<PAGE>
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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, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-9028
----------------
NATIONWIDE HEALTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Maryland 95-3997619
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660
(Address of principal executive offices)
(949) 718-4400
(Registrant's telephone number, including area code)
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Shares of registrant's common stock, $.10 par value, outstanding at July 31,
1999--46,216,484.
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<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
FORM 10-Q
June 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS.......................... 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS................ 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS................ 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.......................................... 8
PART II--OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 12
</TABLE>
1
<PAGE>
PART I
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
ASSETS
------
Investments in real estate
Real estate properties:
Land................................................ $ 148,352 $ 148,388
Buildings and improvements.......................... 1,123,598 1,024,637
Construction in progress............................ 33,989 70,363
---------- ----------
1,305,939 1,243,388
Less accumulated depreciation....................... (147,702) (133,316)
---------- ----------
1,158,237 1,110,072
Mortgage loans receivable, net...................... 198,989 206,613
---------- ----------
1,357,226 1,316,685
Cash and cash equivalents............................. 16,817 16,182
Receivables........................................... 5,614 6,712
Other assets.......................................... 25,308 17,724
---------- ----------
$1,404,965 $1,357,303
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Bank borrowings....................................... $ 80,700 $ 42,000
Senior notes due 2000-2038............................ 613,900 545,150
Convertible debentures................................ -- 57,431
Notes and bonds payable............................... 64,679 64,623
Accounts payable and accrued liabilities.............. 50,425 42,541
Stockholders' equity:
Preferred stock $1.00 par value; 5,000,000 shares
authorized;
Issued and outstanding: 1999--1,000,000; 1998--
1,000,000, stated at liquidation preference of $100
per share.......................................... 100,000 100,000
Common stock $.10 par value; 100,000,000 shares
authorized;
Issued and outstanding: 1999--46,216,484; 1998--
46,206,128......................................... 4,622 4,621
Capital in excess of par value....................... 556,179 555,998
Cumulative net income................................ 468,598 433,644
Cumulative dividends................................. (534,138) (488,705)
---------- ----------
Total stockholders' equity......................... 595,261 605,558
---------- ----------
$1,404,965 $1,357,303
========== ==========
</TABLE>
See accompanying notes.
2
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
1999 1998 1999 1998
------- ------- ------- -------
(Unaudited)
(In thousands except per share
amounts)
<S> <C> <C> <C> <C>
Revenues:
Minimum rent............................ $31,160 $24,746 $60,556 $48,536
Interest and other income............... 5,713 5,703 11,644 11,396
Additional rent and additional
interest............................... 3,998 4,042 7,980 7,717
------- ------- ------- -------
40,871 34,491 80,180 67,649
Expenses:
Interest and amortization of deferred
financing costs........................ 12,911 8,584 24,408 16,836
Depreciation and non-cash charges....... 9,102 6,658 17,832 12,803
General and administrative.............. 1,299 1,103 2,651 2,295
------- ------- ------- -------
23,312 16,345 44,891 31,934
------- ------- ------- -------
Net income before gain (loss) on sale of
properties.............................. 17,559 18,146 35,289 35,715
Gain (loss) on sale of properties........ (335) -- (335) 2,321
------- ------- ------- -------
Net income............................... 17,224 18,146 34,954 38,036
Preferred stock dividends................ (1,919) (1,919) (3,839) (3,839)
------- ------- ------- -------
Net income available to common
stockholders............................ $15,305 $16,227 $31,115 $34,197
======= ======= ======= =======
Per share amounts:
Basic/diluted income from continuing
operations available to common
stockholders........................... $ .34 $ .37 $ .68 $ .73
======= ======= ======= =======
Basic/diluted net income available to
common stockholders.................... $ .33 $ .37 $ .67 $ .78
======= ======= ======= =======
Dividends paid per share................ $ .45 $ .42 $ .90 $ .84
======= ======= ======= =======
Weighted average shares outstanding...... 46,216 44,248 46,215 43,760
======= ======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1999 1998
-------- --------
(Unaudited)
(In thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income............................................... $ 34,954 $ 38,036
Gain (loss) on sale of properties........................ 335 (2,321)
Depreciation and non-cash charges........................ 17,832 12,803
Amortization of deferred financing costs................. 444 442
Net decrease in other assets and liabilities............. 1,042 3,706
-------- --------
Net cash provided by operating activities.............. 54,607 52,666
Cash flow from investing activities:
Investment in real estate properties..................... (72,571) (130,757)
Disposition of real estate properties.................... 14,089 5,496
Investment in mortgage loans receivable.................. (186) (2,399)
Principal payments on mortgage loans receivable.......... 1,123 6,423
-------- --------
Net cash used in investing activities.................. (57,545) (121,237)
Cash flow from financing activities:
Bank borrowings.......................................... 157,000 144,300
Repayment of bank borrowings............................. (118,300) (76,200)
Issuance of senior unsecured debt........................ 68,750 20,000
Issuance of common stock................................. -- 23,149
Dividends paid........................................... (45,433) (40,784)
Issuance of notes and bonds.............................. -- 2,402
Principal payments on convertible debentures, notes and
bonds................................................... (57,700) (204)
Other, net............................................... (744) (370)
-------- --------
Net cash provided by financing activities.............. 3,573 72,293
-------- --------
Increase in cash and cash equivalents...................... 635 3,722
Cash and cash equivalents, beginning of period............. 16,182 10,192
-------- --------
Cash and cash equivalents, end of period................... $ 16,817 $ 13,914
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
(i) The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, and include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
results of operations for the three-month and six-month periods ended June 30,
1999 and 1998 pursuant to the rules and regulations of the Securities and
Exchange Commission. All such adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures in such
financial statements are adequate to make the information presented not
misleading, these condensed consolidated financial statements should be read
in conjunction with the Company's financial statements and the notes thereto
included in the Company's 1998 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the three-
month and six-month periods ended June 30, 1999 and 1998 are not necessarily
indicative of the results for a full year.
