have been exhausted or waived by
the Borrowers, and may thereafter be enforced in any other jurisdiction, within
or outside the United States of America, by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of the Borrowers' obligations and liabilities. The Borrowers further
irrevocably consent and agree to the service of any and all legal process,
summons, notices and documents out of any of the aforesaid courts in any such
action, suit or proceeding by mailing copies thereof by registered or certified
air mail, postage prepaid, to the Borrowers at the address set forth in Section
14 hereof or by serving copies thereof upon any statutory agent for service of
process of the Borrowers. The Borrowers agree that service upon the Borrowers as
provided for herein shall constitute valid and effective personal service upon
the Borrowers and that the failure of any statutory agent to give any notice of
such service to the Borrowers shall not impair or affect in any way the validity
of such service or any judgment rendered in any action or proceeding based
thereon. Nothing herein shall, or shall be construed so as to, limit the right
of the Banks to bring actions, suits or proceedings with respect to the
obligations and liabilities of the Borrowers under, or any other matter arising
out of or in connection with, this Loan Agreement, the Revolving Credit Notes,
the Swing Line Note and/or the other Loan Instruments, or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding, in
the courts of whatever jurisdiction in which property of the Borrowers may be
found or as otherwise shall to the Banks seem appropriate, or to affect the
right to service of process in any jurisdiction in any manner permitted by law.
In addition, the Borrowers hereby irrevocably and unconditionally waive any
objection which the Borrowers may now or hereafter have to the
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laying of venue of any of the aforesaid actions, suits or proceedings arising
out of or in connection with this Loan Agreement, the Revolving Credit Notes,
the Swing Line Note and/or the other Loan Instruments brought in the Circuit
Court of Jefferson County, Kentucky or in the United States District Court for
the Western District of Kentucky, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim that any such action,
suit or proceeding brought in either such court has been brought in an
inconvenient forum.
15.13 WAIVER OF JURY TRIAL. EACH BORROWER, EACH BANK AND THE
ADMINISTRATIVE BANK EACH HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, THE
REVOLVING CREDIT NOTES, THE SWING LINE NOTE OR THE OTHER LOAN INSTRUMENTS. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE BORROWER,
EACH BANK AND THE ADMINISTRATIVE BANK EACH ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP,
AND THAT EACH BORROWER, EACH BANK AND THE ADMINISTRATIVE BANK HAVE ALREADY
RELIED ON THE WAIVER IN ITS RELATED FUTURE DEALINGS WITH THE OTHERS. THE
BORROWER, EACH BANK AND THE ADMINISTRATIVE BANK EACH FURTHER WARRANTS AND
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN
AGREEMENT, THE REVOLVING CREDIT NOTES, THE SWING LINE NOTE OR THE OTHER LOAN
INSTRUMENTS. IN THE EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
15.14 EXECUTION OF LOAN INSTRUMENTS. This Loan Agreement and the other
Loan Instruments may be executed in one or more counterparts by the parties
hereto. Each Borrower has taken written action, corporate or otherwise, to
approve the execution and delivery of this Loan Agreement and the other Loan
Documents and has duly authorized an officer or representative (an "Authorized
Officer") to execute and deliver this Loan Agreement and the other Loan
Documents for and on behalf of such Borrower. In many cases, a common Person has
been authorized by multiple Borrowers that are Consolidated Subsidiaries of
Res-Care to execute and deliver this Loan Agreement and the other Loan
Instruments on behalf of each such Borrower. As a result, and for purposes of
convenience, this Loan Agreement and the other Loan Documents bear signature
blocks wherein such Person may execute this Loan Agreement or the other Loan
Documents by a single signature on behalf of all Borrowers identified above such
signature block. In each such case, each Borrower specifically identified in
such
-87-
<PAGE> 94
signature block represents to the Banks that it has authorized the
Authorized Officer executing such signature block to do so as representative of,
and on behalf of such Borrower, with present intention to authenticate the
writing, and each such Borrower further represents and agrees that by such
execution it intends that this Loan Agreement or other Loan Instrument become a
binding agreement of such Borrower, enforceable in accordance with its terms.
-88-
<PAGE> 95
IN WITNESS WHEREOF, the Borrowers, the Administrative Bank and the
Banks have each caused this Loan Agreement to be duly executed as of the day and
year first above written.
RES-CARE, INC.
(a "Borrower")
---------------------------------
By: Authorized Officer
Name: Ronald G. Geary
Its: President and Chief Operating Officer
-89-
<PAGE> 96
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ADVANTAGE, INC.
TEXAS HOME MANAGEMENT, INC.
CAPITAL TX INVESTMENTS, INC.
THM HOMES, INC.
RSCR TEXAS, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
COMMUNITY ALTERNATIVES OF TEXAS, INC.
CATX PROPERTIES, INC.
RES-CARE CALIFORNIA, INC.
RES-CARE FLORIDA, INC.
RSCR CALIFORNIA, INC.
RES-CARE KANSAS, INC.
RES-CARE ILLINOIS, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
YOUTHTRACK, INC.
RES-CARE PREMIER, INC.
RES-CARE NEW JERSEY, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
ALTERNATIVE YOUTH SERVICES, INC.
COMMUNITY ALTERNATIVES TEXAS PARTNERS, INC.
RSCR WEST VIRGINIA, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
f/k/a RAIMENT, INC.
RES-CARE AVIATION, INC.
COMMUNICATIONS NETWORK CONSULTANTS,
INC.
THE ACADEMY FOR INDIVIDUAL EXCELLENCE,
INC.
RES-CARE OTHER OPTIONS, INC.
SOUTHERN HOME CARE SERVICES, INC.
GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc.
BALD EAGLE ENTERPRISES, INC.
BRINKLEY GROUP HOMES, INC.
NORMAL LIFE, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
-90-
<PAGE> 97
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE CHARLES, INC.
NORMAL LIFE OF FLORIDA, INC.
NORMAL LIFE OF KENTUCKY, INC.
NORMAL LIFE OF NORTH TEXAS, INC.
NORMAL LIFE OF NEW MEXICO, INC.
NORMAL LIFE OF TENNESSEE, INC.
CAREERS IN PROGRESS, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE MANAGEMENT, INC.
NL DELAWARE, INC.
NORMAL LIFE OF OHIO, INC.
BOLIVAR DEVELOPMENT TRAINING CENTER,
INC.
HYDESBURG ESTATES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
WILLARD ESTATES, INC.
BOLIVAR ESTATES, INC.
SKYVIEW ESTATES, INC.
RIVER BLUFF ESTATES, INC.
MEADOW LANE ESTATES, INC.
EBENEZER ESTATES, INC.
HILLSIDE ESTATES, INC.
PEBBLE CREEK ESTATES, INC.
FORT MASON ESTATES, INC.
SHA-REE ESTATES, INC.
BAKER MANAGEMENT, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
UPWARD BOUND, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
RES-CARE WASHINGTON, INC.
RES-CARE ALABAMA, INC.
(each a "Borrower")
- ----------------------------------
By: Authorized Officer
Name: Ralph G. Gronefeld
Assistant Treasurer of each Borrower
-91-
<PAGE> 98
listed above beginning with Community Alternatives Indiana,
Inc. and ending with Res-Care Alabama, Inc., on behalf of
each such Borrower
CREATIVE NETWORKS, LLC
an Arizona limited liability company
(a "Borrower")
- ----------------------------------
By: Authorized Officer
NORMAL LIFE OF INDIANA
a general partnership
(a "Borrower")
By: NORMAL LIFE OF SOUTHERN INDIANA, INC.
one of its General Partners
- ----------------------------------
By: Authorized Officer
and
By: NORMAL LIFE OF CENTRAL INDIANA, INC.
its other General Partner
- ----------------------------------
By: Authorized Officer
PNC BANK, NATIONAL ASSOCIATION
as Administrative Bank
- ----------------------------------
By: Benjamin A. Willingham
Vice President
PNC BANK, NATIONAL ASSOCIATION
as a Bank
- ----------------------------------
By: Benjamin A. Willingham
Vice President
BANK ONE, KENTUCKY, NA
("Bank One")
- ----------------------------------
By: Todd D. Munson
Senior Vice President
FIRST UNION NATIONAL BANK
("First Union")
- ----------------------------------
By: Valerie Cline
Director
FIRST AMERICAN NATIONAL BANK
("First American")
- ----------------------------------
By: Kent Wood
Vice President
FLEET NATIONAL BANK
("Fleet")
- ----------------------------------
By: Ginger Stolzenthaler
Senior Vice President
KEY CORPORATE CAPITAL, INC.
("Key")
- ----------------------------------
By: Jack Boudler
Vice President
NATIONAL CITY BANK OF KENTUCKY
("National City")
- ----------------------------------
By: Deroy Scott
Vice President
BANQUE PARIBAS
("Paribas")
- ----------------------------------
David Canavan
Its:
STAR BANK, NATIONAL ASSOCIATION
("Star")
- ----------------------------------
By: Toby Rau
Assistant Vice President
SUNTRUST BANK, NASHVILLE, N.A.
("SunTrust")
- ----------------------------------
By: Karen Cole Ahern
Group Vice President
UNION BANK OF CALIFORNIA
("Union Bank")
- ----------------------------------
By: Lynn Vine
Vice President
WACHOVIA BANK, N.A.
("Wachovia")
- ----------------------------------
By: John Tibe
Assistant Vice President
AMSOUTH BANK
("AmSouth")
- ----------------------------------
By:
Its:
-92-
<PAGE> 99
SCHEDULE I
ADMINISTRATIVE BANK
PNC BANK, NATIONAL ASSOCIATION ("PNC")
500 West Jefferson Street
Louisville, KY 40202
Attn: Benjamin A. Willingham, Vice President
<PAGE> 100
LIST OF BANKS
AMSOUTH BANK ("AmSouth")
1900 5th Avenue North
7th Floor
Birmingham, AL 35203
Attn: Keith Law, Vice President
BANK ONE, KENTUCKY, NA ("Bank One")
416 West Jefferson
Louisville, Kentucky 40202
Attn: Todd D. Munson, Senior Vice President
PARIBAS ("Paribas")
787 Seventh Avenue
New York, NY 10019
Attn: David Canavan
FIRST AMERICAN NATIONAL BANK ("First American")
First American Center
Nashville, TN 37237
Attn: Kent Wood, Vice President
FIRST UNION NATIONAL BANK ("First Union")
One 1st Union Center
301 S. College Street
Charlotte, NC 28288-0735
Attn: Valerie Cline, Director
FLEET NATIONAL BANK ("Fleet")
1 Federal Street
Boston, MA 02110
Attn: Ginger Stolzenthaler, Vice President
KEY CORPORATE CAPITAL, INC. ("Key")
525 Vine Street
Cincinnati, OH 40202
Attn: Jack Boudler, Vice President
NATIONAL CITY BANK OF KENTUCKY ("National City")
101 South Fifth Street
Louisville, KY 40202
<PAGE> 101
PNC BANK, NATIONAL ASSOCIATION ("PNC")
500 West Jefferson Street
Louisville, KY 40202
Attn: Benjamin A. Willingham, Vice President
STARBANK, NATIONAL ASSOCIATION ("StarBank")
One Financial Square
Louisville, KY 40202
Attn: Toby Rau, Assistant Vice President
SUNTRUST BANK, NASHVILLE, N.A. ("SunTrust")
P.O. Box 305110
Nashville, TN 37230-5110
UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION ("Union Bank")
445 S. Figueroa
16th Floor
Los Angeles, CA 90071
Attn: Lynn Vine, Vice President
WACHOVIA BANK, N. A. ("Wachovia")
191 Peachtree Street, 29th Floor
Atlanta, Georgia 30303-1757
<PAGE> 102
SCHEDULE II
LIST OF BORROWERS OTHER THAN RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal
office and place of business of Louisville, Kentucky ("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCF").
14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RSCRC").
<PAGE> 103
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCP").
22 RES-CARE NEW JERSEY, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCNJ").
23 COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
24 ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AYS")
25 COMMUNITY ALTERNATIVES TEXAS PARTNER, INC. (f/k/a Community
Alternatives Virginia, Inc.), a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("CAV").
26 RSCR WEST VIRGINIA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RSCRWV").
27 COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a
Missouri corporation with principal office and place of business in Louisville,
Kentucky ("R").
28 RES-CARE AVIATION, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("RCA").
29 COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island corporation
with principal office and place of business in Louisville, Kentucky ("CNC").
<PAGE> 104
30 THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation
with principal office and place of business in Louisville, Kentucky ("AIE").
31 RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("ROO").
32 SOUTHERN HOME CARE SERVICES, INC. d/b/a Eldercare, a Georgia
corporation with principal office and place of business in Louisville, Kentucky
("SHCS").
33. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
34. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE").
.
35. BRINKLEY GROUP HOMES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BGH") .
36. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
37. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
38. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
39. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
40. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLL").
41. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
42. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
43. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
<PAGE> 105
44. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with
principal office and place of business in Louisville, Kentucky ("NLK").
45. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with
principal office and place of business in Louisville, Kentucky ("NLNT").
46. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
47. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
48. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
49. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
50. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
51. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
52. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
53. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
54. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
55. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal
office and place of business in Louisville, Kentucky ("NLO").
56. BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation
with principal office and place of business in Louisville, Kentucky ("BSTC").
57. HYDESBURG ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
<PAGE> 106
58. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OWSB").
59. WILLARD ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("WE").
60. BOLIVAR ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BE").
61. SKYVIEW ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SE").
62. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("RBE").
63. MEADOW LANE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("MLE").
64. EBENEZER ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("EE").
65. HILLSIDE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
66. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
67. FORT MASON ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("FME").
68. SHA-REE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SRE").
69. BAKER MANAGEMENT, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BM").
70. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
71. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OEB").
72. UPWARD BOUND, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("UB").
<PAGE> 107
73. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
74. RES-CARE WASHINGTON, INC., a Washington corporation with principal
office and place of business in Louisville, Kentucky ("RCWASH").
75. RES-CARE ALABAMA, INC., an Alabama corporation with principal
office and place of business in Louisville, Kentucky ("RCALA").
<PAGE> 108
SCHEDULE II.A
LIST OF NEW BORROWERS
AS OF JUNE 30, 1998
1. RES-CARE WASHINGTON, INC., a Washington corporation with principal
office and place of business in Louisville, Kentucky ("RCWASH").
2. RES-CARE ALABAMA, INC., an Alabama corporation with principal office
and place of business in Louisville, Kentucky ("RCALA").
<PAGE> 109
SCHEDULE II.B
Certain Entities which Currently are not Included in
Definition of "Existing Borrowers" or "New Borrowers"
1. Biscayne Bay Transitional Living Center Limited Partnership
2. Community Alternatives Illinois, Inc.
3. Premier Rehabilitation Centers of Florida, Inc.
4. Alternative Choices, Inc.
5. The following subsidiaries of ALTERNATIVE YOUTH SERVICES, INC. (#24)
- --------------------------------------------------------------------------------
Academy for Individual Excellence Arizona Youth Associates
3101 Bluebird Lane 1825 E. Northern Ave., Ste. 100
Louisville, KY 40299 Phoenix, AZ 85020
- --------------------------------------------------------------------------------
Ashland S.A.F.E. Bowling Green S.A.F.E.
1926 Carter Avenue, Ste. 300 2530 Scottsville Road., Ste. 1
Ashland, KY 41105 Bowling Green, KY 42104
- --------------------------------------------------------------------------------
Community Youth Serv-Radcliff Community Youth Services-Mayfield
195 Lincoln Trail 1415 State Rt. 45N
Radcliff, KY 40106 Mayfield, KY 42066
Georgia Center for Youth
Route 2 Goose Hollow Road
P. O. Box 966
Reynolds, GA 31076
- --------------------------------------------------------------------------------
Magnolia Academy New Summit School
2513 B. Kerr Road 1220 East Northside Drive
Columbia, TN 38401 Jackson, MS 39236
- --------------------------------------------------------------------------------
Ohio S.A.F.E. Richmond S.A.F.E.
1130 County Rod., #18 210 Saint George St., Ste. 207
P. O. Box 9 Richmond, KY 40475
South Pointe, OH 45680
- --------------------------------------------------------------------------------
Refraining from including those entities within the definition of "New
Borrowers", "Existing Borrowers" or "Borrowers" does not prevent the Banks from
later exercising any rights under the Loan Instruments to require them to become
Borrowers.
<PAGE> 110
SCHEDULE 1.34
CONTINGENT OBLIGATIONS OF RES-CARE, INC.
<PAGE> 111
SCHEDULE 2.1
SCHEDULE OF REVOLVING LOAN COMMITMENTS AND
REVOLVING CREDIT FACILITY PRO RATA SHARES
The maximum amount of the Revolving Credit Facility A Loan Commitments
is $175,000,000. The maximum amount of the Revolving Credit Facility B Loan
Commitments is $25,000,000.
<TABLE>
<CAPTION>
================================================================================================================
NAME OF BANK REVOLVING REVOLVING TOTAL REVOLV
CREDIT FACILITY A CREDIT LOAN CREDIT
LOAN FACILITY B COMMITMENTS FACILITY
COMMITMENT LOAN PRO RATA
COMMITMENT SHARE
<S> <C> <C> <C> <C>
PNC $ 26,250,000 $ 3,750,000 $ 30,000,000 15.00%
Bank One 21,875,000 3,125,000 25,000,000 12.50%
National City 21,875,500 3,125,000 25,000,000 12.50%
SunTrust 17,500,000 2,500,000 20,000,000 10.00%
First Union 15,312,500 2,187,500 17,500,000 8.75%
Wachovia 13,125,000 1,875,000 15,000,000 7.50%
AmSouth 10,937,500 1,562,500 12,500,000 6.25%
Key 10,937,500 1,562,500 12,500,000 6.25%
StarBank 10,937,500 1,562,500 12,500,000 6.25%
Banque Paribas 6,562,500 937,500 7,500,000 3.75%
First American 6,562,500 937,500 7,500,000 3.75%
Fleet 6,562,500 937,500 7,500,000 3.75%
Union Bank 6,562,500 937,500 7,500,000 3.75%
------------ ------------ ------------ -------
TOTAL $175,000.000 $ 25,000,000 $200,000,000 100.00%
============ ============ ============ =======
=====================================================================================================================
</TABLE>
<PAGE> 112
SCHEDULE 2.3A
SCHEDULE OF CLOSING FEES
The Banks identified below will receive a payment of Closing Fees under
this SCHEDULE 2.3A, based upon the total commitments of each Bank under the Loan
Agreement, multiplied by 25/100 of one percent (0.25%), as set forth in the
table below. The aggregate Closing Fees payable under this SCHEDULE 2.3A total
$500,000 ($200,000,000 x 0.25%).
<TABLE>
<CAPTION>
Applicable
Name of Bank Commitment Percentage Closing Fee
- ------------ ---------- ---------- -----------
<S> <C> <C> <C>
PNC $30,000,000 15.00% $75,000.00
Bank One 25,000,000 12.50% 62,500.00
National City 25,000,000 12.50% 62,500.00
SunTrust 20,000,000 10.00% 50,000.00
First Union 17,500,000 8.75% 43,750.00
Wachovia 15,000,000 7.50% 37,500.00
AmSouth 12,500,000 6.25% 31,250.00
Key 12,500,000 6.25% 31,250.00
StarBank 12,500,000 6.25% 31,250.00
Banque Paribas 7,500,000 3.75% 18,750.00
First American 7,500,000 3.75% 18,750.00
Fleet 7,500,000 3.75% 18,750.00
Union Bank 7,500,000 3.75% 18,750.00
Totals 200,000,000 100.00% 500,000.00
</TABLE>
ss
<PAGE> 113
SCHEDULE 6.7
INDEBTEDNESS
<PAGE> 114
SCHEDULE 6.13
CONSOLIDATED SUBSIDIARIES OF RES-CARE, INC.
<TABLE>
<S> <C>
1. COMMUNITY ALTERNATIVES INDIANA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Fort Wayne, Indiana; (ii) Angola, Indiana; and (iii) Sullivan,
Indiana.
Qualified to do business in: Indiana
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State and (iii)
Indiana Secretary of State
2. COMMUNITY ALTERNATIVES NEBRASKA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Lincoln, Nebraska
Qualified to do business in: Nebraska Any name, other than name of
Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Nebraska Secretary of State and (iii)
Delaware Secretary of State
3. COMMUNITY ADVANTAGE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Longmont Colorado, (ii) Brighton Colorado and (iii) Greeley
Colorado.