(ii) The Company invests in healthcare related real estate and, as of June
30, 1999, had investments in 353 facilities located in 35 states. The
facilities include 200 skilled nursing facilities, 121 assisted living
facilities, 14 continuing care retirement communities, 15 residential care
facilities for the elderly, 2 rehabilitation hospitals and 1 medical clinic.
The Company's facilities are operated by 58 different operators, including the
following publicly traded companies: Alterra Healthcare Corporation, American
Retirement Corporation, ARV Assisted Living, Inc., Balanced Care Corporation,
Beverly Enterprises, Inc., Harborside Healthcare Corporation, HEALTHSOUTH
Corporation, Integrated Health Services, Mariner Post-Acute Network and Sun
Healthcare Group, Inc. Of the operators of the facilities, only Alterra
Healthcare Corporation and Beverly Enterprises, Inc. account for more than 10%
of the Company's revenues. They accounted for 12% and 14%, respectively, of
the Company's total revenues for the six months ended June 30, 1999.
As of June 30, 1999, the Company had direct ownership of 162 skilled nursing
facilities, 113 assisted living facilities, 9 continuing care retirement
communities, 15 residential care facilities for the elderly, 2 rehabilitation
hospitals and 1 medical clinic. Substantially all of the Company's owned
facilities are leased under "net" leases (the "Leases"), which are accounted
for as operating leases.
The Leases have initial terms ranging from 9 to 19 years, and generally the
Leases have two or more multiple-year renewal options. The Company earns fixed
monthly minimum rents and may earn periodic additional rents. The additional
rent payments are generally computed as a percentage of facility net patient
revenues in excess of base amounts or as a percentage of the increase in the
Consumer Price Index. Additional rents are generally calculated and payable
monthly or quarterly. Most Leases contain provisions such that the total rent
cannot decrease from one year to the next. Most Leases contain cross-
collateralization and cross-default provisions tied to other Leases with the
same lessee, as well as grouped lease renewals and grouped purchase options.
Obligations under the Leases have corporate guarantees, and Leases covering
186 facilities are backed by irrevocable letters of credit or security
deposits that cover 1 to 12 months of monthly minimum rents. Under the terms
of the Leases, the lessee is responsible for all maintenance, repairs, taxes
and insurance on the leased properties.
As of June 30, 1999, the Company held 33 mortgage loans secured by 38
skilled nursing facilities, 8 assisted living facilities and 5 continuing care
retirement communities. As of June 30, 1999, the mortgage loans had a net book
value of approximately $198,989,000 with individual outstanding balances
ranging from approximately $481,000 to $17,725,000 and maturities ranging from
2003 to 2025.
(iii) Basic earnings per share is computed by dividing income from
continuing operations available to common stockholders by the weighted average
common shares outstanding. Income available to common
5
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
stockholders is calculated by deducting dividends declared on preferred stock
from income from continuing operations and net income. Diluted earnings per
share includes the effect of the potential shares outstanding: dilutive stock
options and dilutive convertible debentures. The effect of convertible
debentures was not dilutive in 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------
1999 1998
-------------- --------------
Income Shares Income Shares
------- ------ ------- ------
(in thousands)
<S> <C> <C> <C> <C>
Income before gain on sale of properties..... $17,559 $18,146
Less: preferred stock dividends.............. 1,919 1,919
------- -------
Amounts used to calculate Basic EPS.......... 15,640 46,216 16,227 44,248
Effect of dilutive securities:
Stock options.............................. -- -- -- 18
------- ------ ------- ------
Amounts used to calculate Diluted EPS...... $15,640 46,216 $16,227 44,266
======= ====== ======= ======
<CAPTION>
Six Months Ended June 30,
-----------------------------
1999 1998
-------------- --------------
Income Shares Income Shares
------- ------ ------- ------
(in thousands)
<S> <C> <C> <C> <C>
Income before gain on sale of properties..... $35,289 $35,715
Less: preferred stock dividends.............. 3,839 3,839
------- -------
Amounts used to calculate Basic EPS.......... 31,450 46,215 31,876 43,760
Effect of dilutive securities:
Stock options.............................. -- -- -- 11
------- ------ ------- ------
Amounts used to calculate Diluted EPS...... $31,450 46,215 $31,876 43,771
======= ====== ======= ======
</TABLE>
(iv) The Company qualifies as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended. The Company
intends to continue to qualify as such and therefore to distribute at least
ninety-five percent (95%) of its taxable income to its stockholders.
Accordingly, no provision has been made for federal income taxes.
(v) During the six-month period ended June 30, 1999, the Company acquired 7
residential care facilities for the elderly in 1 transaction for an aggregate
investment of approximately $2,304,000. During 1999, the Company has provided
new construction financing of approximately $65,718,000. Construction of 15
assisted living facilities has been completed in 1999, in which the Company's
total aggregate investment was $110,258,000; $40,085,000 of this amount was a
current year investment included in the new construction financing amount
above. Upon acquisition or completion of construction, as applicable, the
facilities were concurrently leased under terms generally similar to the
Company's existing Leases. During the six-month period ended June 30, 1999,
the Company also funded approximately $4,038,000 in capital improvements at
certain facilities in accordance with certain existing lease provisions. Such
capital improvements will result in an increase in the minimum rents earned by
the Company on these facilities.
During the six months ended June 30, 1999, the Company funded an additional
$186,000 on existing mortgage loans. Such additional amounts funded will
result in an increase in interest income earned by the Company.
During the six-month period ended June 30, 1999, the Company disposed of 14
facilities in 13 separate transactions for aggregate proceeds of $13,699,000.
The Company recognized an aggregate loss of $335,000
6
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
related to the disposal of these facilities. The Company has deferred
recognition of payments totaling approximately $2,567,000 related to several
facilities pending resolution of renewal negotiations of the master lease
applicable to those facilities.
During the six months ended June 30, 1999, the Company issued $68,750,000 in
aggregate principal amount of medium-term notes. The notes bear fixed interest
at a weighted average rate of 7.81% and have a weighted average maturity of
8.3 years.
During the six-month period ended June 30, 1999, $57,431,000 of the
Company's 6.25% convertible debentures were repaid and the remaining $8,000
were converted into 356 shares of the Company's common stock.
(vi) The adoption of Statement of Financial Account Standards No. 133
Accounting for Derivative Instruments and Hedging Activities does not have an
impact on the Company's financial statements as the Company doesn't utilize
derivatives or engage in any hedging activities.
7
<PAGE>
NATIONWIDE HEALTH PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1999
Statement Regarding Forward Looking Disclosure
Certain information contained in this report includes forward looking
statements, which can be identified by the use of forward looking terminology
such as "may", "will", "expect", "should" or comparable terms or the negative
thereof. These statements involve risks and uncertainties that could cause
actual results to differ materially from those described in the statements.
These risks and uncertainties include (without limitation) the following: the
effect of economic and market conditions and changes in interest rates,
government regulations, including changes in Medicare and Medicaid payment
levels, changes in the healthcare industry, deterioration of the operating
results or financial condition of the Company's tenants, the amount of any
additional investments, access to capital markets and changes in the ratings
of the Company's debt securities.
Operating Results
Six Months 1999 Compared to Six Months 1998
Minimum rent increased $12,020,000 or 25% over the same period in 1998. The
increase was primarily due to minimum rent resulting from investments in
additional leased facilities during the last twelve months. Interest and other
income increased by $248,000 or 2% over the same period in 1998. The increase
was primarily due to the increase in mortgage loans during the last twelve
months, partially offset by the conversion of three mortgaged facilities to
leases. Additional rent and additional interest increased by $263,000 or 3%
over the same period in 1998. The increase was attributable to increased
additional rent and additional interest as provided in the Company's existing
leases and mortgage loans receivable based on increases in the facility
revenues or the Consumer Price Index.
Interest and amortization of deferred financing costs increased $7,572,000
or 45% over the same period in 1998. The increase was primarily due to the
issuance of $238,900,000 in medium-term notes during the last twelve months.
Depreciation and non-cash charges increased $5,029,000 or 39% over the same
period in 1998. The increase was primarily attributable to increased
depreciation due to the acquisition of additional facilities over the last
twelve months. General and administrative costs increased $356,000 or 16% over
the same period in 1998. The increase was due to increases in compensation and
other general expenses.
Second Quarter 1999 Compared to Second Quarter 1998
Minimum rent increased $6,414,000 or 26% over the same period in 1998. The
increase was primarily due to minimum rent resulting from investments in
additional leased facilities during the last twelve months. Interest and other
income increased by $10,000 over the same period in 1998. The minimal increase
was primarily due to the increase in mortgage loans during the last twelve
months, significantly offset by the conversion of three mortgaged facilities
to leases during the quarter. Additional rent and additional interest
decreased by $44,000 or 1% over the same period in 1998. The small decrease
was primarily attributable to the disposal of certain assets during the second
quarter of 1999 partially offset by increased additional rent and additional
interest on continuing facilities. Additional rent and additional interest are
provided for in the Company's existing leases and mortgage loans receivable
based on increases in the facility revenues or the Consumer Price Index.
Interest and amortization of deferred financing costs increased $4,327,000
or 50% over the same period in 1998. The increase was primarily due to the
issuance of $238,900,000 in medium-term notes during the last twelve months.
Depreciation and non-cash charges increased $2,444,000 or 37% over the same
period in 1998. The increase was primarily attributable to increased
depreciation due to the acquisition of additional facilities over the last
twelve months. General and administrative costs increased $196,000 or 18% over
the same period in 1998. The increase was due to increases in compensation and
other general expenses.
8
<PAGE>
The Company expects increased rental revenues and interest income due to the
addition of facilities to its property base and mortgage loans receivable over
the last twelve months. The Company also expects increased additional rent and
additional interest because the Company's leases and mortgages generally
contain provisions under which additional rents or interest income increase
with increases in facility revenues and/or increases in the Consumer Price
Index. Historically, revenues at the Company's facilities and the Consumer
Price Index generally have increased; although, there are no assurances that
they will continue to increase in the future. Sales of facilities or
repayments of mortgages would serve to offset the aforementioned revenue
increases. Additional investments in healthcare facilities would also increase
rental and/or interest income. As additional investments in facilities are
made, depreciation and/or interest expense could also increase. Any such
increases, however, are expected to be at least partially offset by rents or
interest income associated with the investments.
The adoption of Statement of Financial Account Standards No. 133 Accounting
for Derivative Instruments and Hedging Activities does not have an impact on
the Company's financial statements as the Company doesn't utilize derivatives
or engage in any hedging activities.