Qualified to do business in: Colorado
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Colorado Secretary of State and (iii)
Delaware Secretary of State
4. TEXAS HOME MANAGEMENT, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: various in Texas (59 group homes)
Qualified to do business in: Texas
</TABLE>
<PAGE> 115
<TABLE>
<S> <C>
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
5. CAPITAL TX INVESTMENTS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property invarious Texas locations - (i) Bexar County, (ii)
Tarrant, (iii) Angelina, (iv) Travis, (v) Caldwell, (vi) Harris, (vii) Nacogdoches, (viii)
Anderson, (ix) Parker, (x) Gonzalez and (xi) Plano Counties
Qualified to do business in: Texas Any name, other than name of
Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
6. THM HOMES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations: (i) Lubbock, (ii) Bexar,
(iii) Williamson, (iv) Taylor, (v) Tarrant and (vi) Anderson Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
7. RSCR TEXAS, INC., F/K/A THM PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified Locations of operations: (i) Canton,
(ii) Austin, (iii) San Antonio and (iv) Dallas-Ft. Worth, TX
Qualified to do business in: Texas Any name, other than name of
Corporation, used for conducting business in the last five (5)
years: THM Properties, Inc.
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
8. RES-CARE NEW MEXICO, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
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Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Albuquerque, (ii) Rosewell, (iii) Clovis and (iv) Santa Fe, New
Mexico
Qualified to do business in: New Mexico
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State and (ii) New Mexico Secretary of State
9. RES-CARE OHIO INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Fairfield, (ii) Williamsburg, (iii) Hamilton, (iv) Middletown, (v) Cincinnati area,
(vi) Xenia, (vii) Menton and (viii) Lake County, Ohio
Qualified to do business in: Ohio Any name, other than name of Corporation, used for conducting business in the last
five (5) years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Ohio Secretary of State and (iii)
Delaware Secretary of State
10. COMMUNITY ALTERNATIVES OF TEXAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Wichita Co. and (ii) Tarrant Co., Texas
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
11. CATX PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations - Wichita and Tarrant
Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Texas Secretary of State and (iii)
Delaware Secretary of State
12. RES-CARE CALIFORNIA, INC. D/B/A RCCA SERVICES
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State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Stanislaus, (ii) San Mateo, (iii) Sutter, (iv) Nevada, (v) Placer and
(vi) Santa Clara Counties, CA
Qualified to do business in: California
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: RCCA Services
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) California Secretary of State and (iii)
Delaware Secretary of State
13. RES-CARE FLORIDA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: none
Qualified to do business in: Florida
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Florida Secretary of State and (iii)
Delaware Secretary of State
14. RSCR CALIFORNIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Los Angeles, (ii) San Bernardino and (iii) Orange Counties
Qualified to do business in: California
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State (ii) Delaware Secretary of State and (iii)
California Secretary of State
15. RES-CARE KANSAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Sherman, (ii) Neosho, (iii) Stafford and (iv) Cowley, Kansas Qualified to do business
in: Kansas
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Kansas Secretary of State and (iii)
Delaware Secretary of State
16. RES-CARE ILLINOIS, INC.
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State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Jackson and (ii) Vermilion Counties, Illinois
Qualified to do business in: Illinois Any name, other than name of Corporation, used for conducting business in
the last five (5) years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State and (iii)
Illinois Secretary of State
17. RES-CARE OKLAHOMA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Tulsa and (ii) Oklahoma City, Oklahoma
Qualified to do business in: Oklahoma
Any name, other than name of Corporation, used for conducting business in the
last five (5) years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State and (iii)
County Clerk of Oklahoma County, Oklahoma
18. RES-CARE TENNESSEE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Nashville and (ii) Jackson (Madison County), TN
Qualified to do business in: Tennessee
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Tennessee Secretary of State and (iii)
Delaware Secretary of State
19. RES-CARE TRAINING TECHNOLOGIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Location of registered agent in Kentucky: Louisville
Locations of operations: Louisville
Qualified to do business in: Kentucky only
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Clerk of Jefferson County, Kentucky and (ii) Delaware Secretary of State
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20. YOUTHTRACK, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: (i) Arapahoe, (ii) Denver, (iii) Mesa,
(iv) El Paso, (v) Jefferson (vi) Garfield Counties, Colorado and (vii) Brigham City, Utah
Qualified to do business in: Colorado,
Kentucky, Puerto Rico, Utah, Idaho, Arizona, Nevada
Any name, other than name of Corporation, used for conducting business in the last five
(5) years: N/A
UCC Filing Locations: (i) Clerk of Jefferson County, Kentucky, (ii) Colorado Secretary of State,
(iii) Delaware Secretary of State and (iv) Utah Secretary of State
21. RES-CARE PREMIER, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) St. Louis, Missouri and (ii) Chicago, Illinois
Qualified to do business in: Massachusetts, Illinois, Florida, Missouri and Iowa
Any name, other than name of Corporation, used for conducting business in the last five
(5) years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State (ii) Delaware Secretary of State, (iii)
Missouri Secretary of State, (iii) Clerk of St. Louis County, Missouri and (iv) Secretary of State
of Illinois
22. RES-CARE NEW JERSEY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Mercer, (ii) Burlington, (iii) Middlesex, (iv) Warren, (v) Ocean and
(vi) Union Counties; Towns of: (i) Hillsborough, (ii) Howell, (iii) Perberton, and (iv) Chatsworth
Qualified to do business in: New Jersey
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State and
(iii) New Jersey Secretary of State
23. COMMUNITY ALTERNATIVES KENTUCKY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: (i) Bowling Green, (ii) Frankfort, (iii) Morehead, (iv) Owensboro,
(v) Louisville, (vi) Elizabethtown, and (vii) Symsonia, KY.
Qualified to do business in: No other states
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Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Clerk of Jefferson County, Kentucky, (ii) Kentucky Secretary of
State and (iii) Delaware Secretary of State
24. ALTERNATIVE YOUTH SERVICES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Kentucky, Tennessee, Lawrence County, Ohio, Georgia, Jackson,
Mississippi and Hinds County, Madison County, and Rankin County, Mississippi.
Qualified to do business in: (i) Georgia, (ii) Ohio, (iii) Tennessee, (iv) Kentucky, (v)
Maryland and (vi) California
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: In Maryland - d/b/a Res-Care Other Options, Inc.
UCC Filing Locations: (i) Clerk of Jefferson County, Kentucky, (ii) Kentucky Secretary of
State, (iii) Delaware Secretary of State, (iv) Maryland
Secretary of State (v) Tennessee Secretary of State, (vi) Ohio Secretary of State (vii) Clerk of Lawrence County, Ohio,
(viii) Clerk of Superior Court of Fulton County, Georgia, (ix) Mississippi Secretary of State and
(x) Arizona Secretary of State.
25. COMMUNITY ALTERNATIVES VIRGINIA, INC. (K/N/A COMMUNITY ALTERNATIVES
TEXAS PARTNERS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None yet
Qualified to do business in: Virginia
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Community Alternatives Virginia, Inc.
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State and
(iii) State Corporation Commission of Virginia
26. RSCR WEST VIRGINIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: West Virginia
Qualified to do business in: West Virginia
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Yellow Springs
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) West Virginia Secretary of State
and (iii) Delaware Secretary of State
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27. COMMUNITY ALTERNATIVES MISSOURI, INC. F/K/A RAIMENT, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk, Green, Marion, Ralls, Adair, Sullivan and Cape Girardeau
Counties, Missouri
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Raiment, Inc.
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) County Recorder of St. Francois and Cape Girardeau, Missouri
28. RES-CARE AVIATION, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: Kentucky
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: Clerk of Jefferson County, Kentucky
29. COMMUNICATIONS NETWORK CONSULTANTS, INC.
State of incorporation: Rhode Island
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: Yancey, Mitchell, Madison, Buncombe, Jackson, Haywood,
Transylvania, Henderson, Ashe, Alleghany, Watauga, Wilkes, Avery, Burke,
Caldwell, McDowell, Alexander, Cleveland, Rutherford, Polk, Catawba, Surrey, Yadkin, Iredell,
Foryth, Stokes, Davie, Rowan, Cabarrus, Stanley, Union, Mecklenburg, Guilford, Alamance,
Caswell, Orange, Person, Chatham, Durham, Wake, Sampson, Duplin, Nash, Edgecombe, Wayne,
Pender, New Hanover and Brunswick Counties, North Carolina
Qualified to do business in: North Carolina
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Rhode Island Secretary of State (iii) North Carolina
Secretary of State
30. THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Kentucky
Qualified to do business in: No other state
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Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Clerk of Jefferson County, Kentucky and (ii) Delaware Secretary
of State
31. RES-CARE OTHER OPTIONS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Montgomery and Philadelphia Counties, Pennsylvania, (ii) Durham,
Davidson, Orange, Person, Chatam, Wake Cumberland, Forsyth and Stokes Counties, North Carolina,
(iii) Oregon Secretary of State
Qualified to do business in: (i) Oregon, (ii) North Carolina, (iii) Pennsylvania and (iv)
Maryland.
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Delaware Secretary of State, (iii)
Secretary of the Commonwealth of Pennsylvania, (iv) Prothonotary of Montgomery and Philadelphia
Counties, Pennsylvania, (v) North Carolina Secretary of State and (vi) Oregon Secretary of State
THE FOLLOWING ARE NEW BORROWERS JOINING IN THE LOAN DOCUMENTS EFFECTIVE WITH THE
THIRD AMENDMENT TO LOAN DOCUMENTS.
32. SOUTHERN HOME CARE SERVICES, INC.
State of incorporation: Georgia
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Georgia and (ii) South Carolina
Qualified to do business in (other than state of incorporation): South Carolina
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: L. Miller Management, Eldercare
UCC filing locations: (i) Kentucky Secretary of State, (ii) Clerk of the Superior Court of Fulton
County Georgia, (iii) South Carolina Secretary of State
33. GENERAL HEALTH CORPORATION
State of incorporation: Arizona
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Arizona
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Arizona Youth Associates, Inc.
UCC Filing Locations: (i) Kentucky Secretary of State, (ii) Arizona Secretary of State
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34. BALD EAGLE ENTERPRISES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Missouri Secretary of State
35. BRINKLEY GROUP HOMES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Sullivan County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and (iii)
Clerk of Sullivan County, Missouri
36. CREATIVE NETWORKS, LLC
State of formation: Arizona
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Arizona
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Arizona Secretary of State
37. NORMAL LIFE, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky corporation
Locations of operations: KY
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing location: Clerk of Jefferson County, Kentucky
38. NORMAL LIFE OF SOUTHERN INDIANA, INC.
State of incorporation: Indiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
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Locations of operations: (i) Vanderburgh County, Indiana and (ii) Warwick County, Indiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Normal Life of Indiana, Inc.
UCC filing locations: (i) Kentucky Secretary of State, (ii) Indiana Secretary of State and (iii)
Clerk of Vanderburgh County, Indiana
39. NORMAL LIFE OF CENTRAL INDIANA, INC.
State of incorporation: Indiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i)Vigo, (ii) Hamilton, (iii) Clay and (iv) Montgomery Counties,
Indiana
Qualified to do business in (other than state of incorporation):
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: Normal Life of Sheridan, Inc.; Normal Life of Terre Haute, Inc. (merger)
UCC filing locations: (i) Kentucky Secretary of State, (ii) Indiana Secretary of State, (iii) Clerk
of Vigo County, Indiana and (iv) Clerk of Hamilton County, Indiana
40. NORMAL LIFE OF LOUISIANA, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Jefferson Parish, (ii) Orleans Parish and (iii) St. Bernard Parish,
Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Jefferson Parish,
Louisiana
41. NORMAL LIFE OF LAFAYETTE, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Lafayette Parish and (ii) St. Landry Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Lafayette Parish, Louisiana
42. NORMAL LIFE OF LAKE CHARLES, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
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Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Calcasieu Parish, (ii) Beauregard Parish and (iii) Vernon Parish,
Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Calcasieu Parish,
Louisiana
43. NORMAL LIFE OF FLORIDA, INC.
State of incorporation: Florida
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Pinellas and (ii) Hillsborough Counties, Florida
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Florida Secretary of State,
(iii) Clerk of Pinellas County, Florida and (iv) Clerk of Hillsborough County, Florida
44. NORMAL LIFE OF KENTUCKY, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky corporation
Locations of operations: Jefferson County, Kentucky
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Jefferson County, Kentucky
45. NORMAL LIFE OF NORTH TEXAS, INC.
State of incorporation: Texas
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Cameron, (ii) Val Verde, (iii) Tarrant, (iv) Collin, (v) Walde,
(vi) Medina, (vii) El Paso, (viii) Bell, (ix) Navarro and (x) Dallas Counties, Texas.
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Texas Secretary of State
46. NORMAL LIFE OF NEW MEXICO, INC.
State of incorporation: New Mexico
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
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Locations of operations: None
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) New Mexico Secretary of State
47. NORMAL LIFE OF TENNESSEE, INC.
State of incorporation: Tennessee
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Tennessee Secretary of State
48. CAREERS IN PROGRESS, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jefferson Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Jefferson Parish, Louisiana
49. NORMAL LIFE FAMILY SERVICES, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jefferson Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Jefferson Parish, Louisiana
50. NORMAL LIFE OF INDIANA, a general partnership
State of formation: Indiana
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Vanderburgh, (ii) Vigo, (iii) Hamilton, (iv) Warrick, (v) Clay
and (vi) Montgomery Counties, Indiana.
Qualified to do business in (other than state of incorporation): None
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Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Indiana Secretary of State, (iii) Clerk
of Vanderburgh County, Indiana, (iv) Clerk of Vigo County, Indiana and (v) Clerk of Hamilton County,
Indiana
51. NORMAL LIFE OF CALIFORNIA, INC.
State of incorporation: California
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) San Louis Obispo and (ii) Ventura Counties, California.
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) California Secretary of State
52. NORMAL LIFE OF GEORGIA, INC.
State of incorporation: Georgia
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Fulton, (ii) Loundes, (iii) DeKalb, (iv) Gwinett, (v) Douglas and
(vi) Forsyth Counties, Georgia.
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State and (ii) Clerk of Superior Court of
Fulton County, Georgia
53. NORMAL LIFE MANAGEMENT, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky corporation
Locations of operations: None
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5) years:
UCC filing locations: Jefferson County, Kentucky
54. NL OF DELAWARE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Location of Operations: Delaware
Qualified to do business in (other than state of incorporation): None
</TABLE>
<PAGE> 128
<TABLE>
<S> <C>
Any name, other than name of Corporation, used for conducting business in the last five (5)
years:
UCC filing locations: (i) Kentucky Secretary of State and (ii) Delaware Secretary of State
55. NORMAL LIFE OF OHIO, INC.
State of incorporation: Ohio
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Ohio Secretary of State and
(iii) Clerk of Cuyahoga County, Ohio
56. BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
57. HYDESBURG ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State, and
(iii) Clerk of Marion County, Missouri
58. OAKWOOD SUITES OF BOLIVAR, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Marion County,
Missouri Qualified to do business in (other than state of
incorporation): None Any name, other than name of Corporation, used for
conducting business in the last five (5) years:
N/A
</TABLE>
<PAGE> 129
<TABLE>
<S> <C>
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Marion County, Missouri
59. WILLARD ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State, and
(iii) Clerk of Greene County, Missouri
60. BOLIVAR ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
61. SKYVIEW ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Marion County, Missouri
62. RIVER BLUFF ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
</TABLE>
<PAGE> 130
<TABLE>
<S> <C>
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
63. MEADOW LANE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Adair County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri Secretary of State; and
(iii) Clerk of Adair County, Missouri
64. EBENEZER ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Greene County, Missouri
65. HILLSIDE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
66. PEBBLE CREEK ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
</TABLE>
<PAGE> 131
<TABLE>
<S> <C>
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
67. FORT MASON ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Ralls County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Ralls County, Missouri
68. SHA-REE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
69. BAKER MANAGEMENT, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri Secretary of State; and
(iii) Clerk of Polk County, Missouri
70. MISSOURI PROGRESSIVE SERVICES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None Any name, other than name of
Corporation, used for conducting business in the last five (5)
years: N/A
</TABLE>
<PAGE> 132
<TABLE>
<S> <C>
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri Secretary of State; and
(iii) Clerk of Polk County, Missouri
71. OAKVIEW ESTATES OF BOLIVAR, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky:
Not qualified Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Polk County, Missouri
72. UPWARD BOUND, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and
(iii) Clerk of Marion County, Missouri
73. INDIVIDUALIZED SUPPORTED LIVING, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion, Adair, Polk and Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri Secretary of State and (iii)
Clerk of Marion County, Missouri
</TABLE>
<PAGE> 133
THE FOLLOWING (#74-75) ARE BORROWERS THAT JOINED IN THE LOAN DOCUMENTS EFFECTIVE
WITH THE 1998 AMENDED AND RESTATED LOAN AGREEMENT (6/30/98):
<TABLE>
<S> <C>
74. RES-CARE WASHINGTON, INC.
State of incorporation: Washington
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations:
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Washington Secretary of State
75. RES-CARE ALABAMA, INC.
State of incorporation: Alabama
Location of principal office and records: 10140 Linn Station Road Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations:
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business in the last five (5)
years: N/A
UCC filing locations: (i) Kentucky Secretary of State and (ii) Alabama Secretary of State
</TABLE>
THE FOLLOWING ARE CONSOLIDATED SUBSIDIARIES THAT ARE NOT BORROWERS.
1. Biscayne Bay Transitional Living Center Limited Partnership
2. Community Alternatives Illinois, Inc.
3. Premier Rehabilitation Centers of Florida, Inc.
4. Alternative Choices, Inc.
5. The following subsidiaries of ALTERNATIVE YOUTH SERVICES, INC. (#24)
- --------------------------------------------------------------------------------
Academy for Individual Excellence Arizona Youth Associates
3101 Bluebird Lane 1825 E. Northern Ave., Ste. 100
Louisville, KY 40299 Phoenix, AZ 85020
- --------------------------------------------------------------------------------
Ashland S.A.F.E. Bowling Green S.A.F.E.
1926 Carter Avenue, Ste. 300 2530 Scottsville Road., Ste. 1
Ashland, KY 41105 Bowling Green, KY 42104
- --------------------------------------------------------------------------------
Community Youth Serv-Radcliff Community Youth Services-Mayfield
195 Lincoln Trail 1415 State Rt. 45N
<PAGE> 134
- --------------------------------------------------------------------------------
Radcliff, KY 40106 Mayfield, KY 42066
Georgia Center for Youth
Route 2 Goose Hollow Road
P. O. Box 966
Reynolds, GA 31076
- --------------------------------------------------------------------------------
Magnolia Academy New Summit School
2513 B. Kerr Road 1220 East Northside Drive
Columbia, TN 38401 Jackson, MS 39236
- --------------------------------------------------------------------------------
Ohio S.A.F.E. Richmond S.A.F.E.
1130 County Rod., #18 210 Saint George St., Ste. 207
P. O. Box 9 Richmond, KY 40475
South Pointe, OH 45680
- --------------------------------------------------------------------------------
<PAGE> 135
SCHEDULE 8.4
------------
SCHEDULE OF EXISTING LIENS NOT OTHERWISE DESCRIBED IN SECTION 8.4
1. UCC-1 from Res-Care, Inc., as Debtor, in favor of Orix Credit Alliance,
Inc., filed in Jefferson County, Kentucky, #96-00851.
2.
<PAGE> 136
LIST OF EXHIBITS
----------------
1. Exhibit A: Form of Amended and Restated Revolving Credit Notes
and Revolving Credit Notes
2. Exhibit B: Form of Revolving Credit Notes (Revolving
Credit Facility B)
3. Exhibit C: Swing Line Note
4. Exhibit D: Notice of Conversion/Continuation
6. Exhibit E: Request For Revolving Credit Loan
7. Exhibit F: Request for Swing Line Loan
8. Exhibit G: Compliance Certificate
9. Exhibit H: Assignment Agreement
10. Exhibit I: Confidentiality Agreement
11. Exhibit J: Amended and Restated Stock Pledge Agreement (Res-Care)
12. Exhibit K: Form of Security Agreement
13. Exhibit L: Form of UCC-1 Financing Statement
14. Exhibit M: Form of Assumption Agreement
13. Exhibit N: Form of Amendment to Stock Pledge Agreement
14. Exhibit O: Form of Stock Pledge Agreement (Shares in
Non-Consolidated Persons)
15. Exhibit P: Form of Borrower Counsel Opinion
16. Exhibit Q: Application and Agreement for Letter of Credit
<PAGE> 137
EXHIBIT A-1
-----------
FORM OF [AMENDED AND RESTATED] REVOLVING CREDIT PROMISSORY NOTE
REVOLVING CREDIT FACILITY A
$_________ December 23, 1996
Restated as of June 30,
1998
FOR VALUE RECEIVED, RES-CARE, INC., and the other Borrowers identified
on Schedule II attached hereto and incorporated herein by this reference (each a
"Maker" and, collectively, the "Makers"), jointly and severally promise to pay
to the order of [BANK], a __________ (the "Payee"), on or before the Revolving
Credit Facility A Termination Date (as defined in the Loan Agreement defined
below), the lesser of (y) ___________ Dollars ($___________), and (z) the unpaid
aggregate principal amount of all advances made by the Payee to the Makers as
Revolving Credit Loans under Revolving Credit Facility A pursuant to the Loan
Agreement referred to below.
The Makers also promise to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain Loan Agreement
dated as of December 23, 1996, as amended and restated by the 1998 Amended and
Restated Loan Agreement dated as of June 30, 1998, as amended (together with all
future amendments, modifications, supplements and/or restatements thereof, the
"Loan Agreement"; capitalized terms used herein without definition shall have
the meanings assigned those terms in the Loan Agreement), entered into by and
among the Makers, the Banks party thereto (referred to herein individually as a
"Bank" and collectively as the "Banks"), and PNC Bank, National Association, as
Administrative Bank.
This Note is one of the Makers' "Revolving Credit Notes" and is issued
pursuant to and is entitled to the benefits of the Loan Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby were or are
made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Administrative Bank located at 500 West Jefferson Street,
Louisville, Kentucky, or at such other place as shall be designated in writing
for such purpose in accordance with the terms of the Loan Agreement. Until
notified in writing of the transfer of this Note, the Makers and the
Administrative Bank shall be entitled to deem the Payee or such person who has
been so identified by the transferor in writing to the Makers and the
Administrative Bank as the holder of this Note, as the owner and holder of this
Note. Each of the Payee and any subsequent holder of this Note agrees that
before disposing of this Note or any part hereof it will make a notation hereon
or in its records of all principal payments previously made hereunder and of the
date to which interest herein has been paid; PROVIDED, HOWEVER, that the failure
<PAGE> 138
to make a notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Makers hereunder with respect to payments of
principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; PROVIDED, HOWEVER, that if the day on
which any payment relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.
This Note is subject to prepayment at the option of the Makers as
provided in Section 2.4 of the Loan Agreement.
This Note is secured by the Stock Pledge Agreement and the Security
Agreements.
This Note is subject to restriction on transfer or assignment as
provided in Section 12 of the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this Note
or the Loan Agreement shall alter or impair the obligation of the Makers, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.
The Makers promise to pay all reasonable costs and expenses, including
reasonable fees and expenses of counsel, as provided in Section 10.4 of the Loan
Agreement. The Makers hereby consent to all renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waives diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
A-1-3
<PAGE> 139
[This Note is delivered in amendment and restatement of, but not in
novation of, that Note of the Makers in the original amount of $25,000,000 dated
December 23, 1996, as subsequently amended and restated.]
This Note may be executed in one or more counterparts by the parties
hereto. Each Maker of this Note has taken written action, corporate or
otherwise, to approve the execution and delivery of this Note and has duly
authorized an officer or representative (an "Authorized Officer") to execute and
deliver this Note for and on behalf of such Maker. In many cases, a common
Person has been authorized by multiple Makers that are Consolidated Subsidiaries
of Res-Care, Inc. to execute and deliver this Note on behalf of each such Maker.
As a result, and for purposes of convenience, this Note bears signature blocks
wherein such Person may execute this Note by a single signature on behalf of all
Makers identified above such signature block. In each such case, each Maker
specifically identified in such signature block represents to the Banks that it
has authorized the Authorized Officer executing such signature block to do so as
representative of, and on behalf of such Maker, with present intention to
authenticate the writing, and each such Maker further represents and agrees that
by such execution it intends that this Note become a binding agreement of such
Maker, enforceable in accordance with its terms.
A-1-4
<PAGE> 140
IN WITNESS WHEREOF, the Makers have caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
RES-CARE, INC.
(a "Maker")
---------------------------
By: Authorized Officer
A-1-5
<PAGE> 141
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ADVANTAGE, INC.
TEXAS HOME MANAGEMENT, INC.
CAPITAL TX INVESTMENTS, INC.
THM HOMES, INC.
RSCR TEXAS, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
COMMUNITY ALTERNATIVES OF TEXAS, INC.
CATX PROPERTIES, INC.
RES-CARE CALIFORNIA, INC.
RES-CARE FLORIDA, INC.
RSCR CALIFORNIA, INC.
RES-CARE KANSAS, INC.
RES-CARE ILLINOIS, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
YOUTHTRACK, INC.
RES-CARE PREMIER, INC.
RES-CARE NEW JERSEY, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
ALTERNATIVE YOUTH SERVICES, INC.
COMMUNITY ALTERNATIVES TEXAS
PARTNER, INC.
RSCR WEST VIRGINIA, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
f/k/a RAIMENT, INC.
RES-CARE AVIATION, INC.
COMMUNICATIONS NETWORK CONSULTANTS,
INC.
THE ACADEMY FOR INDIVIDUAL
EXCELLENCE,
INC.
RES-CARE OTHER OPTIONS, INC.
SOUTHERN HOME CARE SERVICES, INC.
GENERAL HEALTH CORPORATION d/b/a
Arizona
Youth Associates, Inc.
BALD EAGLE ENTERPRISES, INC.
BRINKLEY GROUP HOMES, INC.
NORMAL LIFE, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
A-1-6
<PAGE> 142
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE CHARLES, INC.
NORMAL LIFE OF FLORIDA, INC.
NORMAL LIFE OF KENTUCKY, INC.
NORMAL LIFE OF NORTH TEXAS, INC.
NORMAL LIFE OF NEW MEXICO, INC.
NORMAL LIFE OF TENNESSEE, INC.
CAREERS IN PROGRESS, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE MANAGEMENT, INC.
NL DELAWARE, INC.
NORMAL LIFE OF OHIO, INC.
BOLIVAR DEVELOPMENT TRAINING CENTER,
INC.
HYDESBURG ESTATES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
WILLARD ESTATES, INC.
BOLIVAR ESTATES, INC.
SKYVIEW ESTATES, INC.
RIVER BLUFF ESTATES, INC.
MEADOW LANE ESTATES, INC.
EBENEZER ESTATES, INC.
HILLSIDE ESTATES, INC.
PEBBLE CREEK ESTATES, INC.
FORT MASON ESTATES, INC.
SHA-REE ESTATES, INC.
BAKER MANAGEMENT, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
UPWARD BOUND, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
RES-CARE WASHINGTON, INC.
RES-CARE ALABAMA, INC.
(each a "Maker")
- --------------------------------------
By: Authorized Officer
Name: Ralph G. Gronefeld
Assistant Treasurer of each Maker
A-1-7
<PAGE> 143
listed above beginning with
Community Alternatives Indiana, Inc.
and ending with Res-Care Alabama,
Inc., on behalf of each such Maker
CREATIVE NETWORKS, LLC
an Arizona limited liability company
(a "Maker")
- -------------------------------------
By: Authorized Officer
NORMAL LIFE OF INDIANA
a general partnership
(a "Maker")
By: NORMAL LIFE OF SOUTHERN INDIANA, INC.
one of its General Partners
- -------------------------------------
By: Authorized Officer
and
By: NORMAL LIFE OF CENTRAL INDIANA, INC.
its other General Partner
- -------------------------------------
By: Authorized Officer
A-1-8
<PAGE> 144
SCHEDULE II
LIST OF BORROWERS OTHER THAN RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal
office and place of business of Louisville, Kentucky ("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCF").
A-1-9
<PAGE> 145
14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RSCRC").
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky
("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCP").
22 RES-CARE NEW JERSEY, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCNJ").
23 COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
24 ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AYS")
25 COMMUNITY ALTERNATIVES TEXAS PARTNER, INC. (f/k/a Community
Alternatives Virginia, Inc.) a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("CAV").
26 RSCR WEST VIRGINIA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RSCRWV").
27 COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a Missouri
corporation with principal office and place of business in Louisville, Kentucky
("R").
A-1-10
<PAGE> 146
28 RES-CARE AVIATION, INC., a Kentucky corporation with principal office
and place of business in Louisville, Kentucky ("RCA").
29 COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island corporation
with principal office and place of business in Louisville,
Kentucky ("CNC").
30 THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AIE").
31 RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky
("ROO").
32 SOUTHERN HOME CARE SERVICES, INC. d/b/a Eldercare, a Georgia
corporation with principal office and place of business in Louisville, Kentucky
("SHCS").
33. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
34. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE"). . 35. BRINKLEY
GROUP HOMES, INC., a Missouri corporation with principal office and place of
business in Louisville, Kentucky ("BGH") .
36. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
37. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
38. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
39. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
40. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLL").
41. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
A-1-11
<PAGE> 147
42. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
43. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
44. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLK").
45. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with principal
office and place of business in Louisville, Kentucky ("NLNT").
46. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
47. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
48. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
49. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
50. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
51. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
52. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
53. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
54. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
55. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal office
and place of business in Louisville, Kentucky ("NLO").
A-1-12
<PAGE> 148
56. BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation
with principal office and place of business in Louisville, Kentucky ("BSTC").
57. HYDESBURG ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
58. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OWSB").
59. WILLARD ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("WE").
60. BOLIVAR ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BE").
61. SKYVIEW ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SE").
62. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("RBE").
63. MEADOW LANE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("MLE").
64. EBENEZER ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("EE").
65. HILLSIDE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("HE").
66. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
67. FORT MASON ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("FME").
68. SHA-REE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SRE").
69. BAKER MANAGEMENT, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BM").
A-1-13
<PAGE> 149
70. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
71. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OEB").
72. UPWARD BOUND, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("UB").
73. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
74. RES-CARE WASHINGTON, INC., a Washington corporation with principal
office and place of business in Louisville, Kentucky ("RCWASH").
75. RES-CARE ALABAMA, INC., an Alabama corporation with principal office
and place of business in Louisville, Kentucky ("RCALA").
A-1-14
<PAGE> 150
EXHIBIT B-1
-----------
FORM OF REVOLVING CREDIT PROMISSORY NOTE
REVOLVING CREDIT FACILITY B
$__________ June 30, 1998
FOR VALUE RECEIVED, RES-CARE, INC., and the other Borrowers identified on
Schedule II attached hereto and incorporated herein by this reference (each a
"Maker" and, collectively, the "Makers"), jointly and severally promise to pay
to the order of [BANK], a __________________ (the "Payee"), on or before the
Revolving Credit Facility B Termination Date (as defined in the Loan Agreement
defined below), the lesser of (y) _______________ Dollars ($_____________), and
(z) the unpaid aggregate principal amount of all advances made by the Payee to
the Makers as Revolving Credit Loans under Revolving Credit Facility B pursuant
to the Loan Agreement referred to below.
The Makers also promise to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain Loan Agreement
dated as of December 23, 1996, as amended and restated by the 1998 Amended and
Restated Loan Agreement dated as of June 30, 1998, as amended (together with all
future amendments, modifications, supplements and/or restatements thereof, the
"Loan Agreement"; capitalized terms used herein without definition shall have
the meanings assigned those terms in the Loan Agreement), entered into by and
among the Makers, the Banks party thereto (referred to herein individually as a
"Bank" and collectively as the "Banks"), and PNC Bank, National Association, as
Administrative Bank.
This Note is one of the Makers' "Revolving Credit Notes" and is issued
pursuant to and is entitled to the benefits of the Loan Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby were or are
made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Administrative Bank located at 500 West Jefferson Street,
Louisville, Kentucky, or at such other place as shall be designated in writing
for such purpose in accordance with the terms of the Loan Agreement. Until
notified in writing of the transfer of this Note, the Makers and the
Administrative Bank shall be entitled to deem the Payee or such person who has
been so identified by the transferor in writing to the Makers and the
Administrative Bank as the holder of this Note, as the owner and holder of this
Note. Each of the Payee and any subsequent holder of this Note agrees that
before disposing of this Note or any part hereof it will make a notation hereon
or in its records of all principal payments previously made hereunder and of the
date to which interest herein has been paid; PROVIDED, HOWEVER, that the failure
to make a notation of any payment made on this Note shall not
<PAGE> 151
limit or otherwise affect the obligation of the Makers hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; PROVIDED, HOWEVER, that if the day on
which any payment relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.
This Note is subject to prepayment at the option of the Makers as provided
in Section 2.4 of the Loan Agreement.
This Note is secured by the Stock Pledge Agreement and the Security
Agreements.
This Note is subject to restriction on transfer or assignment as
provided in Section 12 of the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.
The terms of this Note are subject to amendment only in the manner provided
in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this Note
or the Loan Agreement shall alter or impair the obligation of the Makers, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.
The Makers promise to pay all reasonable costs and expenses, including
reasonable fees and expenses of counsel, as provided in Section 10.4 of the Loan
Agreement. The Makers hereby consent to all renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waives diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
B-1-2
<PAGE> 152
This Note may be executed in one or more counterparts by the parties
hereto. Each Maker of this Note has taken written action, corporate or
otherwise, to approve the execution and delivery of this Note and has duly
authorized an officer or representative (an "Authorized Officer") to execute and
deliver this Note for and on behalf of such Maker. In many cases, a common
Person has been authorized by multiple Makers that are Consolidated Subsidiaries
of Res-Care, Inc. to execute and deliver this Note on behalf of each such Maker.
As a result, and for purposes of convenience, this Note bears signature blocks
wherein such Person may execute this Note by a single signature on behalf of all
Makers identified above such signature block. In each such case, each Maker
specifically identified in such signature block represents to the Banks that it
has authorized the Authorized Officer executing such signature block to do so as
representative of, and on behalf of such Maker, with present intention to
authenticate the writing, and each such Maker further represents and agrees that
by such execution it intends that this Note become a binding agreement of such
Maker, enforceable in accordance with its terms.
B-1-3
<PAGE> 153
IN WITNESS WHEREOF, the Makers have caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
RES-CARE, INC.
(a "Maker")
-------------------------------
By: Authorized Officer
B-1-4
<PAGE> 154
COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ADVANTAGE, INC.
TEXAS HOME MANAGEMENT, INC.
CAPITAL TX INVESTMENTS, INC.
THM HOMES, INC.
RSCR TEXAS, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
COMMUNITY ALTERNATIVES OF TEXAS, INC.
CATX PROPERTIES, INC.
RES-CARE CALIFORNIA, INC.
RES-CARE FLORIDA, INC.
RSCR CALIFORNIA, INC.
RES-CARE KANSAS, INC.
RES-CARE ILLINOIS, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
YOUTHTRACK, INC.
RES-CARE PREMIER, INC.
RES-CARE NEW JERSEY, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
ALTERNATIVE YOUTH SERVICES, INC.
COMMUNITY ALTERNATIVES TEXAS
PARTNERS, INC.
RSCR WEST VIRGINIA, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
f/k/a RAIMENT, INC.
RES-CARE AVIATION, INC.
COMMUNICATIONS NETWORK CONSULTANTS,
INC.
THE ACADEMY FOR INDIVIDUAL
EXCELLENCE,
INC.
RES-CARE OTHER OPTIONS, INC.
SOUTHERN HOME CARE SERVICES, INC.
GENERAL HEALTH CORPORATION d/b/a
Arizona
Youth Associates, Inc.
BALD EAGLE ENTERPRISES, INC.
BRINKLEY GROUP HOMES, INC.
NORMAL LIFE, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
B-1-5
<PAGE> 155
NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE CHARLES, INC.
NORMAL LIFE OF FLORIDA, INC.
NORMAL LIFE OF KENTUCKY, INC.
NORMAL LIFE OF NORTH TEXAS, INC.
NORMAL LIFE OF NEW MEXICO, INC.
NORMAL LIFE OF TENNESSEE, INC.
CAREERS IN PROGRESS, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE MANAGEMENT, INC.
NL DELAWARE, INC.
NORMAL LIFE OF OHIO, INC.
BOLIVAR DEVELOPMENT TRAINING CENTER,
INC.
HYDESBURG ESTATES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
WILLARD ESTATES, INC.
BOLIVAR ESTATES, INC.
SKYVIEW ESTATES, INC.
RIVER BLUFF ESTATES, INC.
MEADOW LANE ESTATES, INC.
EBENEZER ESTATES, INC.
HILLSIDE ESTATES, INC.
PEBBLE CREEK ESTATES, INC.
FORT MASON ESTATES, INC.
SHA-REE ESTATES, INC.
BAKER MANAGEMENT, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
UPWARD BOUND, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
RES-CARE WASHINGTON, INC.
RES-CARE ALABAMA, INC.
(each a "Maker")
- -------------------------------------
By: Authorized Officer
Name: Ralph G. Gronefeld
Assistant Treasurer of each Maker
B-1-6
<PAGE> 156
listed above beginning with
Community Alternatives Indiana, Inc.
and ending with Res-Care Alabama,
Inc., on behalf of each such Maker
CREATIVE NETWORKS, LLC
an Arizona limited liability company
(a "Maker")
- -----------------------------------
By: Authorized Officer
NORMAL LIFE OF INDIANA
a general partnership
(a "Maker")
By: NORMAL LIFE OF SOUTHERN INDIANA, INC.
one of its General Partners
- -----------------------------------
By: Authorized Officer
and
By: NORMAL LIFE OF CENTRAL INDIANA, INC.
its other General Partner
- -----------------------------------
By: Authorized Officer
B-1-7
<PAGE> 157
SCHEDULE II
LIST OF BORROWERS OTHER THAN
RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal
office and place of business of Louisville, Kentucky ("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCF").
B-1-8
<PAGE> 158
14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RSCRC").
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky
("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCP").
22 RES-CARE NEW JERSEY, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCNJ").
23 COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
24 ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AYS")
25 COMMUNITY ALTERNATIVES TEXAS PARTNER, INC., (f/k/a Community
Alternatives Virginia, Inc.), a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("CAV").
26 RSCR WEST VIRGINIA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RSCRWV").
27 COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a Missouri
corporation with principal office and place of business in Louisville, Kentucky
("R").
B-1-9
<PAGE> 159
28 RES-CARE AVIATION, INC., a Kentucky corporation with principal office
and place of business in Louisville, Kentucky ("RCA").
29 COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island corporation
with principal office and place of business in Louisville,
Kentucky ("CNC").
30 THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AIE").
31 RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky
("ROO").
32 SOUTHERN HOME CARE SERVICES, INC. d/b/a Eldercare, a Georgia
corporation with principal office and place of business in Louisville, Kentucky
("SHCS").
33. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
34. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE"). . 35. BRINKLEY
GROUP HOMES, INC., a Missouri corporation with principal office and place of
business in Louisville, Kentucky ("BGH") .
36. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
37. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
38. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
39. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
40. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLL").
41. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
B-1-10
<PAGE> 160
42. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
43. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
44. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLK").
45. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with principal
office and place of business in Louisville, Kentucky ("NLNT").
46. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
47. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
48. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
49. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
50. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
51. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
52. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
53. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
54. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
55. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal office
and place of business in Louisville, Kentucky ("NLO").
B-1-11
<PAGE> 161
56. BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation
with principal office and place of business in Louisville, Kentucky ("BSTC").
57. HYDESBURG ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
58. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OWSB").
59. WILLARD ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("WE").
60. BOLIVAR ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BE").
61. SKYVIEW ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SE").
62. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("RBE").
63. MEADOW LANE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("MLE").
64. EBENEZER ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("EE").
65. HILLSIDE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("HE").
66. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
67. FORT MASON ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("FME").
68. SHA-REE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SRE").
69. BAKER MANAGEMENT, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BM").
B-1-12
<PAGE> 162
70. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
71. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OEB").
72. UPWARD BOUND, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("UB").
73. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
74. RES-CARE WASHINGTON, INC., a Washington corporation with principal
office and place of business in Louisville, Kentucky ("RCWASH").
75. RES-CARE ALABAMA, INC., an Alabama corporation with principal office
and place of business in Louisville, Kentucky ("RCALA").
B-1-13
<PAGE> 163
EXHIBIT C
---------
AMENDED AND RESTATED SWING LINE PROMISSORY NOTE
$15,000,000.00 December 23, 1996
Restated as of June _, 1998
FOR VALUE RECEIVED, RES-CARE, INC. and the other Borrowers identified on
Schedule II attached hereto and incorporated herein by this reference (each a
"Maker" and, collectively, the "Makers"), jointly and severally promise to pay
to the order of PNC Bank, National Association, a National banking association
(the "Payee"), on or before the Swing Line Commitment Termination Date (as
defined in the Loan Agreement defined below), the lesser of (y) Fifteen Million
Five Hundred Thousand Dollars ($15,000,000.00), and (z) the unpaid aggregate
principal amount of all advances made by the Payee to the Makers as Swing Line
Loans under the Loan Agreement referred to below.