Liquidity and Capital Resources
During the six-month period ended June 30, 1999, the Company acquired 7
residential care facilities for the elderly in 1 transaction for an aggregate
investment of approximately $2,304,000. During 1999, the Company has provided
new construction financing of approximately $65,718,000. Construction of 15
assisted living facilities has been completed in 1999, in which the Company's
total aggregate investment was $110,258,000; $40,085,000 of this amount was a
current year investment included in the new construction financing amount
above. Upon acquisition or completion of construction, as applicable, the
facilities were concurrently leased under terms generally similar to the
Company's existing leases. During the six-month period ended June 30, 1999,
the Company also funded approximately $4,038,000 in capital improvements at
certain facilities in accordance with certain existing lease provisions. Such
capital improvements will result in an increase in the minimum rents earned by
the Company on these facilities. The acquisitions, construction advances and
capital improvement advances were funded by borrowings on the Company's bank
line of credit and by cash on hand.
During the six-month period ended June 30, 1999, the Company disposed of 14
facilities in 13 separate transactions for aggregate proceeds of $13,699,000.
The Company recognized an aggregate loss of $335,000 related to the disposal
of these facilities. The Company has deferred recognition of payments totaling
approximately $2,567,000 related to several facilities pending resolution of
renewal negotiations of the master lease applicable to those facilities.
During the six-month period ended June 30, 1999, the Company issued
$68,750,000 in aggregate principal amount of medium-term notes. The notes bear
fixed interest at a weighted average rate of 7.81% and have a weighted average
maturity of 8.3 years.
At June 30, 1999, the Company had $19,300,000 available under its
$100,000,000 bank line of credit which expires March 31, 2001. The Company has
shelf registrations on file with the Securities and Exchange Commission under
which the Company may issue (a) up to $486,100,000 in aggregate principal
amount of medium term notes and (b) up to approximately $178,247,000 of
securities including debt, convertible debt, common and preferred stock. The
Company anticipates issuing securities under such shelf registrations to repay
borrowings under the Company's bank line of credit.
The Company anticipates making additional investments in healthcare related
facilities. Financing for such future investments may be provided by
borrowings under the Company's bank line of credit, private placements or
public offerings of debt or equity, and the assumption of secured
indebtedness. The Company believes it has sufficient liquidity and financing
capability to finance future investments as well as repay borrowings at or
prior to their maturity.
9
<PAGE>
Year 2000 Readiness Disclosure
All statements contained in the following section are "Year 2000 Readiness
Disclosures" within the meaning of the Year 2000 Information and Disclosure
Act.
The Year 2000 issue (the "Year 2000 Issue") in computers arises from the
common industry practice of using two digits to represent a date in computer
software code and databases to enhance both processing time and save storage
space. Therefore, when dates in the year 2000 and beyond are indicated and
computer programs read the date "00," the computer may default to the year
"1900" rather than the correct "2000." This could result in incorrect
calculations, faulty data and computer shutdowns, which would cause
disruptions of operations.
The Company has reviewed the risks of the Year 2000 Issue with regard to the
Company's own internal operations, information systems and software
applications and continues to review the impact on the Company of its outside
vendors', lessees' and borrowers' ability to operate. The Company believes its
own internal operations, information systems and software applications are
compliant at June 30, 1999 based upon reasonable assurance by vendors and the
Company's information systems consultants. During the second quarter of 1999,
the Company replaced its entire computer system, which consists of a local
area network of twelve personal computers and three servers, to enable it to
upgrade its accounting software unrelated to the Year 2000 Issue. The cost to
remediate the Year 2000 Issue with regard to the Company's internal
operations, information systems and software applications is not believed to
be material.
The Company's vendors that provide banking, communications and payroll
services and the Company's lessees and borrowers will also likely be affected
by the Year 2000 Issue. If the Company's vendors, lessees and borrowers are
not Year 2000 compliant, or if they face disruptions in their operations or
cash flows due to Year 2000 Issues, the Company could face significant
temporary disruptions in rent and mortgage payments and, therefore, cash flows
after that date.
The Company's lessees and borrowers generally rely extensively on
information systems, including systems for capturing patient and cost
information and for billing and collection of reimbursement for healthcare
services provided. Furthermore, the Company's lessees and borrowers likewise
are dependent on a variety of third parties, including, but not limited to,
Medicare and Medicaid programs, insurance companies, HMO's and other private
payors, governmental agencies, fiscal intermediaries that process claims and
make payments for the Medicare and Medicaid programs, utilities that provide
electricity, water, natural gas and communications services, and vendors of
medical supplies and pharmaceuticals used in patient care, all of whom must
also adequately address the Year 2000 Issue. The Company continues to review
publicly filed information of its lessees, borrowers and vendors regarding
their state of readiness with respect to identifying and remediating their
Year 2000 Issues. In January of 1999, the Company began sending questionnaires
to and/or contacting its lessees, borrowers and vendors regarding their state
of readiness with respect to identifying and remediating their Year 2000
Issues. The responses received and filings reviewed to date by the Company
have generally indicated that the respondents anticipate their remediation
plans will be completed before the end of 1999. Most respondents have
indicated that they do not have assurances that the third parties on which
they depend, many of whom are noted above, will accomplish adequate
remediation of their Year 2000 Issues. It is not possible for the Company to
determine or be assured that adequate remediation of the Year 2000 Issue will
be accomplished by such lessees, borrowers and vendors. Furthermore, it is not
possible for the Company to determine or be assured that third parties upon
which the Company's lessees, borrowers and vendors are dependent, will
accomplish adequate remediation of their Year 2000 Issues.
The Company will also have risks associated with Year 2000 Issues in non-
information technology areas as it relates to owned properties. There is a
risk that embedded chips in elevators, security systems, electrical systems
and similar technology-driven devices may stop functioning due to Year 2000
Issues. Substantially all of the Company's owned properties are leased under
triple-net leases and as such, the cost to remediate any of these items will
be paid by the lessees.