The Makers also promise to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain Loan Agreement
dated as of December 23, 1996, as amended and restated by the 1998 Amended and
Restated Loan Agreement dated as of June 30, 1998, as amended (together with all
future amendments, modifications, supplements and/or restatements thereof, the
"Loan Agreement"; capitalized terms used herein without definition shall have
the meanings assigned those terms in the Loan Agreement), entered into by and
among the Makers, the Banks party thereto (referred to herein individually as a
"Bank" and collectively as the "Banks"), and PNC Bank, National Association, as
Administrative Bank.
This Note is the Makers' "Swing Line Note" and is issued pursuant to and is
entitled to the benefits of the Loan Agreement to which reference is hereby made
for a more complete statement of the terms and conditions under which the Swing
Line Loans evidenced hereby were or are made and are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Administrative Bank located at 500 West Jefferson Street,
Louisville, Kentucky, or at such other place as shall be designated in writing
for such purpose in accordance with the terms of the Loan Agreement. Until
notified in writing of the transfer of this Note, the Makers and the
Administrative Bank shall be entitled to deem the Payee or such person who has
been so identified by the transferor in writing to the Makers and the
Administrative Bank as the holder of this Note, as the owner and holder of this
Note. Each of the Payee and any subsequent holder of this Note agrees that
before disposing of this Note or any part hereof it will make a notation hereon
or in its records of all principal payments previously made hereunder and of the
date to which interest herein has been paid; PROVIDED, HOWEVER, that the failure
to make a notation of any payment made on this Note shall not
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limit or otherwise affect the obligation of the Makers hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; PROVIDED, HOWEVER, that if the day on
which any payment relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.
This Note is subject to prepayment at the option of the Makers.
This Note is secured by the Stock Pledge Agreement and the Security
Agreements.
This Note is subject to restriction on transfer or assignment as provided
in Section 12 of the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.
The terms of this Note are subject to amendment only in the manner provided
in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this Note or
the Loan Agreement shall alter or impair the obligation of the Makers, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.
The Makers promise to pay all reasonable costs and expenses, including
reasonable fees and expenses of counsel, as provided in Section 10.4 of the Loan
Agreement. The Makers hereby consent to all renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waives diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
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This Note is delivered in amendment and restatement of, but not in novation
of, that Swing Line Note of the Makers in the original amount of $7,500,000
dated December 23, 1996, as subsequently amended and restated.
This Note may be executed in one or more counterparts by the parties
hereto. Each Maker of this Note has taken written action, corporate or
otherwise, to approve the execution and delivery of this Note and has duly
authorized an officer or representative (an "Authorized Officer") to execute and
deliver this Note for and on behalf of such Maker. In many cases, a common
Person has been authorized by multiple Makers that are Consolidated Subsidiaries
of Res-Care, Inc. to execute and deliver this Note on behalf of each such Maker.
As a result, and for purposes of convenience, this Note bears signature blocks
wherein such Person may execute this Note by a single signature on behalf of all
Makers identified above such signature block. In each such case, each Maker
specifically identified in such signature block represents to the Banks that it
has authorized the Authorized Officer executing such signature block to do so as
representative of, and on behalf of such Maker, with present intention to
authenticate the writing, and each such Maker further represents and agrees that
by such execution it intends that this Note become a binding agreement of such
Maker, enforceable in accordance with its terms.
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IN WITNESS WHEREOF, the Makers have caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
RES-CARE, INC.
(a "Maker")
-----------------------------
By: Authorized Officer
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COMMUNITY ALTERNATIVES INDIANA, INC.
COMMUNITY ALTERNATIVES NEBRASKA, INC.
COMMUNITY ADVANTAGE, INC.
TEXAS HOME MANAGEMENT, INC.
CAPITAL TX INVESTMENTS, INC.
THM HOMES, INC.
RSCR TEXAS, INC.
RES-CARE NEW MEXICO, INC.
RES-CARE OHIO, INC.
COMMUNITY ALTERNATIVES OF TEXAS, INC.
CATX PROPERTIES, INC.
RES-CARE CALIFORNIA, INC.
RES-CARE FLORIDA, INC.
RSCR CALIFORNIA, INC.
RES-CARE KANSAS, INC.
RES-CARE ILLINOIS, INC.
RES-CARE OKLAHOMA, INC.
RES-CARE TENNESSEE, INC.
RES-CARE TRAINING TECHNOLOGIES, INC.
YOUTHTRACK, INC.
RES-CARE PREMIER, INC.
RES-CARE NEW JERSEY, INC.
COMMUNITY ALTERNATIVES KENTUCKY, INC.
ALTERNATIVE YOUTH SERVICES, INC.
COMMUNITY ALTERNATIVES TEXAS
PARTNERS, INC.
RSCR WEST VIRGINIA, INC.
COMMUNITY ALTERNATIVES MISSOURI, INC.
f/k/a RAIMENT, INC.
RES-CARE AVIATION, INC.
COMMUNICATIONS NETWORK CONSULTANTS,
INC.
THE ACADEMY FOR INDIVIDUAL
EXCELLENCE,
INC.
RES-CARE OTHER OPTIONS, INC.
SOUTHERN HOME CARE SERVICES, INC.
GENERAL HEALTH CORPORATION d/b/a
Arizona
Youth Associates, Inc.
BALD EAGLE ENTERPRISES, INC.
BRINKLEY GROUP HOMES, INC.
NORMAL LIFE, INC.
NORMAL LIFE OF SOUTHERN INDIANA, INC.
NORMAL LIFE OF CENTRAL INDIANA, INC.
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NORMAL LIFE OF LOUISIANA, INC.
NORMAL LIFE OF LAFAYETTE, INC.
NORMAL LIFE OF LAKE CHARLES, INC.
NORMAL LIFE OF FLORIDA, INC.
NORMAL LIFE OF KENTUCKY, INC.
NORMAL LIFE OF NORTH TEXAS, INC.
NORMAL LIFE OF NEW MEXICO, INC.
NORMAL LIFE OF TENNESSEE, INC.
CAREERS IN PROGRESS, INC.
NORMAL LIFE FAMILY SERVICES, INC.
NORMAL LIFE OF CALIFORNIA, INC.
NORMAL LIFE OF GEORGIA, INC.
NORMAL LIFE MANAGEMENT, INC.
NL DELAWARE, INC.
NORMAL LIFE OF OHIO, INC.
BOLIVAR DEVELOPMENT TRAINING CENTER,
INC.
HYDESBURG ESTATES, INC.
OAK WOOD SUITES OF BOLIVAR, INC.
WILLARD ESTATES, INC.
BOLIVAR ESTATES, INC.
SKYVIEW ESTATES, INC.
RIVER BLUFF ESTATES, INC.
MEADOW LANE ESTATES, INC.
EBENEZER ESTATES, INC.
HILLSIDE ESTATES, INC.
PEBBLE CREEK ESTATES, INC.
FORT MASON ESTATES, INC.
SHA-REE ESTATES, INC.
BAKER MANAGEMENT, INC.
MISSOURI PROGRESSIVE SERVICES, INC.
OAKVIEW ESTATES OF BOLIVAR, INC.
UPWARD BOUND, INC.
INDIVIDUALIZED SUPPORTED LIVING, INC.
RES-CARE WASHINGTON, INC.
RES-CARE ALABAMA, INC.
(each a "Maker")
- -----------------------------------
By: Authorized Officer
Name: Ralph G. Gronefeld
Assistant Treasurer of each Maker
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listed above beginning with
Community Alternatives Indiana, Inc.
and ending with Res-Care Alabama,
Inc., on behalf of each such Maker
CREATIVE NETWORKS, LLC
an Arizona limited liability company
(a "Maker")
- ----------------------------------
By: Authorized Officer
NORMAL LIFE OF INDIANA
a general partnership
(a "Maker")
By: NORMAL LIFE OF SOUTHERN INDIANA, INC.
one of its General Partners
- ----------------------------------
By: Authorized Officer
and
By: NORMAL LIFE OF CENTRAL INDIANA, INC.
its other General Partner
- ----------------------------------
By: Authorized Officer
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SCHEDULE II
LIST OF BORROWERS OTHER THAN RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky
("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky
("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and place
of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware corporation
with principal office and place of business in Louisville,
Kentucky ("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal office
and place of business of Louisville, Kentucky
("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky
("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware corporation
with principal office and place of business in Louisville,
Kentucky ("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCF").
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14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RSCRC").
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky
("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCP").
22 RES-CARE NEW JERSEY, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCNJ").
23 COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
24 ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("AYS")
25 COMMUNITY ALTERNATIVES VIRGINIA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAV").
26 RSCR WEST VIRGINIA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RSCRWV").
27 COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a Missouri
corporation with principal office and place of business in Louisville, Kentucky
("R").
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28 RES-CARE AVIATION, INC., a Kentucky corporation with principal office
and place of business in Louisville, Kentucky ("RCA").
29 COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island corporation
with principal office and place of business in Louisville,
Kentucky ("CNC").
30 THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AIE").
31 RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky
("ROO").
32 SOUTHERN HOME CARE SERVICES, INC. d/b/a Eldercare, a Georgia corporation
with principal office and place of business in Louisville, Kentucky ("SHCS").
33. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
34. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE"). . 35. BRINKLEY
GROUP HOMES, INC., a Missouri corporation with principal office and place of
business in Louisville, Kentucky ("BGH") .
36. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
37. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
38. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
39. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
40. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky
("NLL").
41. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
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42. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
43. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
44. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLK").
45. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with principal
office and place of business in Louisville, Kentucky ("NLNT").
46. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
47. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
48. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
49. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
50. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
51. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
52. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
53. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
54. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
55. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal office
and place of business in Louisville, Kentucky ("NLO").
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56. BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("BSTC").
57. HYDESBURG ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("HE").
58. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("OWSB").
59. WILLARD ESTATES, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("WE").
60. BOLIVAR ESTATES, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("BE").
61. SKYVIEW ESTATES, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("SE").
62. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky
("RBE").
63. MEADOW LANE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("MLE").
64. EBENEZER ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("EE").
65. HILLSIDE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("HE").
66. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
67. FORT MASON ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("FME").
68. SHA-REE ESTATES, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("SRE").
69. BAKER MANAGEMENT, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BM").
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70. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
71. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("OEB").
72. UPWARD BOUND, INC., a Missouri corporation with principal office and
place of business in Louisville, Kentucky ("UB").
73. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
74. RES-CARE WASHINGTON, INC., a Washington corporation with principal
office and place of business in Louisville, Kentucky ("RCWASH").
75. RES-CARE ALABAMA, INC., an Alabama corporation with principal office
and place of business in Louisville, Kentucky ("RCALA").
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EXHIBIT D
---------
FORM OF NOTICE OF CONVERSION/CONTINUATION
-----------------------------------------
This Notice of Conversion/Continuation is being delivered to PNC Bank,
National Association, as Administrative Bank, pursuant to Section 2.2D of that
certain Loan Agreement dated as of December 23, 1996, as amended and restated by
the 1998 Amended and Restated Loan Agreement dated as of June 30, 1998, as
further amended from time to time (the "Loan Agreement") among RES-CARE, INC.,
and all Borrowers listed on Schedule II to the Loan Agreement, as that Schedule
II may be amended from time to time (collectively, the "Borrowers"), the Banks
named therein, and PNC Bank, National Association, as Administrative Bank for
the Banks (together with all amendments, modifications and supplements thereto
and all restatements thereof, the "Loan Agreement"). The Borrowers hereby
request the Banks to:
_____ [check if applicable] convert $__________ principal amount of Base Rate
Loans into a Euro-Rate Loan for an Interest Period of _____ month(s) [select a
one, two, three or six month period] on ____________, 19___;
_____ [check if applicable] convert $__________ principal amount of Euro-Rate
Loans into a Base Rate Loan on _____________, 19___;
_____ [check if applicable] continue $__________ principal amount of Euro-Rate
Loans as a Euro-Rate Loan for an Interest Period of _____ month(s) [select a
one, two, three or six month period] on ____________, 19___.
The undersigned officer, on behalf of the Borrowers, certifies that no
Event of Default has occurred and is continuing under the Loan Agreement.
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<PAGE> 177
Capitalized terms used herein without definition shall have the meanings
assigned to those terms in the Loan Agreement.
Dated: ______________________
RES-CARE,
INC.
By:
------------------------------------
Title:
----------------------------------
On behalf of itself and all Borrowers listed on
Schedule II to the Loan Agreement, as that
Schedule II may be amended from time to time
(collectively, the "Borrowers")
D-2
<PAGE> 178
EXHIBIT E-1
-----------
REQUEST FOR REVOLVING CREDIT LOAN
---------------------------------
REVOLVING CREDIT FACILITY A
This Request For Revolving Credit Loan under Revolving Credit Facility A is
being delivered to PNC Bank, National Association, as Administrative Bank,
pursuant to Section 2.lC of that certain Loan Agreement dated as of December 23,
1996, as amended and restated by the 1998 Amended and Restated Loan Agreement
dated as of June 30, 1998, as amended from time to time (the "Loan Agreement")
among RES-CARE, INC., and all Borrowers listed on Schedule II to the Loan
Agreement, as that Schedule II may be amended from time to time (collectively,
the "Borrowers"), the Banks named therein, and PNC Bank, National Association,
as Administrative Bank for the Banks (together with all amendments,
modifications and supplements thereto and all restatements thereof, the "Loan
Agreement"). The Borrowers hereby request the Banks to make a Revolving Credit
Loan under Revolving Credit Facility A to the Borrowers in the amount of
$__________ on _____________, 19___ (the "Funding Date"). The Revolving Credit
Loan requested hereunder shall be in the form of a:
_______ Base Rate Loan [check if applicable]
_______ Euro-Rate Loan [check if applicable]
To the extent the Borrowers have requested a Euro-Rate Loan, the initial
Interest Period shall be month(s) [select a one, two, three or six month period)
commencing on the Funding Date.
The proceeds of the Revolving Credit Loan requested pursuant to this
Request For Revolving Credit Loan shall be deposited in the Borrowers' account
maintained with the Administrative Bank. Capitalized terms used herein without
definition shall have the meanings assigned to those terms in the Loan
Agreement.
The undersigned officer, on behalf of the Borrowers, certifies that:
(a) The amount of the Revolving Credit Loan under Revolving Credit Facility
A requested pursuant to this Request For Revolving Credit Loan will not cause
the outstanding aggregate principal balance of Revolving Credit Loans under
Revolving Credit Facility A to exceed the aggregate Revolving Credit Facility A
Loan Commitments in effect as of the date hereof;
(b) The amount of the proposed Revolving Credit Loan will not cause the
ratio of the Borrowers' Indebtedness to Cash Flow from Operations to exceed 4.5
to 1.0;
(c) The representations and warranties contained in the Loan Agreement, as
originally stated or as updated in writing from time to time by the Borrowers,
are true and correct in all
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<PAGE> 179
material respects on and as of the date hereof to the same extent as though made
on and as of the date hereof;
(d) No event has occurred and is continuing under the Loan Agreement, or
will result from the disbursement of the Revolving Credit Loan requested
pursuant to this Request For Revolving Credit Loan, which would constitute an
Event of Default;
(e) The Borrowers have performed all of their obligations in all material
respects and have satisfied all conditions which the Loan Agreement and the
other Loan Instruments provide shall be performed or satisfied on or before the
Funding Date for the Revolving Credit Loan requested pursuant to this Request
For Revolving Credit Loan;
(f) No order, judgment or decree of any court, arbitrator or governmental
authority purports to enjoin or restrain any Bank from making the Revolving
Credit Loan requested pursuant to this Request For Revolving Credit Loan; and
(g) No injunction or other restraining order has been issued and no hearing
to cause an injunction or other restraining order to be issued is pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of the Loan Agreement or the making of
Revolving Credit Loans thereunder.
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Dated: ______________________
RES-CARE,
INC.
By:
------------------------------------
Title:
----------------------------------
On behalf of itself and all Borrowers listed on
Schedule II to the Loan Agreement, as that
Schedule II may be amended from time to time
(collectively, the "Borrowers")
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EXHIBIT E-2
REQUEST FOR REVOLVING CREDIT LOAN
---------------------------------
REVOLVING CREDIT FACILITY B
This Request For Revolving Credit Loan under Revolving Credit Facility B is
being delivered to PNC Bank, National Association, as Administrative Bank,
pursuant to Section 2.lC of that certain Loan Agreement dated as of December 23,
1996, as amended and restated by the 1998 Amended and Restated Loan Agreement
dated as of June 30, 1998, as amended from time to time (the "Loan Agreement")
among RES-CARE, INC., and all Borrowers listed on Schedule II to the Loan
Agreement, as that Schedule II may be amended from time to time (collectively,
the "Borrowers"), the Banks named therein, and PNC Bank, National Association,
as Administrative Bank for the Banks (together with all amendments,
modifications and supplements thereto and all restatements thereof, the "Loan
Agreement"). The Borrowers hereby request the Banks to make a Revolving Credit
Loan under Revolving Credit Facility B to the Borrowers in the amount of
$__________ on _____________, 19___ (the "Funding Date"). The Revolving Credit
Loan requested hereunder shall be in the form of a:
_______ Base Rate Loan [check if applicable]
_______ Euro-Rate Loan [check if applicable]
To the extent the Borrowers have requested a Euro-Rate Loan, the initial
Interest Period shall be month(s) [select a one, two, three or six month period)
commencing on the Funding Date.
The proceeds of the Revolving Credit Loan requested pursuant to this
Request For Revolving Credit Loan shall be deposited in the Borrowers' account
maintained with the Administrative Bank. Capitalized terms used herein without
definition shall have the meanings assigned to those terms in the Loan
Agreement.
The undersigned officer, on behalf of the Borrowers, certifies that:
(a) The amount of the Revolving Credit Loan under Revolving Credit Facility
B requested pursuant to this Request For Revolving Credit Loan will not cause
the outstanding aggregate principal balance of Revolving Credit Loans under
Revolving Credit Facility B to exceed the aggregate Revolving Credit Facility B
Loan Commitments in effect as of the date hereof;
(b) The amount of the proposed Revolving Credit Loan will not cause the
ratio of the Borrowers' Indebtedness to Cash Flow from Operations to exceed 4.5
to 1.0;
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<PAGE> 182
(c) The representations and warranties contained in the Loan Agreement, as
originally stated or as updated in writing from time to time by the Borrowers,
are true and correct in all material respects on and as of the date hereof to
the same extent as though made on and as of the date hereof;
(d) No event has occurred and is continuing under the Loan Agreement, or
will result from the disbursement of the Revolving Credit Loan requested
pursuant to this Request For Revolving Credit Loan, which would constitute an
Event of Default;
(e) The Borrowers have performed all of their obligations in all material
respects and have satisfied all conditions which the Loan Agreement and the
other Loan Instruments provide shall be performed or satisfied on or before the
Funding Date for the Revolving Credit Loan requested pursuant to this Request
For Revolving Credit Loan;
(f) No order, judgment or decree of any court, arbitrator or governmental
authority purports to enjoin or restrain any Bank from making the Revolving
Credit Loan requested pursuant to this Request For Revolving Credit Loan; and
(g) No injunction or other restraining order has been issued and no hearing
to cause an injunction or other restraining order to be issued is pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of the Loan Agreement or the making of
Revolving Credit Loans thereunder.
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<PAGE> 183
Dated: ______________________
RES-CARE,
INC.
By:
------------------------------------
Title:
----------------------------------
On behalf of itself and all Borrowers listed on
Schedule II to the Loan Agreement, as that
Schedule II may be amended from time to time
(collectively, the "Borrowers")
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<PAGE> 184
EXHIBIT F
---------
REQUEST FOR SWING LINE LOAN
---------------------------
This Request For Swing Line Loan is being delivered to PNC Bank, National
Association, as Administrative Bank, pursuant to Section 3.1 of that certain
Loan Agreement dated as of December 23, 1996, as amended and restated by the
1998 Amended and Restated Loan Agreement dated as of June 30, 1998, as amended
from time to time (the "Loan Agreement") among RES-CARE, INC., and all Borrowers
listed on Schedule II to the Loan Agreement, as that Schedule II may be amended
from time to time (collectively, the "Borrowers"), the Banks named therein, and
PNC Bank, National Association, as Administrative Bank for the Banks (together
with all amendments, modifications and supplements thereto and all restatements
thereof, the "Loan Agreement"). The Borrowers hereby request the Administrative
Bank to make a Swing Line Loan to the Borrowers in the amount of $___________ on
_________________________ 19, (the "Funding Date"). The Bank has advised the
Borrower that the Swing Line Loan will bear interest at the Offered Rate of
percent from the Funding Date until a date agreed to by the Bank and the
Borrowers.