Based on currently available information, the Company believes that the
impact of the Year 2000 Issue, as it relates to its internal operations,
information systems and software applications will not be material. However,
there
10
<PAGE>
can be no assurance that the Year 2000 Issues of its vendors, lessees,
borrowers and third parties upon which they are dependent will not have a
material impact on the future operations and/or financial results of the
Company. The Company is in the process of developing a contingency plan to
mitigate the risks associated with its lessees, borrowers and vendors.
Readers are cautioned that most of the statements contained in the "Year
2000 Readiness Disclosure" paragraphs are forward looking and should be read
in conjunction with the Company's disclosures under the heading "Statement
Regarding Forward Looking Disclosure" set forth above.
Market Risk Exposure
The "Market Risk Exposure" paragraphs are presented to provide an update
about material changes to the "Market Risk Exposure" paragraphs included in
the Company's 1998 Annual Report on Form 10-K filed with the Securities and
Exchange Commission and should be read in conjunction with those paragraphs.
The Company is exposed to market risks related to fluctuations in interest
rates on its mortgage loans receivable and debt. The Company does not utilize
interest rate swaps, forward or option contracts on foreign currencies or
commodities, or other types of derivative financial instruments. Readers are
cautioned that many of the statements contained in the "Market Risk Exposure"
paragraphs are forward looking and should be read in conjunction with the
Company's disclosures under the heading "Statement Regarding Forward Looking
Disclosure" set forth above.
The Company provides mortgage loans to operators of healthcare facilities as
part of its normal operations. The majority of the loans have fixed rates.
Four of the mortgage loans have adjustable rates, however, the rates adjust
only once or twice over the loan lives and the minimum adjusted rate is equal
to the current rate. Therefore, all mortgage loans receivable are treated as
fixed rate notes.
The Company utilizes debt financing primarily for the purpose of making
additional investments in healthcare facilities. Historically, the Company has
made short-term borrowings on its bank line of credit to fund its acquisitions
until market conditions were appropriate, based on management's judgment, to
issue stock or fixed rate debt to provide long-term financing.
During the six months ended June 30, 1999, the Company issued an additional
$68,750,000 of fixed rate debt maturing on the following dates with the
following interest rates: $23,750,000 maturing in 2004 at an average rate of
7.56% and $45,000,000 maturing in 2009 at an average rate of 7.94%. In
addition, the bank borrowings under the Company's bank line of credit have
increased to $80,700,000 from $42,000,000. In January of 1999, $57,431,000 of
the Company's 6.25% convertible debentures were repaid and the remaining
$8,000 were converted into 356 shares of the Company's common stock.
The Company does not believe that the future market risks related to the
above securities or those detailed in the 1998 Annual Report on Form 10-K will
have a material impact on the Company or the results of its future operations.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on April 19, 1999 ("Annual
Meeting"). At the Annual Meeting, Charles D. Miller and R. Bruce Andrews were
re-elected to serve for a three-year term until the 2002 Annual Meeting of
Stockholders. The other directors whose term of office continued after the
meeting are John C. Argue, David R. Banks, Sam A. Brooks, Jr. and Jack D.
Samuelson. Additionally, the selection of Arthur Andersen LLP as independent
accountants for the year ended December 31, 1999 was ratified.
Voting at the Annual Meeting was as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast Abstentions/Broker
Matter For Against non-Votes
------ ---------- ---------- ------------------
<S> <C> <C> <C>
Election of Charles D. Miller..... 40,154,581 497,896 --
Election of R. Bruce Andrews...... 40,171,759 480,718 --
Ratification of selection of
Arthur Andersen LLP.............. 40,544,297 35,016 73,164
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 Amendment Number Ten to Credit Agreement dated as of May 3, 1999.
10.2 Amended and Restated Credit Agreement Dated as of July 27, 1999.
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 11, 1999
NATIONWIDE HEALTH PROPERTIES, INC.
/s/ Mark L. Desmond
By: _________________________________
Mark L. Desmond
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
EXHIBIT 10.1
AMENDMENT NUMBER TEN TO CREDIT AGREEMENT
----------------------------------------
This AMENDMENT NUMBER TEN OF CREDIT AGREEMENT, dated as of May 3, 1999 (this
"Amendment"), is entered into among NATIONWIDE HEALTH PROPERTIES, INC., a
Maryland corporation (the "Borrower"), certain of the Banks (as defined below)
that are signatories hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
agent for the Banks thereunder (in such capacity, the "Agent").
WHEREAS, the Borrower has requested that the Banks amend certain provisions of
the Credit Agreement as set forth herein.
WHEREAS, subject to the terms and conditions contained herein, the Banks
signatory hereto are willing to amend such provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, conditions, and
provisions hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS FOR THIS AMENDMENT;
-------------------------------
AMENDMENT OF ARTICLE I OF THE CREDIT AGREEMENT
----------------------------------------------
1.1 Definitions for this Amendment. Any and all initially capitalized terms
------------------------------
used herein shall have the meanings ascribed thereto in the Credit Agreement
unless specifically defined herein. For purposes of this Amendment, the
following initially capitalized terms shall have the following meanings:
"Agent" shall have the meaning set forth in the introduction to this
-----
Amendment.
"Amendment" means this Amendment Number Ten to Credit Agreement among
---------
the Borrower, certain of the Banks, and the Agent.
"Banks" means, collectively, the financial institutions signatory
-----
hereto and Sanwa Bank California, and "Bank" means any of the Banks.