The proceeds of the Swing Line Loan requested pursuant to this Request For
Swing Line Loan shall be deposited in the Borrowers' account maintained with the
Administrative Bank. Capitalized terms used herein without definition shall have
the meanings assigned to those terms in the Loan Agreement.
The undersigned officer, on behalf of the Borrowers, certifies that:
(a) The amount of the Swing Line Loan requested pursuant to this Request
For Swing Line Loan will not cause the outstanding aggregate principal balance
of Swing Line Loans to exceed $15,000,000;
(b) The representations and warranties contained in the Loan Agreement, as
originally stated or as updated in writing from time to time by the Borrowers,
are true and correct in all material respects on and as of the date hereof to
the same extent as though made on and as of the date hereof;
(c) No event has occurred and is continuing under the Loan Agreement, or
will result from the disbursement of the Swing Line Loan requested pursuant to
this Request For Swing Line Loan, which would constitute an Event of Default;
(d) The Borrowers have performed all of their obligations in all material
respects and has satisfied all conditions which the Loan Agreement and the other
Loan Instruments provide
F-1
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shall be performed or satisfied on or before the Funding Date for the Swing Line
Loan requested pursuant to this Request For Swing Line Loan;
(e) No order, judgment or decree of any court, arbitrator or governmental
authority purports to enjoin or restrain the Administrative Bank from making the
Swing Line Loan requested pursuant to this Request For Swing Line Loan; and
(f) No injunction or other restraining order has been issued and no hearing
to cause an injunction or other restraining order to be issued is pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of the Loan Agreement or the making of Swing
Line Loans thereunder.
Dated: ______________________
RES-CARE,
INC.
By:
-----------------------------------
Title:
----------------------------------
On behalf of itself and all Borrowers listed on
Schedule II to the Loan Agreement, as that
Schedule II may be amended from time to time
(collectively, the "Borrowers")
F-2
<PAGE> 186
EXHIBIT G
---------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
This Compliance Certificate is being delivered to PNC Bank, National
Association, as Administrative Bank, pursuant to Section 7.3 (iii) of that
certain Loan Agreement dated as of December 23, 1996, as amended and restated by
the 1998 Amended and Restated Loan Agreement dated as of June 30, 1998, as
amended from time to time (the "Loan Agreement") among RES-CARE, INC., and all
Borrowers listed on Schedule II to the Loan Agreement, as that Schedule II may
be amended from time to time (collectively, the "Borrowers"), the Banks named
therein and PNC Bank, National Association, as Administrative Bank for the Banks
(together with all amendments, modifications and supplements thereto and all
restatements thereof, the "Loan Agreement"). All capitalized terms used herein
without definition shall have the meanings assigned to those terms in the Loan
Agreement. The undersigned officer, on behalf of the Borrowers, certifies that
as of the last day of the most recently ended month of the Borrowers dated
____________, 19___ (the "Compliance Date"):
1. EXTRAORDINARY Transactions. The Borrowers have not, during the preceding
Month ending on the Compliance Date, consummated any of the transactions
described in Section 8.1 of the Loan Agreement, other than [if the Borrowers
consummated any of the transactions described in section 8.1 of the Loan
Agreement, describe such transactions in detail] [Reference Section 8.1 of the
Loan Agreement].
2. INDEBTEDNESS. The Borrowers have not, during the preceding Month ending
on the Compliance Date, incurred or assumed any new or additional Indebtedness,
other than [if any such new or additional Indebtedness has been incurred or
assumed by the Borrowers, describe the amount and nature of the Indebtedness,
the assets securing the same, if any, and the holder thereof] [Reference Section
8.2 of the Loan Agreement].
3. LIENS. The Borrowers have not, during the preceding Month ending on the
Compliance Date, granted any liens or purchase money security interests in
assets acquired by the Borrowers, other than [if any such liens or purchase
money security interests have been granted, describe the amount of the
Indebtedness secured by the lien or purchase money security interest, the assets
secured by the lien or purchase money security interest and the holder thereof]
[Reference Section 8.4 of the Loan Agreement].
4. NET WORTH. The Borrowers' Net Worth requirement is calculated as follows
[Reference Section 8.6 of
the Loan Agreement]:
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<PAGE> 187
(a) Borrower's Net Worth at Compliance Date
(b) Minimum Net Worth at Closing Date $100,000,000
(c) 75% of the Net Income (if positive) for each month
beginning with the month ended 6/30/98 ______
(d) Increases in capital accounts from issuance of
capital stock of Res-Care ______
(e) Increases in Net Worth resulting from the issuance by
Res-Care of its capital stock to pay in whole or in
part the purchase price of any entity or assets
acquired by the Borrowers
(f) (b) + (c) + (d) + (e) = ------ (This is required Net
Worth)
Required: Net Worth at Compliance Date (a) must not be less
than required Net Worth (f)
5. INDEBTEDNESS TO CASH FLOW RATIO. The ratio of the Borrowers'
Indebtedness to its Cash Flow from Operations for the rolling twelve (12) month
period ended as of the Compliance Date was ____________, calculated as follows
(Reference Section 8.7 of the Loan Agreement):
(a) Indebtedness ______
(b) Net Income ______
(c) Interest Expense ______
(d) provisions for taxes based
on income ______
(e) depreciation ______
(f) amortization ______
(g) non-cash charges to income ______
G-2
<PAGE> 188
(h) non-cash credits to income ______
(i) (b) + (c) + (d) + (e) +
(f) + (g) - (h) = ______
(j) (a) divided by (i) ______
Required: Indebtedness to Cash Flow from Operations
Ratio (j) must be less than or equal to 4.50 to 1.0
6. SENIOR INDEBTEDNESS TO CASH FLOW RATIO. The ratio of the Borrowers'
Indebtedness to its Cash Flow from Operations for the rolling twelve (12) month
period ended as of the Compliance Date was ____________, calculated as follows
(Reference Section 8.8 of the Loan Agreement):
(a) Senior Indebtedness ______
(b) Net Income ______
(c) Interest Expense ______
(d) provisions for taxes based on income ______
(e) depreciation ______
(f) amortization ______
(g) non-cash charges to income ______
(h) non-cash credits to income ______
(i) (b) + (c) + (d) + (e) +
(f) + (g) - (h) = ______
(j) (a) divided by (i) ______
Required: Senior Indebtedness to Cash Flow from Operations
Ratio (j) must be less than or equal to 3.0 to 1.0
7. DEBT TO CAPITALIZATION RATIO. The ratio of the Borrowers' Debt to
its Capitalization as of the Compliance Date was ____________, calculated as
follows (Reference Section 8.9 of the Loan Agreement):
(a) Net Worth (obtain from line 4(a) above) ______
G-3
<PAGE> 189
(b) Debt ______
(c) (a) divided by (b) ______
Required: Debt to Capitalization
Ratio (c) must be less than or equal to the following ratios.
Period Applicable Ratio
------ ---------- -----
6/30/98-9/30/99 .70 to 1.0
10/01/99-9/30/00 .60 to 1.0
10/01/00 and thereafter .55 to 1.0
8. FIXED CHARGE COVERAGE RATIO REQUIREMENT. The Borrowers' Fixed Charge
Coverage Ratio for the rolling twelve (12) month period ended as of the
Compliance Date was ___________, calculated as follows [Reference Section 8.10
of the Loan Agreement]:
(a) EBIT ______
(b) Operating Lease/Rental
Expense ______
(c) (a) + (b) ______
(d) Interest
Expense ______
(e) Operating Lease/Rental
Expense ______
(f) Current Maturities
of Long-Term Debt ______
(g) (d) + (e) + (f) ______
(h) (c) divided by (g) ______
Required: Fixed Charge Coverage
Ratio (h) must be equal to or greater than 1.75 to
1.0
9. BUSINESS COMBINATIONS. The Borrowers have not, during the preceding
twelve (12) months ending on the Compliance Date, engaged in any Business
Combinations, other than:
G-4
<PAGE> 190
[if any such Business Combination occurred, describe the Business
Combination in detail, including the assets acquired, the seller thereof,
the total consideration paid thereof or and the date of consummation
thereof] [Reference Section 8.11 of the Loan Agreement].
Attached hereto is a spreadsheet or report demonstrating that Business
Combinations occurring within the last twelve months ending as of the Compliance
Date have not caused the Borrowers to violate any of the financial covenants set
forth in Sections 8.6 through 8.10 of the Loan Agreement. Data on each Business
Combination occurring within this period should be included on such spreadsheet
or report.
10. CONTINGENT OBLIGATIONS. The Borrowers have not, during the preceding
month ending on the Compliance Date, incurred or assumed any Contingent
Obligations, other than [if any such new or additional Contingent Obligations
has been incurred or assumed by the Borrower, describe the amount and nature of
the particular Contingent Obligation, the Person on whose behalf the Contingent
Obligation was incurred or assumed and the Person in whose favor the Contingent
Obligation was incurred or assumed] [Reference Section 8.12 of the Loan
Agreement].
11. INVESTMENTS, LOANS AND GUARANTEES. The Borrowers have not, during the
preceding month ending on the Compliance Date, made any loans or guarantees in
violation of the provisions of Section 8.12 of the Loan Agreement, other than
[if any such assets or other investments have been acquired by the Borrower, or
if any such loans have been made by the Borrower, describe such assets or other
investments and the cost thereof to the Borrower and describe such loans and the
borrower thereof] [Reference Section 8.12 of the Loan Agreement].
12. DIVIDENDS. During the preceding month ending on the Compliance Date,
the Borrowers have not paid any dividends in violation of Section 8.13 of the
Loan Agreement other than [if any such dividends were paid in violation of
Section 8.13 of the Loan Agreement, describe such dividends in detail including
the amount thereof, to whom paid and the date of payment thereof][Reference
Section 8.13 of the Loan Agreement).
13. HAZARDOUS MATERIALS. The Borrowers have not, during the preceding month
ending on the Compliance Date, breached the provisions of Section 7.8 of the
Loan Agreement, other than [if the Borrowers have breached the provisions of
Section 7.8 of the Loan Agreement, describe the nature of the breach] [Reference
Section 7.8 of the Loan Agreement].
The undersigned officer of Res-Care, Inc. executing and delivering this
Compliance Certificate on behalf of all Borrowers further certifies that he has
reviewed the Loan Agreement and has no knowledge of any event or condition which
constitutes a Potential Default or an Event of Default under the Loan Agreement
or the other Loan Instruments other than (if any Potential Default or Event of
Default has occurred, describe the same, the period of existence thereof and
what action the Borrowers have taken or propose to take with respect thereto).
<PAGE> 191
IN WITNESS WHEREOF, the Borrowers, through a duly authorized officer of
Res-Care, Inc., have executed this Compliance Certificate this _______ day of
____________,
19___.
RES-CARE, INC.
By:
- -----------------------------------
Title:
- ----------------------------------
On behalf of itself and all Borrowers
listed on Schedule II to the Loan
Agreement, as that Schedule II may be
amended from time to time (collectively,
the "Borrowers")
G-6
<PAGE> 192
EXHIBIT H
---------
FORM OF ASSIGNMENT AGREEMENT
----------------------------
Reference is hereby made to the Loan Agreement dated as of December 23,
1996, as amended and restated by the 1998 Amended and Restated Loan Agreement
dated as of June 30, 1998 (the "Loan Agreement") among RES-CARE, INC., and all
Borrowers listed on Schedule II to the Loan Agreement, as that Schedule II may
be amended from time to time (collectively, the "Borrowers"), the Banks named
therein and PNC Bank, National Association, as Administrative Bank for the Banks
(together with all amendments, modifications and supplements thereto and all
restatements thereof, the "Loan Agreement"). Terms defined in the Loan Agreement
are used herein as therein defined. [ASSIGNOR] (the "Assignor") and [ASSIGNEE]
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, on a non-recourse basis, the
Assignor's rights and obligations under the Loan Agreement as of the date hereof
which represents the percentage interest specified in Item 3 of Annex I
(attached) of all outstanding rights and obligations relating to the Assignor's
Revolving Loan Commitment, which include the Assignor's Revolving Credit
Facility Pro Rata Share of all outstanding Revolving Credit Loans, (for purposes
of Annex I the "Assignee's Assigned Share" shall mean the respective amounts of
the Revolving Credit Loans assigned to the Assignee). After giving effect to
such sale and assignment, the Assignee's Revolving Loan Commitment and the
amount of the Obligations owing to the Assignee will be as set forth in Item 3
of Annex I.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim arising through the Assignor;
(ii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any
other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or the performance or observance by the
Borrowers of any of their obligations under the Loan Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements referred to therein
for the most recent month and Fiscal Year of the Borrowers together with such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment Agreement; (ii)
agrees that it will, independently and without reliance, as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Agreement;
H-1
<PAGE> 193
(iii) confirms that it is eligible as an assignee under the terms of the Loan
Agreement; (iv) appoints and authorizes the Administrative Bank to take such
action on its behalf and to exercise such powers under the Loan Agreement and
the other Loan Instruments as are delegated to the Administrative Bank by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Agreement and the other Loan
Instruments are required to be performed by it as a Bank, (vi) attaches the
forms or other documents prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Loan Agreement, (vii) confirms that the
Borrowers have consented to the assignment hereby effected as evidenced by its
signature below, and (viii) confirms that it has executed a Confidentiality
Agreement in the form attached on Exhibit I to the Loan Agreement.
4. Following the execution of this Assignment Agreement by the Assignor,
the Assignee and the Borrowers, this Assignment Agreement will be delivered to
the Administrative Bank for recording by the Administrative Bank. The effective
date of this Assignment Agreement shall be the date of execution hereof by the
Assignor, the Assignee, the Borrowers and the Administrative Bank, unless
otherwise specified on Item 4 of Annex I hereto (the "Settlement Date").
5. As of the Settlement Date, (i) the Assignee shall be a party to the Loan
Agreement and, to the extent provided in this Assignment Agreement, shall have
the rights and obligations of a Bank thereunder and under the other Loan
Instruments, and (ii) the Assignor shall, to the extent provided in this
Assignment Agreement, relinquish its rights and be released from its obligations
under the Loan Agreement and the other Loan Instruments.
6. Upon such acceptance and recording by the Administrative Bank, from and
after the Settlement Date, the Administrative Bank shall make all payments under
the Loan Agreement in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and fees with respect
thereto) to the Assignee. Upon the Settlement Date, the Assignee shall pay to
the Assignor the principal amount of any outstanding Revolving Credit Loans
assigned pursuant hereto.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF KENTUCKY,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
H-2
<PAGE> 194
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written, such execution being made on Annex I hereto.
[NAME OF ASSIGNOR], as Assignor
By:
------------------------------------
Title:
----------------------------------
[(NAME OF ASSIGNEE] as Assignee
By:
------------------------------------
Title:
----------------------------------
Received and Consented to this
_______ day of ____________, 19___
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Bank
By:
Title:
Consented to this _______ day of
______________, 19___
H-3
<PAGE> 195
RES-CARE, INC.
By:
- ---------------------------------------------------------------------------
Title:
- -------------------------------------------------------------------------
On behalf of itself and all Borrowers listed on Schedule II to the Loan
Agreement, as that Schedule II may be amended from time to time (collectively,
the "Borrowers")
H-4
<PAGE> 196
ANNEX I
Borrowers: Res-Care,
Inc. and subsidiaries
Date of Assignment
Agreement:
______________, 19___.
Amount (as of Date of Item #2 above):
Assignor's Revolving $_________
Loan Commitment
Assignee's Assigned ________%
Share of Assignor's
Revolving Loan
Commitment
Amount of Assignee's $________
Assigned Share of
Assignor's Revolving
Loan Commitment
Assignor's Revolving $________
Credit Loans
Outstanding
Assignee's Assigned _______%
Share of Assignor's
Revolving Credit
Loans Outstanding
Assignee's Amount of $________
Assignor's Revolving
Credit Loans
Outstanding
$________
_______%
$________
<PAGE> 197
$________
_______%
$________
Settlement Date:* ____________
Payment Instructions:
Amount of Payment $________
(Assignee's Share of
Assignor's Revolving
Credit Loans)
Wire Instructions:
==============================
------------------------------
------------------------------
------------------------------
------------------------------
Attn:
Telephone:
Telecopier:
Reference:
ACCEPTED AND AGREED:
[ASSIGNOR] [ASSIGNEE]
By: ________________________________ By:_________________________________
Title:______________________________ Title:______________________________
- ------------------------
- - This date should be no earlier than five Business Days after the date of
receipt by Administrative Bank.
<PAGE> 198
EXHIBIT I
---------
FORM OF CONFIDENTIALITY AGREEMENT
---------------------------------
(LETTERHEAD OF POTENTIAL ASSIGNOR]
[Date]
[POTENTIAL ASSIGNEE OR PARTICIPANT]
Re: Loan Agreement dated as of December 23, 1996, as amended and restated
by the 1998 Amended and Restated Loan Agreement dated as of June 30,
1998, as amended from time to time (the "Loan Agreement"), among
RES-CARE, INC., and all Borrowers listed on Schedule II to the Loan
Agreement, as that Schedule II may be amended from time to time
(collectively, the "Borrowers"), the Banks named therein, and PNC Bank,
National Association, as Administrative Bank for the Banks (the
"Administrative Bank")
Dear ____________:
You have requested information concerning the Borrowers in connection with
a potential assignment to you or participation of [a portion of] our interest in
the captioned credit facility (the "Information"). The Information has been
provided by a number of sources, including the Borrowers. While the Information
is believed to be reliable, no representation is made or has been made by the
undersigned (the "Assignor") or the Administrative Bank as to the accuracy or
completeness of the Information. In addition, certain financial models are
presented in the Information, which models were prepared by the Borrowers.
Neither the Assignor nor the Administrative Bank makes any representation as to
the reasonableness of such assumptions or as to any other financial information
contained in the models. Each recipient is urged to make its own evaluation of
the financial models (including the assumptions on which they are based). By
receipt of the Information, the recipient agrees that the Assignor and the
Administrative Bank shall have no liability for any misstatement or omission of
fact or for any opinion expressed herein.
The Assignor has provided the Information on a confidential basis and
expects it to be used for the sole purpose of considering the purchase of an
interest in the referenced credit facility provided to the Borrowers. By receipt
of the Information, the recipient agrees that the Information will be kept
confidential and will not, without the prior written consent of the Borrowers,
the Assignor and the Administrative Bank, be disclosed by the recipient in any
manner whatsoever, in whole or in part, and will not be used other than in
connection with the transaction described herein. The recipient shall be
responsible for any breach of this Confidentiality Agreement by its agents,
employees and representatives. The Borrowers shall be considered third party
I-1
<PAGE> 199
beneficiaries of this agreement between Assignor and Assignee or Participant.
Moreover, the recipient agrees to transmit the Information only to its agents,
employees and representatives who need to know the contents of the Information
for the purpose of evaluating the credit facility and who are informed of the
confidential nature of the Information. Should the recipient decline to purchase
an interest in the credit facility, the recipient shall return all materials
supplied by the Assignor or the Administrative Bank as soon as possible to the
entity which furnished such materials to the recipient and, in any event,
promptly upon request.
The Information shall not be photocopied, reproduced or distributed to
other at any time without the prior consent of the Borrowers, the Assignor and
the Administrative Bank.
[NAME OF POTENTIAL ASSIGNOR]
By:
------------------------------------
Title:
----------------------------------
ACKNOWLEDGED AND AGREED AS OF THE
________DAY OF ___________________,
19____
[POTENTIAL ELIGIBLE ASSIGNEE]
By:
Title:
1-2
<PAGE> 200
EXHIBIT J
---------
STOCK PLEDGE AGREEMENT
----------------------
[NOTE: THE STOCK PLEDGE AGREEMENTS WILL BE AMENDED AND RESTATED.
DRAFTS OF THESE WILL BE PROVIDED SEPARATELY]
J-3
<PAGE> 201
EXHIBIT K
---------
FORM OF SECURITY AGREEMENT
--------------------------
[THIS FORM IS TO BE USED FOR NEW BORROWERS]
This is a Security Agreement dated as of June _, 1998 (this "Agreement"),
between _________________, a _______________ corporation with principal office
and place of business in Louisville, Kentucky (the "Maker") and PNC BANK,
NATIONAL ASSOCIATION, a National banking association (hereafter referred to as
the "Administrative Bank"). The Administrative Bank at all times under this
Agreement is acting for and on behalf of the Banks as defined in the Loan
Agreement dated December 23, 1996, as amended and restated by the 1998 Amended
and Restated Loan Agreement dated as of June 30, 1998, as amended from time to
time (the "Loan Agreement"), by and among the identified on SCHEDULE II of the
Loan Agreement (the "Borrowers"), the Administrative Bank and the Banks. All
references to the Administrative Bank shall be deemed to be a reference to the
Administrative Bank as agent for and on behalf of the Banks.
RECITALS
A. The Borrower, the Borrowers identified on SCHEDULE II of the Loan
Agreement (the "Borrowers"), and the Banks are entering into a Loan Agreement
dated as of the date of this Agreement (the "Loan Agreement"), pursuant to
which, among other things, the Banks have agreed to provide the Borrowers with
the Revolving Credit Facility and the Letter of Credit Subfacility and PNC has
agreed to provide the Borrowers with the Swing Line Credit Facility. Any terms
not specifically defined herein shall have the meaning set forth in the Loan
Agreement.
B. The Borrower is entering into this Agreement to secure the payment of
the Revolving Credit Facility and the Letter of Credit Subfacility to the Banks,
and the Borrower's other Obligations to the Banks, as well as to secure the
payment of the Swing Line Credit Facility to PNC.
C. This Agreement is being entered into concurrently with the extension of
the Revolving Credit Facility, the Letter of Credit Subfacility, and the Swing
Line Credit Facility and the Banks are extending the Revolving Credit Facility
and the Letter of Credit Subfacility and PNC is extending the Swing Line Credit
Facility in reliance up the Borrower's obligations evidenced by this Agreement.
NOW, THEREFORE, the Borrower and the Administrative Bank agree as
follows:
1. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meanings given them in the Loan Agreement. In addition, the following terms
shall have the following meanings, and the meanings assigned to all capitalized
terms used herein shall be equally applicable to both the singular and plural
forms of the terms defined:
<PAGE> 202
"Accounts Receivable" means all (a) rights to payment for any goods
sold or services performed, whether such right to payment exists on the date of
this Agreement or is created thereafter, and whenever and wherever acquired,
whether or not such right to payment has been earned by performance, and whether
or not such right to payment is evidenced by any Document, Instrument or Chattel
Paper, and all claims against common carriers for goods and Inventory lost in
transit; and (b) the proceeds or products of any of the foregoing. The term
"Accounts Receivable" includes the term "account" as defined in KRS 355.9-106.
The amount of an Account Receivable shall be the amount of the receivable net of
all discounts.
"Chattel Paper" means a writing or writings defined in Section 9-105 of
the Uniform Commercial Code.
"Collateral" means any or all of the property in which the Borrower
grants to the Administrative Bank a security interest under SECTION 2 of this
Agreement.
"Document" means a document of title as defined in KRS 355.1-201 and a
receipt of the kind described in KRS 355.7-201.
"Event of Default" shall have the meaning given that term in SECTION 8
of this Agreement.
"General Intangibles" means all personal property (including things in
action) other than goods, accounts, chattel paper, documents and instruments
(all as defined in the Uniform Commercial Code), whether such personal property
is owned on the date of this Agreement, or is acquired thereafter, and shall
include, but is not limited to, all existing and future royalties, rights,
claims, benefits and proceeds in, under or to any franchise agreements,
insurance policies, customer lists, choses in action, books, records, patents
and patents applications, copyrights, trademarks, trade names, trade secrets,
sales contracts, licenses, certificates of need, permits, tax and any other
types of refunds, returned and unearned insurance premiums, claims, product
designs, drawings, technical data, computer programs, computer tapes and
software, catalogs, blue prints, contract rights, and all rights as an unpaid
vendor or lienor, including stoppage in transit, replevin or reclamation. The
term "General Intangible" includes "general intangible" as defined in KRS
355.9-105.
"Instrument" means a negotiable instrument as defined in KRS 355.3-104.
"Inventory" means inventory as defined in KRS 355.9-109.
"Regulatory Restrictions" means laws and regulations governing
licenses, permits, certificates of need and contracts related thereto.
"Secured Obligations" means all of the obligations secured by this
Agreement as set forth in SECTION 3 of this Agreement.
K-2
<PAGE> 203
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect in the Commonwealth of Kentucky.
"Unmatured Default" means the happening of any event or occurrence
which, together with the giving of any required notice or the passage of any
required period of time, or both, would constitute an Event of Default.
2. GRANT OF SECURITY Interests.
1. The Borrower grants to the Administrative Bank a security interest
in the following property (the "Collateral"):
1. all of the Borrower's right, title and interest in and to its
Accounts Receivable;
2. all of the Borrower's right, title and interest in and to its
General Intangibles;
3. any and all property which the Borrower receives or is or may
hereafter be entitled to receive on account of any collections of or with
respect to the Borrower's Accounts Receivable, or any Chattel Paper, Documents
and Instruments in payment of or substitution for any of the Borrower's Accounts
Receivable or the Borrower's General Intangibles, or any part thereof; and
4. any and all property which the Borrower receives or which the
Borrower may hereafter become entitled to receive on account of any sale,
exchange, transfer or other disposition of the Borrower's Accounts Receivables
or General Intangibles, or any part thereof.
2. The Borrower grants a further security interest to the Administrative
Bank in the proceeds and products of any sale, exchange, collection or other
disposition of the Collateral or any part thereof.
3. OBLIGATIONS SECURED. The security interests granted by the Borrower
hereby secure the payment and performance of all of the following Secured
Obligations: (a) any and all indebtedness of the Borrower to the Banks evidenced
by the Revolving Credit Notes, the Swing Line Notes, the Application and
Agreements for Letters of Credit and any and all obligations contained in the
Loan Agreement; (b) any and all of the representations, warranties, obligations,
agreements, covenants and promises of the Borrower contained in the Loan
Agreement, the Revolving Credit Notes, the Swing Line Notes, the Application and
Agreements for Letters of Credit, this Agreement and the other Loan Instruments;
and (c) any and all indebtedness, obligations and liabilities of the Borrower to
the Banks, however evidenced, whether now existing or hereafter arising, direct
or indirect, absolute or contingent, or acquired by the Banks, including without
limitation, any and all other indebtedness, liabilities and obligations of
Borrower to the Banks that exist on the date of this Agreement, or arise or are
created or acquired after the date of this Agreement, regardless of whether of
the same or of a different class or type as the indebtedness evidenced by the
Revolving Credit
K-3
<PAGE> 204
Notes, the Swing Line Notes, the Application and Agreements for
Letters of Credit and/or the other Loan Instruments, and whether or not the
creation thereof was reasonably foreseeable or would be naturally contemplated
by the Borrower or the Banks as the date of this Agreement.
4. REPRESENTATIONS AND WARRANTIES. To induce the Administrative Bank to
enter into this Agreement, any and all of the representations and warranties
made by the Borrower in the Loan Agreement and the other Loan Instruments are
incorporated herein by reference, and the Borrower further represents, warrants
and agrees as follows:
a. The Borrower has full right, power, authority and capacity to
enter into and perform this Agreement; and this Agreement has been duly entered
into and delivered and constitutes a legal, valid and binding obligation of the
Borrower enforceable in accordance with its terms.
b. Except as affected by the Regulatory Restrictions, the
Borrower has good and marketable title to the Borrower's Collateral, and the
Collateral is not subject to any lien, charge, pledge, encumbrance, claim or
security interest other than the security interests created by this Agreement.
3. The Borrower's chief place of business and assets are located at the
locations set forth in EXHIBIT A hereto. The Borrower will maintain its books
and records at the chief place of business identified in EXHIBIT A hereto.
4. The Collateral is used and will be used for business use only.
5. The Borrower, within 30 days after the execution and delivery of this
Agreement, shall provide the Administrative Bank with a listing of any names
under which the Borrower has conducted business within the five (5) consecutive
years last preceding the date of this Agreement.
6. The Borrower understands and acknowledges that the Banks are extending
Revolving Credit Facility and the Letter of Credit Subfacility and that PNC is
extending the Swing Line Credit Facility to the Borrower in reliance upon the
security interests granted by the Borrower evidenced by this Agreement. The
Borrower intends to induce the Banks to extend the Revolving Credit Facility and
the Letter of Credit Subfacility, and to induce PNC to extend the Swing Line
Credit Facility, recognizing that such inducement results in this Agreement
becoming legally valid and enforceable.
5. DURATION OF SECURITY INTERESTS. The Administrative Bank, its
successors and assigns, shall hold the security interests created hereby upon
the terms of this Agreement, and this Agreement shall continue until the
Revolving Credit Notes, the Swing Line Note and the Application and Agreements
for Letters of Credit have been paid in full, the other Secured Obligations have
been performed, executed, or satisfied in their entirety, and no commitment to
lend or extend credit which is intended to be secured hereby remains
outstanding. After payment of any part of the Secured
K-4
<PAGE> 205
Obligations, the Administrative Bank may, at its option, retain all or any
portion of the Collateral as security for any remaining Secured Obligations and
retain this Agreement as evidence of such security. The security interests
granted hereunder shall not be impaired or affected by any renewals or
extensions of time for payment of any of the Secured Obligations, or by release
of any party liable on the Secured Obligations; by any acquisition, release or
surrender of other security, collateral or guaranty; by delay in enforcement of
payment of any of the Secured Obligations; or by delay in enforcement of any
security.
6. CERTAIN NOTICES. The Borrower shall notify the Administrative Bank of
any and all changes of location of the Borrower's chief place of business and of
the registered office of the Borrower's registered agent in Kentucky, and of the
books and records with respect to any Accounts Receivable and of the location of
any other of the Collateral at least 30 days prior to effecting any such change.
7. COVENANT NOT TO DISPOSE OF OR IMPAIR COLLATERAL. Except as may be
required by the Regulatory Restrictions, the Borrower shall not, without the
prior written consent of the Administrative Bank, sell, transfer or otherwise
dispose of the Collateral, or any part thereof or interest therein, except (a)
collections of Accounts Receivable permitted under this Agreement and (b)
otherwise as permitted by the Loan Instruments. The Borrower shall not permit
any of the Collateral to be levied upon under any legal process, nor permit
anything to be done that may impair the value of the Collateral or the security
intended to be provided by this Agreement.
8. DEFAULT. The occurrence of an Event of Default under the Loan
Agreement shall constitute a default under this Agreement (an "Event of
Default").
9. REMEDIES. Upon any Event of Default, the Administrative Bank, in
addition to exercising all other rights or remedies, may proceed to exercise
with respect to the Collateral all rights, options and remedies of a secured
party upon default as provided for under the Uniform Commercial Code. The rights
of the Administrative Bank upon an Event of Default shall include, without
limitation, any and all rights and remedies in any and all other Loan
Instruments, agreements and other writings between the Administrative Bank and
the Borrower, all rights and remedies as provided by law, in equity or
otherwise, and in addition thereto, the following:
a. The right to require the Borrower to assemble the Collateral
and the books and records with respect to Accounts Receivable and make them
available to the Administrative Bank at a place or places to be designated by
the Administrative Bank which is reasonably convenient to the Borrower and the
Administrative Bank.
b. The right to sell the Collateral at public or private sale in
one or more lots in accordance with Uniform Commercial Code. The Administrative
Bank may bid upon and purchase any or all of the Collateral at any public sale
thereof, and shall be entitled to apply the unpaid portion of the Secured
Obligations as a credit against the purchase price. The Administrative Bank's
purchase of all or any of the Collateral shall extinguish the Borrower's rights
under Section 9-506 of the Uniform Commercial Code upon application of the
unpaid portion of the Secured Obligations.
K-5
<PAGE> 206
The Administrative Bank shall be entitled to apply the proceeds of any such sale
to the satisfaction of the Secured Obligations and to expenses incurred in
realizing upon the Collateral in accordance with the Uniform Commercial Code.
c. The right to notify the account debtors on all or any part of
the Borrower's Accounts Receivable of the Administrative Bank's interest therein
and to require such account debtors to begin making payments directly to the
Administrative Bank regardless of whether the Borrower was previously making
collections on all or any part of the Borrower's Accounts Receivable. The
Administrative Bank shall have the right to proceed against any such account
debtors in its own name, or in the name of the Borrower (as appropriate) with or
without the consent of the Borrower. The Administrative Bank may retain any such
payments or collections and apply them to the satisfaction of the Secured
Obligations and to expenses incurred in collection, all in accordance with the
Uniform Commercial Code.
d. The right to recover the reasonable expenses of taking
possession of any of the Collateral that may be reduced to possession, preparing
the Collateral for sale, selling the Collateral, collecting all or any part of
the Borrower's Accounts Receivable, and other like expenses.
e. The right to recover all of the Administrative Bank's expenses
of collection, including, without limitation, court costs and reasonable
attorneys' fees and disbursements incurred in realizing upon the Collateral or
enforcing or attempting to enforce any provision of this Agreement.
f. Subject to applicable Regulatory Restrictions, the right to
retain the Collateral and become the owner thereof, in accordance with the
provisions of the Uniform Commercial Code.
7. The right to proceed by appropriate legal process at law or in equity to
enforce any provision of this Agreement or in aid of the execution of any power
of sale, or for foreclosure of the security interests of the Administrative
Bank, or for the sale of the Collateral under the judgment or decree of any
court.
8. The right to enter any premises where any Collateral may be located for the
purpose of taking possession or removing the same.
10. CUMULATIVE REMEDIES. The rights and remedies of the Administrative
Bank shall be deemed to be cumulative, and any exercise of any right or remedy
shall not be deemed to be an election of that right or remedy to the exclusion
of any other right or remedy. Notwithstanding the foregoing, the Administrative
Bank shall be entitled to recover by the cumulative exercise of all remedies no
more than the sum of (a) the Secured Obligations at the time of exercise of
remedies, plus (b) the costs, fees and expenses the Administrative Bank is
otherwise entitled to recover.
11. WAIVERS. The Borrower acknowledges that this Agreement involves the
grant of multiple security interests, and the Borrower hereby waives, to the
extent permitted by applicable
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<PAGE> 207
law, (a) any requirement of marshaling assets or proceeding against Persons or
assets in any particular order, and (b) any and all notices of every kind and
description which may be required to be given by any statute or rule of law and
any defense of any kind which the Borrower may now or hereafter have with
respect to the rights of the Administrative Bank with respect to the Collateral
under this Agreement.
12. COLLECTIONS FROM ACCOUNTS RECEIVABLE.
a. At any time when the Administrative Bank may exercise remedies
under SECTION 9 of this Agreement, the Administrative Bank shall have the right
to notify account debtors obligated on any or all Accounts Receivable to make
payments directly to the Administrative Bank.
b. Until the Administrative Bank requests that account debtors of
Accounts Receivable be notified of the Administrative Bank's security interest
created at a time when the Administrative Bank may exercise remedies under
SECTION 9 of this Agreement, the Borrower shall continue to collect payments on
the Borrower's Accounts Receivable and use the proceeds thereof in the ordinary
course of business. In any event, if any Event of Default has occurred and is
continuing, the Borrower may not use the proceeds from payments on Accounts
Receivable to satisfy any indebtedness to any Person other than the
Administrative Bank. If the Borrower collects payments on any Accounts
Receivable after an Event of Default has occurred and while it is continuing,
the Borrower shall hold the proceeds received from that collection as a
constructive trust for the Administrative Bank and shall turn over such proceeds
to the Administrative Bank immediately upon demand in the identical form
received, if so requested by the Administrative Bank. In the event of such
payment, the Administrative Bank shall credit the proceeds as payment of the
Secured Obligations first to costs or penalties if any, second to interest, and
then to principal. Any credit given to the Borrower for proceeds in form other
than cash shall be conditional upon final payment to the Borrower in cash or
solvent credit of the items, and if any item is not paid the amount of any
credit given for it shall be charged to the Borrower whether or not the item is
returned, and such amount shall be a part of the obligations secured by this
Agreement.
c. The Borrower shall have no power to, and shall not, waive,
compromise or discount any Accounts Receivable, without the prior written
consent of the Administrative Bank, except for (1) ordinary trade discounts and
allowances for payment within thirty days of the date of invoice or billing, and
(2) discounts or allowances in the ordinary course of collecting Accounts
Receivable.
d. It is the understanding of Administrative Bank and Borrower
that Borrower's Accounts Receivable will ordinarily not be evidenced by
promissory notes, trade acceptances, Instruments or Chattel Paper. To the extent
that any Account Receivable shall be evidenced by a promissory note, trade
acceptance, Instrument or Chattel Paper with an original principal balance of
$50,000 or more, the Borrower (as appropriate) shall immediately deliver such
promissory note, trade acceptance, Instrument or Chattel Paper to the
Administrative Bank, appropriately endorsed to the Administrative Bank's order.
The Borrower authorizes the Administrative Bank to endorse
K-7
<PAGE> 208
same on the Borrower's behalf and hereby waives presentment, demand, notice of
dishonor, protest and notice of protest and all other notices with respect
thereto.
13. THE ADMINISTRATIVE BANK AS AGENT FOR THE BORROWER. The Borrower
hereby irrevocably constitutes the Administrative Bank as the Borrower's agent
and attorney-in-fact at any time during any period when the Administrative Bank
may exercise the remedies set forth in SECTION 9 of this Agreement, to (a)
proceed against account debtors obligated on Accounts Receivable in the
Borrower's name or in the Administrative Bank's name, and (b) sign and endorse
all checks, drafts and other Chattel Paper, Documents and Instruments in payment
of Accounts Receivable, and (c) perform all such other acts with respect to
Accounts Receivable as the Administrative Bank may in its discretion deem
necessary to effectuate the security intended to be granted in this Agreement.
14. SPECIAL COLLECTION PROCEDURE. Upon the Administrative Bank's demand
at any time when the Administrative Bank may exercise remedies under SECTION 9
of this Agreement, the Borrower shall forthwith, upon receipt of all checks,
drafts, cash and other remittances in payment or on account of Accounts
Receivable by the Borrower, deposit the same in a special bank account
maintained with the Administrative Bank over which the Administrative Bank
alone, to the exclusion of the Borrower, has the power of withdrawal. The funds
in such account shall be held by the Administrative Bank for application toward
the Secured Obligations. Such proceeds paid on Accounts Receivable shall be
deposited in precisely the form received, except for the endorsement of the
Borrower where necessary to permit collection of items, which endorsement the
Borrower agrees to make and which the Administrative Bank is also hereby
authorized by to make in the Borrower's name and on the Borrower's behalf as
attorney-in-fact. Pending such deposit, the Borrower agrees that the Borrower
will not commingle any such checks, drafts, cash and other remittances with any
other funds or property, but will hold them separate and apart therefrom in
express trust for the Administrative Bank until deposited in that special
account. The Administrative Bank will, once each day, apply the whole or any
part of the collected funds on deposit in such special account against the
principal and/or interest of the Secured Obligations, the order and method of
such application being in the sole discretion of the Administrative Bank. Any
portion of the funds in the special account which the Administrative Bank elects
not to apply as provided in the preceding sentence may be paid over by the
Administrative Bank to the Borrower or may be retained in the special account,
at the Administrative Bank's sole discretion, as continuing security and in
which the Borrower hereby grants to the Administrative Bank security interests
for all the Secured Obligations.
15. BOOKS AND RECORDS. The Borrower shall maintain books and records
with respect to Accounts Receivable in form and manner reasonably satisfactory
to the Administrative Bank, and the Administrative Bank shall have the right
during business hours with reasonable notice to inspect any and all of the
business properties, premises or books and records of the Borrower relating to
Accounts Receivable or other Collateral or the proceeds thereof. The Borrower
further agrees from time to time to furnish such reports, data and financial
statements with respect to the Collateral as the Administrative Bank may
reasonably request from time to time.
K-8
<PAGE> 209
16. CERTAIN OBLIGATIONS REGARDING Collateral. The Borrower shall keep
the Collateral free and clear of any and all liens other than (i) liens, if any,
imposed by the Regulatory Restrictions and (ii) the security interests created
in favor of the Administrative Bank under this Agreement or permitted by the
Loan Instruments, and shall declare and pay any and all fees, assessments,
charges and taxes allocable to the Collateral, or which might result in a lien
against the Collateral if left unpaid unless the Borrower at the Borrower's own
expense is contesting the validity or amount thereof in good faith by an
appropriate proceeding timely instituted which shall operate to prevent the
collection or satisfaction of the lien or amount so contested. If the Borrower
fails to pay such amount and is not contesting the validity or amount thereof in
accordance with the preceding sentence, the Administrative Bank may, but is not
obligated to, pay such amount, and such payment shall be deemed conclusive
evidence of the legality or validity of such amount. The Borrower shall promptly
reimburse the Administrative Bank for any and all payments made by the
Administrative Bank in accordance with the preceding sentence, and until
reimbursement, such payments shall be part of the Secured Obligations.