----
"Borrower" shall have the meaning set forth in the introduction to
--------
this Amendment.
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
May 20, 1993, among the Borrower, the Banks, and the Agent, as amended
by that certain Amendment Number One to Credit Agreement dated as of
April 28, 1994, that certain Amendment Number Two to Credit
<PAGE>
Agreement dated as of July 11, 1995, that certain Amendment Number
Three to Credit Agreement dated as of January 22, 1996, that certain
Amendment Number Four and Waiver to Credit Agreement dated as of
December 10, 1996, that certain Amendment Number Five to Credit
Agreement dated as of April 1, 1997, that certain Amendment Number Six
and Waiver to Credit Agreement dated as of August 15, 1997, that
certain Amendment Number Seven and Restatement of Amendments One
Through Six to Credit Agreement dated as of April 6, 1998, that
certain Amendment Number Eight to Credit Agreement dated as of January
29, 1999, and that certain Amendment Number Nine to Credit Agreement
dated as of March 8, 1999.
ARTICLE 2
AMENDMENT OF CERTAIN PROVISIONS
-------------------------------
OF THE CREDIT AGREEMENT
-----------------------
2.1 Amendment of Section 1.1 of the Credit Agreement. Section 1.1(b) of the
------------------------------------------------
Credit Agreement is amended to restate the following two definitions in their
entirety:
"Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate Portion of
---------------------------------
Loans outstanding prior to the Termination Date:
(i) 1.20%, if Borrower has at least two of the following long-term senior debt
ratings: (A) Bal or less as determined by Moody's Investors Service
("Moody's"), (B) BB+ or less as determined by Standard and Poor's Corporation
("S&P"), and (C) BB+ or less as determined by Duff & Phelps Inc. ("Duff");
(ii) 0.825%, if Borrower has at least two of the following long-term senior
debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or better
as determined by S&P, and (C) BBB- or better as determined by Duff;
(iii) 0.70%, if the Borrower has at least two of the following long-term
senior debt ratings: (A) Baa2 or better as determined by Moody's, (B) BBB or
better as determined by S&P, and (C) BBB or better as determined by Duff;
(iv) 0.625%, if the Borrower has at least two of the following long-term
senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+ or
better as determined by S&P, and (C) BBB+ or better as determined by Duff; or
(v) 0.55%, if the Borrower has at least two of the following long-term senior
debt ratings: (A) A3 or better as determined by Moody's, (B) A- or better as
determined by S&P, and (C) A- or better as determined by Duff.
In the event that the Borrower satisfies more than one of the ratings
requirements clauses in the preceding sentence, the Applicable Eurodollar Rate
Margin shall be the lowest applicable percentage amount. In the event that the
Borrower does not satisfy any of the ratings requirements clauses in the
preceding sentence (due to the unavailability of any such ratings or otherwise),
the Applicable Eurodollar Rate Margin shall be 1.20%. Each change in the
Applicable Eurodollar Rate Margin based on a change in such long-term senior
debt rating shall be effective for each Interest Period of each Eurodollar Rate
Portion of the Loans commencing on or after the second Business Day after the
date that the Borrower provides written notice to the Agent of such rating
change.
"Applicable Facility Fee Rate" means, for each calendar quarter:
----------------------------
(i) 0.425% per annum, if Borrower has at least two of the following long-term
senior debt ratings: (A) bal or less as determined by Moody's, (B) BB+ or less
as determined by S&P, and (C) BB+ or less as determined by Duff;
(ii) 0.30% per annum, if Borrower has at least two of the following long-term
senior debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or
better as determined by S&P, and (C) BBB- or better as determined by Duff;
(iii) 0.30% per annum, if the Borrower has at least two of the following
long-term senior debt ratings: (A) Baa2 or better as determined by Moody's, (B)
BBB or better as determined by S&P, and (C) BBB or better as determined by Duff;
(iv) 0.25% per annum, if the Borrower has at least two of the following long-
term senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+
or better as determined by S&P, and (C) BBB+ or better as determined by Duff; or
(v) 0.20% per annum, if the Borrower has at least two of the following long-
term senior debt ratings: (A) A3 or better as determined by Moody's, (B) A- or
better as determined by S&P, and (C) A- or better as determined by Duff.
<PAGE>
In the event that the Borrower satisfies more than one of the ratings
requirements clauses in the preceding sentence, the Applicable Facility Fee Rate
shall be the percentage amount applicable to the highest ratings requirement
clause met by the Borrower. In the event that the Borrower does not satisfy any
of the ratings requirements clauses in the preceding sentence (due to the
unavailability of any such ratings or otherwise), the Applicable Facility Fee
Rate shall be 0.425%. Each change in the Applicable Facility Fee Rate based on a
change in such long-term senior debt rating shall be effective for the calendar
quarter commencing on or after the date that the Borrower provides written
notice to the Agent of such rating change.
2.2 Amendment of Section 9.2 of the Credit Agreement. Section 9.2 of the
------------------------------------------------
Credit Agreement is amended and restated in its entirety as follows:
9.2 Financial Covenants.
-------------------------
So long as any Loan or any other amount payable by the Borrower hereunder shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees that:
(a) Leverage Ratio. The Borrower will not permit the ratio of
--------------
Consolidated Total Liabilities to Consolidated Tangible Net Worth to be greater
than 1.50 to 1.00;
(b) Minimum Consolidated Tangible Net Worth. The Borrower will
---------------------------------------
maintain Consolidated Tangible Net Worth of not less than $550,000,000.