17. USE AND INSPECTION OF COLLATERAL. The Borrower shall not use the
Collateral in violation of any statute or ordinance, and the Administrative Bank
shall have the right, at reasonable hours, to inspect the Collateral at the
premises of the Borrower or wherever the Collateral may be located.
18. NOTICE.
a. Any requirement of the Uniform Commercial Code or other
applicable law of reasonable notice shall be met if such notice is given at
least five (5) business days before the time of sale, disposition or other event
or thing giving rise to the requirement of notice.
b. All notices and other communications under this
Agreement shall be delivered in accordance with and subject to Section 14 of the
Loan Agreement.
19. FURTHER ASSURANCE. The Borrower shall sign from time to time such
financing statements and other documents and instruments and take such other
actions as the Administrative Bank may request from time to time to more fully
create, perfect, continue, maintain or terminate the security interests in the
Collateral intended to be created in this Agreement.
20. MISCELLANEOUS.
a. Failure by the Administrative Bank to exercise any right shall
not be deemed a waiver of that right, and any single or partial exercise of any
right shall not preclude the further exercise of that right. Every right of the
Administrative Bank shall continue in full force and effect until such right is
specifically waived in a writing signed by the Administrative Bank.
b. If any part, term or provision of this Agreement is held by
any court to be prohibited by any law applicable to this Agreement, the rights
and obligations of the parties shall be construed and enforced with that part,
term or provision enforced to the greatest extent allowed by
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<PAGE> 210
law, or if it is totally unenforceable, as if this Agreement did not contain
that particular part, term or provision.
c. The headings in this Agreement have been included for ease of
reference only, and shall not be considered in the construction or
interpretation of this Agreement.
d. This Agreement shall inure to the benefit of the
Administrative Bank, its successors and assigns, and all obligations of the
Borrower shall bind the Borrower's successors and assigns.
e. To the extent allowed under the Uniform Commercial Code, this
Agreement shall in all respects be governed by and construed in accordance with
the laws of the Commonwealth of Kentucky.
f. This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof. No change, modification, addition or
termination of this Agreement shall be enforceable unless in writing and signed
by the party against whom enforcement is sought.
g. This Agreement may be signed by each party upon a separate
copy, and in such cases one counterpart of this Agreement shall consist of
enough of such copies to reflect the signature of each party.
h. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or the terms thereof to produce or account for
more than one such counterpart.
9. The Borrower consents to one or more actions being instituted and
maintained in the Jefferson County, Kentucky, Circuit Court to enforce this
Agreement and/or one or more of the other Loan Instruments, and waives any
objection to any such action based upon lack of personal or subject matter
jurisdiction or improper venue. The Borrower agrees that any process or other
legal summons in connection with any such action or proceeding may be served by
mailing a copy thereof by certified mail, or any substantially similar form of
mail, addressed to the Borrower as provided in SECTION 18 above.
10. The Borrower acknowledges that the Borrower has received a copy of
this Agreement and each of the other Loan Instruments, as fully executed by the
parties thereto. The Borrower acknowledges that the Borrower (a) has READ THIS
AGREEMENT AND THE OTHER LOAN INSTRUMENTS OR HAS CAUSED SUCH DOCUMENTS TO BE
EXAMINED BY THE BORROWER'S REPRESENTATIVES OR ADVISORS; (b) is thoroughly
familiar with the transactions contemplated in this Agreement and the other Loan
Instruments; and (c) has had the opportunity to ask such questions to
representatives of the Administrative Bank, and receive answers thereto,
concerning the terms and conditions of the transactions contemplated in this
Agreement and the other Loan Instruments as the Borrower deems necessary in
connection with the Borrower's decision to enter into this Agreement.
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<PAGE> 211
IN WITNESS WHEREOF, the Borrower and the Administrative Bank have
executed and delivered this Agreement as of the date set out in the preamble
hereto, but actually on the dates set forth below.
BORROWER:
---------
-----------------------
BY
----------------------------
Authorized Officer
Date: ___________________
ADMINISTRATIVE BANK:
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------
Ben Willingham, Vice President
Date: ______________________
K-11
<PAGE> 212
EXHIBIT A
1. [NEW BORROWER NAME]
State of incorporation:
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky:
Locations of operations:
Qualified to do business in:
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
Filing Locations:
K-12
<PAGE> 213
EXHIBIT L
---------
FORM OF UCC-1 FINANCING STATEMENT
---------------------------------
L-1
<PAGE> 214
EXHIBIT A TO UCC-1 FINANCING STATEMENT
DESCRIPTION OF COLLATERAL:
All of the Debtor's Accounts Receivable, General Intangibles and products and
proceeds thereof.
DEFINITIONS:
"Accounts Receivable" means all (a) rights to payment for any goods sold or
services performed, whether such right to payment exists on the date of this
UCC-1 financing statement or is created thereafter, and whenever and wherever
acquired, whether or not such right to payment has been earned by performance,
and whether or not such right to payment is evidenced by any document,
instrument or chattel paper, and all claims against common carriers for goods
and inventory lost in transit; and (b) the proceeds or products of any of the
foregoing. The amount of an Account Receivable shall be the amount of the
receivable net of all discounts.
"General Intangibles" means all personal property (including things in action)
other than goods, accounts, chattel paper, documents and instruments (all as
defined in the Uniform Commercial Code), whether such personal property is owned
on the date of this UCC-1 financing statement, or is acquired thereafter, and
shall include, but is not limited to, all existing and future royalties, rights,
claims, benefits and proceeds in, under or to any franchise agreements,
insurance policies, customer lists, choses in action, books, records, patents
and patents applications, copyrights, trademarks, trade names, trade secrets,
sales contracts, licenses, certificates of need, permits, tax and any other
types of refunds, returned and unearned insurance premiums, claims, product
designs, drawings, technical data, computer programs, computer tapes and
software, catalogs, blue prints, contract rights, and all rights as an unpaid
vendor or lienor, including stoppage in transit, replevin or reclamation.
L-2
<PAGE> 215
EXHIBIT M
---------
FORM OF ASSUMPTION AGREEMENT
----------------------------
[THIS FORM OF ASSUMPTION AGREEMENT IS TO BE USED WHEN A NEW BORROWER
JOINS THE BORROWER GROUP IN BETWEEN AMENDMENT TO THE LOAN DOCUMENTS. IT MAY BE
AMENDED TO INSERT A CONSOLIDATED SUBSIDIARY FOR RES-CARE, WHERE A CONSOLIDATED
SUBSIDIARY OWNS SHARES OF A NEW BORROWER]
This is an Assumption Agreement dated as of ________, 199_, (this
"Agreement"), between PNC BANK, NATIONAL ASSOCIATION, a National banking
association (hereafter referred to as the "Administrative Bank"), RES-CARE,
INC., a Kentucky corporation with principal office and place of business in
Louisville, Kentucky ("Res-Care") and ___________, a _______________ corporation
(the New Borrower"). The Administrative Bank at all times under this Agreement
is acting for and on behalf of the Banks as defined in the Loan Agreement dated
December 23, 1996, as amended and restated by the 1998 Amended and Restated Loan
Agreement dated as of June 30, 1998, as amended from time to time (the "Loan
Agreement"), as amended, by and among the Borrowers, the Administrative Bank and
the Banks. Any terms not specifically defined herein shall have the meaning set
forth in the Loan Agreement. All references to the Administrative Bank shall be
deemed to be a reference to the Administrative Bank as agent for and on behalf
of the Banks.
RECITALS
A. Res-Care, the Borrowers and the Banks have entered into the Loan
Agreement, pursuant to which, among other things, the Banks have agreed to
provide the Borrowers with the Revolving Credit Facility and the Letter of
Credit Subfacility and PNC has agreed to provide the Borrowers with the Swing
Line Credit Facility.
B. The New Borrower has become a Consolidated Subsidiary of Res-Care.
As such, it may have access to the proceeds of Revolving Credit Loans, Swing
Line Loans and the issuance of Letters of Credit. Under the terms of Section
7.10 of the Loan Agreement, the New Borrower, upon becoming a Consolidated
Subsidiary, is required to execute and deliver this Assumption Agreement and
other related documents in favor of the Administrative Bank.
C. The New Borrower wishes to execute and deliver this Assumption
Agreement and other related documents in favor of the Administrative Bank and to
avail itself of the benefits, and to subject itself to the obligations, of the
Loan Agreement and the other Loan Instruments.
NOW, THEREFORE, the New Borrower, Res-Care and the Administrative Bank
agree as follows:
1. ASSUMPTION OF OBLIGATIONS. The New Borrower hereby assumes all
Obligations and liabilities of the Borrowers to the Banks under the Loan
Agreement, the Revolving Credit
<PAGE> 216
Notes, the Swing Line Note and the Applications and Agreements for Letters of
credit, as fully as if the New Borrower had executed each of the Loan Agreement,
the Revolving Credit Notes, the Swing Line Note and the Applications and
Agreements for Letters of Credit on June _, 1998, and on each date of subsequent
amendment thereof. The Loan Agreement, the Revolving Credit Notes, the Swing
Line Note and the Applications and Agreements for Letters of Credit shall each
be deemed to be amended by this Agreement and to incorporate this Agreement by
reference.
2. PARTY TO LOAN Instruments. By the execution and delivery of this
Agreement, the New Borrower is hereby made a party to each of the Loan
Agreement, the Revolving Credit Notes, the Swing Line Note and the Applications
and Agreements for Letters of Credit, as amended. The New Borrower hereby
acknowledges receipt of copies of the Loan Agreement, the Revolving Credit
Notes, the Swing Line Note and the Applications and Agreements for Letters of
Credit.
3. SECURITY INTEREST. To secure its obligations to the Banks under the Loan
Agreement, the Revolving Credit Notes, the Swing Line Note and the Applications
and Agreements for Letters of Credit, the New Borrower has executed and
delivered to the Administrative Bank a Security Agreement, in the form attached
to the Loan Agreement as EXHIBIT K, and UCC-1 financing statements, in the form
attached to the Loan Agreement as EXHIBIT L.
4. RESOLUTIONS. The New Borrower has provided the Administrative Bank
with a unanimous written action or resolution of its Board of Directors,
approving the execution and delivery of this Agreement and all documents related
thereto.
5. CERTIFICATE OF INCORPORATION AND BYLAWS. The New Borrower has provided
the Administrative Bank with copies of its Certificate of Incorporation or
Articles of Incorporation, as applicable, and its Bylaws.
6. PLEDGE OF SHARES OF NEW BORROWER. Res-Care, as the owner of the
outstanding shares of the New Borrower, has executed and delivered to the
Administrative Bank an Amendment to Stock Pledge Agreement, pledging its shares
of the New Borrower to the Administrative Bank, and has delivered the
certificates representing such shares to the Administrative Bank.
IN WITNESS WHEREOF, the New Borrower, Res-Care, on behalf of itself and the
other Borrowers, and the Administrative Bank have executed and delivered this
Agreement as of the date set out in the preamble hereto, but actually on the
dates set forth below.
NEW BORROWER:
-------------------------
BY
------------------------
2
<PAGE> 217
Authorized Officer
Date: _________, 199_
RES-CARE,
INC.
on behalf of itself and all Borrowers
listed on Schedule II to the Loan
Agreement, as that Schedule II may be
amended from time to time (collectively,
the "Borrowers")
BY
-------------------------------------
Ronald G. Geary, President
Date: ____________, 199_
ADMINISTRATIVE BANK:
--------------------
PNC BANK, NATIONAL ASSOCIATION
BY
------------------------------------
Ben Willingham, Vice President
Date: ____________, 199_
3
<PAGE> 218
EXHIBIT N
---------
FORM OF AMENDMENT TO STOCK PLEDGE AGREEMENT
-------------------------------------------
This is an Amendment to Stock Pledge Agreement dated as of ________, 199_,
(this "Agreement"), between PNC BANK, NATIONAL ASSOCIATION, a National banking
association (hereafter referred to as the "Administrative Bank") and RES-CARE,
INC., a Kentucky corporation with principal office and place of business in
Louisville, Kentucky ("Res-Care"). The Administrative Bank at all times under
this Agreement is acting for and on behalf of the Banks as defined in the Loan
Agreement dated December 23, 1996, as amended and restated by the 1998 Amended
and Restated Loan Agreement dated as of June 30, 1998 by and among the
Borrowers, the Administrative Bank and the Banks, as amended (the "Loan
Agreement"). Any terms not specifically defined herein shall have the meaning
set forth in the Loan Agreement. All references to the Administrative Bank shall
be deemed to be a reference to the Administrative Bank as agent for and on
behalf of the Banks.
RECITALS
A. Res-Care, the other Borrowers and the Banks have entered into the Loan
Agreement, pursuant to which, among other things, the Banks have agreed to
provide the Borrowers with the Revolving Credit Facility and the Letter of
Credit Subfacility and PNC has agreed to provide the Borrowers with the Swing
Line Credit Facility.
B. _________________, a _____________ corporation with principal office and
place of business in Louisville, Kentucky (the "New Borrower") has become a
Consolidated Subsidiary of Res-Care and a Borrower under the Loan Instruments.
Under the terms of Section 7.10 of the Loan Agreement, Res-Care is required to
execute and deliver this Amendment to Stock Pledge Agreement and other related
documents in favor of the Administrative Bank and to deliver the share
certificates of the New Borrower to the Administrative Bank in pledge.
C. Res-Care wishes to execute and deliver this Agreement and other related
documents in favor of the Administrative Bank and to deliver the share
certificates of the New Borrower to the Administrative Bank in pledge.
NOW, THEREFORE, Res-Care and the Administrative Bank agree as follows:
1. AMENDMENT OF STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement is
hereby amended by the amendment of Exhibit A of the Stock Pledge Agreement to
include the shares described in Exhibit 1 hereto. The shares described on
Exhibit 1 hereto are hereby deemed to be "Pledged Shares" under the Stock Pledge
Agreement. The Stock Pledge Agreement is hereby deemed to be amended by this
Agreement and to incorporate this Agreement by reference.
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2. DELIVERY OF PLEDGED SHARES. To secure its obligations to the Banks under
the Loan Agreement, the Revolving Credit Notes, the Swing Line Note and the
Applications and Agreements for Letters of Credit, Res-Care has delivered to the
Administrative Bank the share certificates evidencing the Pledged Shares that
are described in Exhibit 1 hereto.
IN WITNESS WHEREOF, Res-Care and the Administrative Bank have executed and
delivered this Agreement as of the date set out in the preamble hereto, but
actually on the dates set forth below.
RES-CARE, INC.
BY
-------------------------------------
Authorized Officer
Date: ____________, 199_
ADMINISTRATIVE BANK:
--------------------
PNC BANK, NATIONAL ASSOCIATION
BY
------------------------------------
Ben Willingham, Vice President
Date: ____________, 199_
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EXHIBIT 1
List of Pledged Shares of New Consolidated Subsidiary
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EXHIBIT O
---------
STOCK PLEDGE AGREEMENT
----------------------
[FOR PLEDGE OF SHARES/INTERESTS IN PERSONS OTHER THAN CONSOLIDATED
SUBSIDIARIES]
This STOCK PLEDGE AGREEMENT, is made and entered into as of the _____ day
of June, 1998, by and between (i) ____________, a _________ corporation with
principal office and place of business in Louisville, Kentucky (the "Maker"),
and (ii) PNC BANK, NATIONAL ASSOCIATION, a National banking association with
principal office and place of business in Louisville, Kentucky ("PNC"), in its
capacity as the Administrative Bank under the Loan Agreement (as defined below)
for and representative of the Banks (as defined below) (PNC, in its capacity as
the Administrative Bank for and representative of the Banks under the Loan
Agreement dated as of December 23, 1996, as amended and restated by the 1998
Amended and Restated Loan Agreement dated as of June 30, 1998, as amended from
time to time (the "Loan Agreement"), is referred to herein as the
"Administrative Bank"). The Administrative Bank at all times under this
Agreement is acting for and on behalf of the Banks as defined in the Loan
Agreement. All references to the Administrative Bank shall be deemed to be a
reference to the Administrative Bank as agent for and on behalf of the Banks.
P R E L I M I N A R Y S T A T E M E N T:
A. Pursuant to that certain Loan Agreement of even date herewith,(a) the
Banks have established a revolving line of credit in the principal amount of One
Hundred Seventy Five Million Dollars ($175,000,000.00) in favor of the Borrowers
(the "Revolving Credit Facility"), (b) the Banks have committed to issue letters
of credit for the account of the Borrowers in an aggregate amount of up to
Twenty Million Dollars ($20,000,000.00) as a sublimit of the Revolving Credit
Facility (the "Letter of Credit Facility"), and (c) PNC has established a swing
line revolving line of credit in the principal amount of Fifteen Million Dollars
($15,000,000.00) in favor of the Borrowers as a sublimit of the Revolving Credit
Facility (the "Swing Line Credit Facility").
B. The obligation of the Borrowers to repay advances under the Revolving
Credit Facility is evidenced by the Revolving Credit Notes, as defined in the
Loan
Agreement.
C. The obligation of the Borrowers to repay Letters of Credit is evidenced
by each Application and Agreement for Letter of Credit, as defined in the Loan
Agreement,
executed by the Borrowers.
D. The obligation of the Borrowers to repay advances under the Swing Line
Credit Facility is evidenced by the Swing Line Note.
E. The obligation of the Banks to establish the Revolving Credit Facility
and the Letter of Credit Facility and the obligation of PNC to establish the
Swing Line Credit Facility is subject
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to the condition that the Borrower execute and deliver this Stock Pledge
Agreement in favor of the Administrative Bank for the benefit of the Banks.
F. This Pledge Agreement pledges to PNC interests owned by the Borrower
in a Person that is not a Consolidated Subsidiary of Res-Care (a
"Non-Consolidated Person").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth herein and in the Loan Agreement, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:
2. DEFINITIONS. The following terms or phrases shall have the following
meanings:
1. "Collateral" has the meaning set forth in Section 2.1 of this
Stock Pledge Agreement.
2. "Event of Default" shall have the meaning set forth in
Section 7 of this Stock Pledge Agreement.
3. "Pledged Shares" means all of the shares of common stock of the
Non-Consolidated Persons now or hereafter owned by the Borrower and now or
hereafter pledged to the Administrative Bank for the benefit of the Banks
pursuant to this Stock Pledge Agreement to secure the payment of the Secured
Obligations. A schedule of the Pledged Shares existing as of the date hereof is
attached hereto and made a part hereof as EXHIBIT A.
4. "Secured Obligations" has the meaning set forth in Section 2.1
of this Stock Pledge Agreement.
All terms not otherwise defined herein shall have the meaning set forth for such
terms in the Loan Agreement.
3. GRANT OF SECURITY INTEREST.
1. The Borrower hereby pledges and assigns to the Administrative Bank
and hereby grants to the Administrative Bank, in each case on behalf of the
Banks, a security interest in (a) the Pledged Shares, (b) any and all stock
rights, rights to subscribe, liquidating dividends, dividends paid in stock, new
securities or any other property to which the Borrower is or may hereafter
become entitled to receive on account of the Pledged Shares, and (c) all
dividends and distributions declared in respect of the Pledged Shares and all
proceeds of any sale or other disposition of the Pledged Shares and other
property described in this Section 2 to which the Borrower is entitled
(hereinafter collectively referred to as the "Collateral"), to secure (i) the
payment of the entire unpaid principal of and all interest now accrued or
hereafter to accrue on the Revolving Credit Notes, (ii) the payment of the
entire unpaid principal of and all interest now
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accrued or hereafter to accrue on the Swing Line Note, (iii) the payment of all
drafts now or hereafter honored by PNC under all Letters of Credit, as such term
is defined in the Loan Agreement, now or hereafter issued by PNC pursuant to the
Letter of Credit Facility, (iv) the performance of all of the covenants,
agreements and obligations of the Borrower hereunder and under the Loan
Agreement and the other Loan Instruments, as such term is defined in the Loan
Agreement, not otherwise referred to above, and (v) the payment and performance
of all other liabilities, obligations, covenants and duties owing by the
Borrower to the Banks or either of them arising under or pursuant to the Loan
Agreement and/or the other Loan Instruments of any kind or nature, whether now
existing or hereafter created, arising or acquired, absolute or contingent,
joint or joint and several, due or to become due, and whether or not evidenced
by any note, guaranty or other instrument (the Revolving Credit Notes, the Swing
Line Note, the obligations of the Borrower in respect of all Letters of Credit
and all of the other indebtedness and obligations described in this Section 2.1
are hereinafter collectively referred to as the "Secured Obligations"). The term
"Secured Obligations" includes, without limitation, all interest, charges,
expenses, reasonable attorneys' fees and any other sums chargeable to the
Borrower under the Loan Agreement and/or any other Loan Instrument. The
Revolving Credit Notes, the Swing Line Note and the other Secured Obligations
are secured by the Pledged Shares and the other Collateral on a pro rata basis
without preference, distinction or priority of any kind whatsoever. The
Administrative Bank shall hold the Pledged Shares upon the terms and provisions
of this Stock Pledge Agreement, and the security interest in the Pledged Shares
and the other Collateral granted to the Administrative Bank on behalf of the
Banks pursuant to this Stock Pledge Agreement shall continue until all of the
Secured Obligations have been respectively paid in full to the Banks and the
Banks have no further obligation to lend under the Loan Agreement.
2. If the Borrower receives additional property of the type described
in this Section 2, the Borrower shall immediately deliver such property to the
Administrative Bank, to be held by the Administrative Bank pursuant to this
Stock Pledge Agreement.
3. Upon execution of this Stock Pledge Agreement, the Borrower shall
deliver to the Administrative Bank the share certificates evidencing the Pledged
Shares, together with executed blank stock powers.
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Administrative Bank and the Banks as follows, which
representations and warranties shall survive the execution and delivery of this
Stock Pledge Agreement and the delivery of the Pledged Shares to the
Administrative Bank:
1. The Borrower has the full right, power and authority to enter into
and perform this Stock Pledge Agreement. This Stock Pledge Agreement has been
duly entered into and delivered by the Borrower and constitutes the legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, except as enforceability thereof may be limited by applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally, and by the
application of usual equitable principles where equitable remedies are sought.
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2. The Borrower has good and marketable title to the Pledged Shares,
and the Pledged Shares are not and will not be subject to any lien, charge,
pledge, encumbrance, claim or security interest of any nature whatsoever, other
than the security interest created by this Stock Pledge Agreement.
3. All of the Pledged Shares are fully paid and non-assessable. The
Pledged Shares have been issued to and are registered in the name of the
Borrower.
4. The Borrower has not entered into any stock restriction or purchase
agreement with respect to the Pledged Shares which would in any way restrict the
sale, pledge or other transfer of the Pledged Shares or of any interest in or to
the Pledged Shares.
5. The execution and delivery of this Stock Pledge Agreement and the
performance of the transactions contemplated hereby will not contravene or
constitute a default under or result in a lien upon any property of the Borrower
pursuant to any applicable law or decree or any agreement, document or
instrument binding upon or affecting the Borrower or any of its assets.
6. There is no action, suit or proceeding pending or, to the best of
the Borrower's knowledge, information and belief, threatened against the
Borrower which might adversely affect its property or financial condition in any
respect.
7. All statements contained herein pertaining to the Pledged Shares and
the other Collateral are true and correct.
5. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees with the
Administrative Bank on behalf of the Banks that the Borrower will observe and
perform all of the following provisions until all of the Secured Obligations
have respectively been paid in full to the Banks and the Banks have no further
obligation to lend under the Loan Agreement and this Stock Pledge Agreement has
been terminated by the Administrative Bank on behalf of the Banks:
1. The Borrower will take all actions and will execute all documents
and instruments that may be necessary or as may be reasonably requested by the
Administrative Bank (a) to perfect the Administrative Bank's security interest
in all of the Collateral in accordance with the requirements of applicable law,
(b) to achieve and maintain the priority of the Administrative Bank's security
interest in all of the Collateral, and (c) to maintain, preserve and protect the
Collateral and the Administrative Bank's security interest therein.
2. The Borrower will promptly pay when due, and before penalties would
attach, all taxes, assessments, charges, encumbrances and liens now or hereafter
imposed upon or affecting the Collateral or any part thereof, unless the
Borrower at its own expense is contesting any such amount in good faith by an
appropriate proceeding timely instituted and which shall operate to prevent the
collection or satisfaction of the lien or amount so contested. If the Borrower
fails to pay such amounts and is not contesting the validity or amount thereof
in
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accordance with the preceding sentence, the Administrative Bank may, but is
not obligated to, pay such amounts, and such payment shall be conclusive
evidence of the legality or validity thereof.
3. The Borrower will keep the Collateral free and clear of all levies,
security interests and other liens and charges whatsoever, excepting only the
Administrative Bank's first priority perfected security interest in the
Collateral.
4. The Borrower will, at its own expense, procure, execute and deliver
from time to time, in recordable form, all endorsements, Uniform Commercial Code
Financing Statements, Uniform Commercial Code Continuation Statements, Uniform
Commercial Code Assignments and all other documents and instruments deemed
necessary or appropriate by the Administrative Bank in its reasonable judgment
to perfect, maintain and protect its perfected security interest in the
Collateral. The Borrower will pay all filing and recording fees and taxes
charged in connection therewith, and if any such fees and taxes are paid by the
Administrative Bank and/or the Banks, the same shall bear interest at the
Default Rate, as such term is defined in the Loan Agreement, and all such
amounts and all accrued interest thereon shall be added to and constitute part
of the Secured Obligations, shall be secured by the Administrative Bank's
security interest in all of the Collateral granted to the Administrative Bank
with the same priority as the Revolving Credit Notes to the fullest extent
permitted by applicable law, and shall be due and payable in full to the
Administrative Bank and/or the Banks, as applicable, upon demand made therefor
by the Administrative Bank and/or the Banks at any time in their sole and
absolute discretion.
5. The Borrower will appear in and defend any action or proceeding
which may affect its title to the Collateral and/or the Administrative Bank's
perfected security interest in the Collateral.
6. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees with
the Administrative Bank on behalf of the Banks that the Borrower will not
surrender or lose possession of the Collateral or any part thereof (other than
to the Administrative Bank pursuant hereto), or sell, further encumber or
otherwise dispose of or transfer the Collateral or any part thereof or any of
its rights, titles or interests therein without the prior written consent of the
Banks.
7. CERTAIN RIGHTS RESPECTING THE PLEDGED SHARES.
1. So long as no Event of Default has occurred and is continuing, the
Borrower may exercise all voting rights with respect to the Pledged Shares, but
the Borrower shall not cause any Non-Consolidated Person to take or fail to take
any action which will constitute a breach of any term or provision of the Loan
Agreement and/or the other Loan Instruments. Provided, upon the occurrence of
any Event of Default, and so long as such Event of Default exists, the
Administrative Bank may, at its sole option, exercise all voting rights with
respect to the Pledged Shares, and to that end the Borrower hereby constitutes
any officer of the Administrative Bank as its proxy and attorney-in-fact for all
purposes of voting the Pledged Shares at any annual, regular or special meeting
of shareholders of the Non-Consolidated Persons, and this appointment shall be
deemed coupled with an interest and is and shall be irrevocable until all of the
Secured Obligations
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have been respectively paid in full to the Banks and the Banks have no further
obligation to lend under the Loan Agreement, and all persons whatsoever shall be
conclusively entitled to rely upon any oral or written certification of the
Administrative Bank that it is entitled to vote the Pledged Shares hereunder.
The Borrower shall execute and deliver to the Administrative Bank any additional
proxies and powers of attorney that the Administrative Bank may desire in its
own name to effectuate the provisions of this Stock Pledge Agreement.
2. Upon the occurrence and during the continuation of any Event of
Default, all dividends and distributions, including liquidating dividends, paid
in respect of the Pledged Shares shall be immediately remitted to the
Administrative Bank on behalf of the Banks, to be applied by the Banks to the
unpaid principal of and/or accrued and unpaid interest on the Secured
Obligations on a pro rata basis without preference, distinction or priority of
any kind whatsoever. Until all such dividends or other distributions are paid to
the Administrative Bank, the Borrower shall hold all of the same in trust and as
a fiduciary for the Administrative Bank.
8. EVENT OF DEFAULT. The following shall each constitute an "Event of
Default" hereunder:
1. If the Borrower shall breach, violate or fail to perform or observe
any covenant, obligation, agreement, condition or other provision contained in
this Stock Pledge Agreement, and the same is not cured to the reasonable
satisfaction of the Banks, as such term is defined in the Loan Agreement, within
thirty (30) days after the Administrative Bank has specified such default in a
written notice delivered to the Borrower.
2. The occurrence and continuation of any Event of Default under and as
defined in the Loan Agreement.
9. REMEDIES.
1. Upon the occurrence of any Event of Default, the Banks may at their
option declare the Secured Obligations to be immediately due and payable, the
Administrative Bank may exercise the rights with respect to the Pledged Shares
contemplated in Section 6 of this Stock Pledge Agreement, and the Administrative
Bank, in addition to exercising all other rights or remedies, may proceed to
exercise with respect to the Pledged Shares or other Collateral all rights,
options and remedies of a secured party upon default as provided under the
Uniform Commercial Code as then adopted in the Commonwealth of Kentucky.
2. The rights of the Administrative Bank upon the occurrence of any
Event of Default shall include, without limitation, the following:
The right to the immediate possession of the Pledged Shares and/or the
other Collateral not then in the Administrative Bank's possession without
requirement of notice or demand or of any legal process.
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The right to sell or otherwise dispose of the Pledged Shares and/or the
other Collateral or any part thereof at one or more public or private sales, in
one or more lots or parcels, regardless of whether the Pledged Shares and/or the
other Collateral is present at the place of sale, for cash or credit or for
future delivery, and on such terms and conditions and in such manner as the
Banks may determine in their sole and absolute discretion, with the Banks having
the right to bid upon and be the purchaser of any or all of the Pledged Shares
and/or the other Collateral so sold at any public sale. Each such public or
private sale may be held without demand or advertisement or notice of intention
to sell or of the time or place of sale, except as otherwise expressly provided
herein, and without prior judicial hearing or other notice or demand of any
kind, except as otherwise expressly provided herein, all of which are hereby
expressly and unconditionally waived by the Borrower.
The right to recover the reasonable expenses of the Administrative Bank
in preparing for sale and selling the Pledged Shares and/or other Collateral and
other like expenses, together with court costs and reasonable attorneys' fees
incurred by the Administrative Bank and/or the Banks.
The right to proceed by appropriate legal process at law or in equity to
enforce any provision of this Stock Pledge Agreement or in aid of the execution
of any power of sale, or for foreclosure of the security interest of the
Administrative Bank in the Pledged Shares and/or the other Collateral, or for
the sale of the Pledged Shares and/or the other Collateral under the judgment or
decrees of any court.
All proceeds derived from the enforcement by the Administrative Bank of
any one or more of the rights and remedies set forth in this Section 8, after
deducting therefrom all reasonable costs and expenses incurred or paid by the
Administrative Bank and/or the Banks in enforcing such rights and remedies,
shall be applied to the payment of the Secured Obligations on a pro rata basis
without preference, distinction or priority of any kind whatsoever.
10. EXERCISE OF REMEDIES. The rights and remedies of the Administrative
Bank upon the occurrence of an Event of Default, whether arising at law, in
equity and/or under this Stock Pledge Agreement or under the other Loan
Instruments, shall be deemed to be cumulative, and the exercise of any right or
remedy shall not be deemed to be an election of that right or remedy to the
exclusion of any other right or remedy.
11. WAIVER. The Borrower hereby waives any claim arising by reason of
(a) the fact that the price for which the Pledged Shares or any part thereof is
sold at any private sale or sales is less than the price which would have been
obtained at a public sale or sales or is less than the amount of the Secured
Obligations; (b) any reasonable delay by the Administrative Bank in selling the
Pledged Shares following the occurrence of an Event of Default, including,
without limitation, any delays in selling the Pledged Shares resulting from the
compliance by the Administrative Bank with applicable federal and state
securities laws, even if the price of the Pledged Shares thereafter declines; or
(c) the immediate sale of the Pledged Shares upon the occurrence of an Event of
Default, even if the price of the Pledged Shares should thereafter increase.
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12. PAYMENT OF COSTS, ATTORNEYS' FEES AND EXPENSES. To the extent not
paid out of the proceeds of sale of the Pledged Shares, the Borrower shall pay
any and all reasonable costs, attorneys' fees and other expenses of whatever
kind incurred by the Administrative Bank and/or the Banks in connection with (a)
enforcing this Stock Pledge Agreement, (b) obtaining possession of the Pledged
Shares, (c) the protection and preservation of the Pledged Shares and the other
Collateral, and (d) any litigation involving the Pledged Shares or other
Collateral, any benefit accruing by virtue of the provisions hereof or the
rights of the Administrative Bank and the Banks hereunder.
12. ADVANCES BY ADMINISTRATIVE BANK AND BANKS. The Borrower shall
reimburse the Administrative Bank and the Banks for all reasonable advances made
by the Administrative Bank and/or the Banks in performing any actions on behalf
of the Borrower pursuant to this Stock Pledge Agreement, including, without
limitation, all amounts paid by the Administrative Bank and/or the Banks (a) to
discharge taxes, levies, liens and/or security interests against the Pledged
Shares and/or the other Collateral, and/or (b) in connection with the exercise
by the Administrative Bank and/or the Banks of their rights and remedies
hereunder or under the other Loan Instruments and/or at law or in equity. All
such advances made by the Administrative Bank and/or the Banks shall bear
interest at the Default Rate and all such advances and all interest thereon
shall be secured by this Stock Pledge Agreement with the same priority as the
Revolving Credit Notes to the fullest extent permitted by the applicable law,
and shall be due and payable in full to the Administrative Bank and/or the
Banks, as applicable, upon demand made therefor by the Administrative Bank
and/or the Banks at any time in their sole and absolute discretion.
13. IRREVOCABLE ATTORNEY-IN-FACT. The Borrower hereby irrevocably
appoints the Administrative Bank as the Borrower's attorney-in-fact (a) to do
all acts and things which the Administrative Bank may deem necessary or
appropriate in its reasonable discretion to perfect and to continue the
perfected status of the security interest in the Pledged Shares and the other
Collateral created in favor of the Administrative Bank pursuant to this Stock
Pledge Agreement and to protect the Pledged Shares and the other Collateral, and
(b) to perform such other acts in connection with the Pledged Shares and the
other Collateral as the Administrative Bank determines in its reasonable
discretion to be necessary or appropriate to effectuate the purposes and
provisions of this Stock Pledge Agreement.
14. RETURN OF COLLATERAL. The Administrative Bank at the direction of
the Banks may at any time deliver the Pledged Shares or other Collateral, or any
part thereof, to the Borrower. The receipt by the Borrower of the Pledged Shares
or other Collateral shall be a complete and full discharge of the Administrative
Bank and the Banks with respect to such Pledged Shares or other Collateral, and
the Administrative Bank and the Banks shall be discharged from any liability or
responsibility with respect thereto.
15. WAIVER OF HEARING. The Borrower hereby irrevocably and expressly
waives (a) any constitutional or other right to a judicial hearing prior to the
time the Administrative Bank takes possession of and/or disposes of the Pledged
Shares and the other Collateral or any part thereof as provided in Section 8
hereof, and (b) all rights to redeem or reclaim the Pledged Shares and the other
Collateral or any part thereof, whether sold at public or private sale.
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16. GENERAL WAIVERS. Any forbearance or failure or delay by the
Administrative Bank in exercising any right, power or remedy shall not preclude
the further exercise thereof, and every right, power and remedy of the
Administrative Bank shall continue in full force and effect until such right,
power or remedy is specifically waived in a writing executed by the
Administrative Bank. The Borrower hereby irrevocably and expressly waives (a)
any right to require the Administrative Bank and the Banks to proceed against
any person or to exhaust any other security for the Secured Obligations or to
pursue any remedy in their power prior to enforcing the Administrative Bank's
security interest in the Pledged Shares and the other Collateral and the
Administrative Bank's other rights hereunder, and (b) any right to require the
Administrative Bank to enforce its security interest in all of the Pledged
Shares and the other Collateral contemporaneously in time. It is understood and
agreed by the Borrower that the Administrative Bank has the right, in the sole
and absolute discretion of the Banks, to enforce or forbear from enforcing its
security interest in the Pledged Shares and the other Collateral or any part
thereof as the Banks elect in their sole and absolute discretion.
17. NOTICE.
17.1 Any requirement of the Uniform Commercial Code of reasonable
notice of the intended sale or other disposition of the Pledged Shares and the
other Collateral which may not otherwise be waived shall be met if such notice
is given to the Borrower at least ten (10) Business Days, as such term is
defined in the Loan Agreement, before the time of sale, disposition or other
event or thing giving rise to the requirement of notice.
17.2 All notices and other communications under this Stock Pledge
Agreement shall be in writing and shall be personally delivered or sent by
express courier service, or by registered or certified United States mail,
return receipt requested, postage prepaid, addressed as follows (or to such
other address as to which either the Borrower or the Administrative Bank shall
have given the other written notice):
If to the Borrower: Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
Attn: Mr. Ronald G. Geary
If to the
Administrative Bank: PNC Bank, National Association
500 West Jefferson Street
Louisville, Kentucky 40202
Attn: Mr. Ben Willingham
cc: John S. Egan
Brown, Todd & Heyburn PLLC
3200 Aegon Center
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Louisville, Kentucky 40202
All written notices and other communications required under this Stock
Pledge Agreement shall be deemed given upon the earliest of (a) actual delivery
in person, (b) one (1) Business Day after having been delivered to an express
courier service, or (c) two (2) Business Days after having been deposited in the
United States mails, in accordance with the foregoing.
18. FURTHER ASSURANCES. The Borrower shall execute all such other
documents or instruments, and shall take such other actions, as the
Administrative Bank and/or the Banks may reasonably request to more fully create
and maintain, or to verify, ratify or perfect, the security interest in the
Pledged Shares and the other Collateral hereby created in favor of the
Administrative Bank pursuant to this Stock Pledge Agreement.
19. NO IMPLIED WAIVER. All options and rights of the Administrative Bank
hereunder are continuing, and the failure of the Administrative Bank to exercise
any such option or right in any instance shall not be construed as waiving the
right to exercise such option or right at any subsequent time or be construed as
waiving the right to exercise any other option or right hereunder or at law or
in equity. No exercise by the Administrative Bank of any of the options, rights
or powers provided herein and no delay or omission in the exercise of such
options, rights or powers provided herein shall be construed to exhaust the same
or be construed as a waiver thereof, and each such option, right and power may
be exercised at any time and from time to time.
20. SEVERABILITY OF PROVISIONS. If any term or provision of this Stock
Pledge Agreement is held to be invalid or unenforceable in any jurisdiction, the
other terms and provisions hereof shall remain in full force and effect in such
jurisdiction and the invalid or unenforceable provision shall remain in full
force and effect in all other jurisdictions.
21. GOVERNING LAW. This Stock Pledge Agreement and the respective
rights, duties and obligations of the parties hereto shall be governed by and
construed in accordance with the laws of the Commonwealth of Kentucky.
22. SUCCESSORS AND ASSIGNS. This Stock Pledge Agreement shall bind the
Borrower and its successors and assigns and shall inure to the benefit of the
Administrative Bank and the Banks and their respective successors and assigns,
including, without limitation, each subsequent holder of the Revolving Credit
Notes, the Swing Line Note and/or the other Secured Obligations.
23. CAPTIONS. The various section headings used in this Stock Pledge
Agreement are inserted for convenience of reference only and shall be ignored in
interpreting or construing the provisions hereof.
24. TIME OF THE ESSENCE. Time shall be of the essence in the performance
of all of the Borrower's covenants, obligations and agreements under this Stock
Pledge Agreement.
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25. ENTIRE AGREEMENT. This Stock Pledge Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior understandings with respect to the subject matter hereof.
No change, modification, addition or termination of this Stock Pledge Agreement
shall be enforceable unless in writing and signed by the party against whom
enforcement is sought.
IN WITNESS WHEREOF, the Borrower and the Administrative Bank have
executed this Stock Pledge Agreement on the day and year first above written.
17
<PAGE> 232
By:
--------------------------------
Authorized Officer
(the "Shareholder")
PNC BANK, NATIONAL ASSOCIATION,
in its
capacity as the Administrative Bank for
the Banks
By:
------------------------------------
Ben Willingham
Vice President
(the "Administrative Bank")
18
<PAGE> 233
EXHIBIT A
PLEDGED SHARES
--------------
19
<PAGE> 234
EXHIBIT P
BORROWER COUNSEL OPINION
------------------------
<PAGE> 235
EXHIBIT Q
PNC's standard Application and Agreement for Letter of Credit
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<S> <C>
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0
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<TABLE> <S> <C>
<ARTICLE> 5
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<S> <C>
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<PERIOD-START> JAN-01-1998
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