(c) Debt Service Coverage Ratio. The Borrower will maintain a ratio
---------------------------
of (a) EBITDA to (ii) the sum of (A) Consolidated Interest Expense plus (B)
----
regularly scheduled principal payments (other than payments due on any final
maturities) on Indebtedness (including such payments attributable to Capital
Leases but excluding such payments relating to Indebtedness to trade creditors
for goods and services incurred in the ordinary course of business on customary
terms), of the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP, for any period of four consecutive fiscal
quarters of the Borrower of not less than 2.50 to 1.00.
ARTICLE 3
MISCELLANEOUS
-------------
3.1 Loan Documents. This Amendment shall be one of the Loan Documents.
--------------
3.2 Execution. This Amendment may be executed in any number of counterparts,
---------
each of which when so executed and delivered shall be deemed an original. All
of such counterparts shall constitute but one and the same instrument. Delivery
of an executed counterpart of the signature pages of this Amendment by
telecopier shall be equally effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of the signature
pages of this Amendment by telecopier shall thereafter also promptly deliver a
manually executed counterpart, but the failure to deliver such manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
3.3 Effectiveness. This Amendment shall be effective, as of the date first
-------------
written above, when one or more counterparts hereof shall have been executed by
the Borrower, the Banks whose signatures are provided for below, and the Agent,
and shall have been delivered to the Agent. Pursuant to Section 12.1 of the
Credit Agreement, this Amendment, when effective, shall be binding upon all the
Banks, having been approved by Majority Banks.
3.4 No Other Amendment. Except as expressly amended hereby, the Credit
------------------
Agreement shall remain unchanged and in full force and effect. To the extent
any terms or provisions of this Amendment conflict with those of the Credit
Agreement, the terms and provisions of this Amendment shall control. This
Amendment shall be deemed a part of and is hereby incorporated in the Credit
Agreement.
3.5 Governing Law. This Amendment shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of California.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered as of the date first above written.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, in its individual
capacity and as Agent
By: ____________________________
Title: __________________________
SANWA BANK CALIFORNIA
By: ____________________________
Title: __________________________
By: ____________________________
Title: __________________________
NATIONSBANK, N.A.
By: ____________________________
Title: __________________________
By: ____________________________
Title: __________________________
THE BANK OF NEW YORK
By: ____________________________
Title: __________________________
By: ____________________________
Title: __________________________
NATIONWIDE HEALTH PROPERTIES, INC.
By: ____________________________
Title: __________________________
<PAGE>
EXHIBIT 10.2
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
_________________________________________________________________
NATIONWIDE HEALTH PROPERTIES, INC.
_______________________________
$100,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 27, 1999
_________________________________
WELLS FARGO BANK, NATIONAL ASSOCIATION
BANK OF AMERICA, N.A.
THE BANK OF NEW YORK
KBC BANK N.V.
Banks
-----
WELLS FARGO BANK, NATIONAL ASSOCIATION
Agent
-----
- --------------------------------------------------------------------------------
-1-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as of July
27, 1999, is made among NATIONWIDE HEALTH PROPERTIES, INC., a Maryland
corporation (the "Borrower"), the financial institutions listed on the signature
pages of this Agreement under the heading "BANKS" (each a "Bank" and,
collectively, the "Banks") and WELLS FARGO BANK, NATIONAL ASSOCIATION as agent
for the Banks hereunder (in such capacity, the "Agent").
WHEREAS, each of the Borrower, the Agent, and the Banks are parties to that
certain Credit Agreement, dated as of May 20, 1993, as amended by that certain
Amendment Number One to Credit Agreement dated as of April 28, 1994, that
certain Amendment Number Two to Credit Agreement dated as of July 11, 1995, that
certain Amendment Number Three to Credit Agreement dated as of January 22, 1996,
that certain Amendment Number Four and Waiver to Credit Agreement dated as of
December 10, 1996, that certain Amendment Number Five to Credit Agreement dated
as of April 1, 1997, that certain Amendment Number Six and Waiver to Credit
Agreement dated as of August 15, 1997, that certain Amendment Number Seven and
Restatement of Amendments One Through Six to Credit Agreement dated as of April
6, 1998, that certain Amendment Number Eight to Credit Agreement dated as of
January 29, 1999, that certain Amendment Number Nine to Credit Agreement dated
as of March 8, 1999, and that certain Amendment Number Ten to Credit Agreement
dated as of May 3, 1999 (and as otherwise amended, supplemented, modified or
restated from time to time prior to the date hereof, the "Existing Credit
Agreement"), pursuant to which each of the Banks have agreed to make revolving
loans to the Borrower in an aggregate principal amount of up to $100,000,000 at
any time outstanding;
WHEREAS, the Borrower, the Agent and the Banks desire to and do hereby amend,
replace, and restate the Existing Credit Agreement its entirety; and
WHEREAS, the Banks are severally willing to continue to make such loans to the
Borrower upon the terms and subject to the conditions set forth in this
Agreement.
ACCORDINGLY, each of the parties hereto agrees as follows:
DEFINITIONS
Certain Defined Terms.
- ----------------------
As used in this Agreement, the following terms shall have the following
meanings:
"ADA" means the Americans with Disabilities Act of 1990, including (unless the
---
context otherwise requires) any rules or regulations promulgated thereunder.
"Affiliate" means any Person which, directly or indirectly, controls, is
---------
controlled by or is under common control with another Person. For purposes of
the foregoing, "control," "controlled by" and "under common control with" with
respect to any Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agent" has the meaning set forth in the introduction to this Agreement.
-----
"Agent's Account" means the account of the Agent maintained at its office at 201
---------------
Third Street, San Francisco, California 94103, bearing the number 4518-054432,
or such other account in Los Angeles as the Agent from time to time shall
designate in a written notice to the Borrower and the Banks.
"Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate Portion of
---------------------------------
Loans outstanding prior to the Termination Date:
(i) 1.20%, if Borrower has at least two of the following long-term senior debt
ratings: (A) Bal or less as determined by Moody's Investors Service
("Moody's"), (B) BB+ or less as determined by Standard and Poor's Corporation
("S&P"), and (C) BB+ or less as determined by Duff & Phelps Inc. ("Duff");
(ii) 0.825%, if Borrower has at least two of the following long-term senior
debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or better
as determined by S&P, and (C) BBB- or better as determined by Duff;
(iii) 0.70%, if the Borrower has at least two of the following long-term
senior debt ratings: (A) Baa2 or better as determined by Moody's, (B) BBB or
better as determined by S&P, and (C) BBB or better as determined by Duff;
-2-
<PAGE>
(iv) 0.625%, if the Borrower has at least two of the following long-term
senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+ or
better as determined by S&P, and (C) BBB+ or better as determined by Duff; or
(v) 0.55%, if the Borrower has at least two of the following long-term senior
debt ratings: (A) A3 or better as determined by Moody's, (B) A- or better as
determined by S&P, and (C) A- or better as determined by Duff.
In the event that the Borrower satisfies more than one of the ratings
requirements clauses in the preceding sentence, the Applicable Eurodollar Rate
Margin shall be the lowest applicable percentage amount. In the event that the
Borrower does not satisfy any of the ratings requirements clauses in the
preceding sentence (due to the unavailability of any such ratings or otherwise),
the Applicable Eurodollar Rate Margin shall be 1.20%. Each change in the
Applicable Eurodollar Rate Margin based on a change in such long-term senior
debt rating shall be effective for each Interest Period of each Eurodollar Rate
Portion of the Loans commencing on or after the second Business Day after the
date that the Borrower provides written notice to the Agent of such rating
change.
"Applicable Facility Fee Rate" means, for each calendar quarter:
----------------------------
(i) 0.425% per annum, if Borrower has at least two of the following long-term
senior debt ratings: (A) bal or less as determined by Moody's, (B) BB+ or less
as determined by S&P, and (C) BB+ or less as determined by Duff;
(ii) 0.30% per annum, if Borrower has at least two of the following long-term
senior debt ratings: (A) Baa3 or better as determined by Moody's, (B) BBB- or
better as determined by S&P, and (C) BBB- or better as determined by Duff;
(iii) 0.30% per annum, if the Borrower has at least two of the following
long-term senior debt ratings: (A) Baa2 or better as determined by Moody's, (B)
BBB or better as determined by S&P, and (C) BBB or better as determined by Duff;
(iv) 0.25% per annum, if the Borrower has at least two of the following long-
term senior debt ratings: (A) Baa1 or better as determined by Moody's, (B) BBB+
or better as determined by S&P, and (C) BBB+ or better as determined by Duff; or
(v) 0.20% per annum, if the Borrower has at least two of the following long-
term senior debt ratings: (A) A3 or better as determined by Moody's, (B) A- or
better as determined by S&P, and (C) A- or better as determined by Duff.
In the event that the Borrower satisfies more than one of the ratings
requirements clauses in the preceding sentence, the Applicable Facility Fee Rate
shall be the percentage amount applicable to the highest ratings requirement
clause met by the Borrower. In the event that the Borrower does not satisfy any
of the ratings requirements clauses in the preceding sentence (due to the
unavailability of any such ratings or otherwise), the Applicable Facility Fee
Rate shall be 0.425%. Each change in the Applicable Facility Fee Rate based on
a change in such long-term senior debt rating shall be effective for the
calendar quarter commencing on or after the date that the Borrower provides
written notice to the Agent of such rating change.
"Assignment and Assumption Agreement" means an Assignment and Assumption
-----------------------------------
Agreement by and between an assigning Bank and such Bank's assignee thereunder,
in substantially the form of Exhibit A-1.
-----------
"Authorized Officer" means any individual authorized by the Borrower to act on
------------------
the Borrower's behalf in connection with the Loan Documents as specified in the
certificate delivered pursuant to Section 7.1(c)(iv), or in the latest such
------------------
certificate delivered by the Borrower to the Agent to reflect any change in the
authorization of any such individual.
"Bank" and "Banks" each has the meaning set forth in the introduction of this
---- -----
Agreement.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978.
---------------
"Base Rate" means, for any day, the higher of (a) the Federal Funds Rate plus
---------
0.50% and (b) the rate of interest most recently announced within Wells Fargo at
its principal office in San Francisco as its "prime rate", with the
understanding that the Base Rate is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as the Agent may designate. Each change in
the interest rate on the Loans based on a change in the Base Rate shall be
effective as of the effective date of such change in the Base Rate.
"Base Rate Portion" means each portion of a Loan bearing interest at a rate
-----------------
determined by reference to the Base Rate.
-3-
<PAGE>
"Borrower" has the meaning set forth in the introduction of this Agreement.
--------
"Borrower's Account" means the account of the Borrower maintained at Wells
------------------
Fargo's office at 333 South Grand Avenue, Los Angeles, California 90071, bearing
the number 4692-089329, or such other account as the Borrower from time to time
shall designate in a written notice to the Agent for the deposit of funds
borrowed under this Agreement.
"Borrowing" means a borrowing consisting of simultaneous Loans made at any one
---------
time by the Borrower from the Banks pursuant to Article II.
----------
"Business Day" means a day (i) other than Saturday or Sunday, and (ii) on which
------------
commercial banks are open for business in New York, New York, Chicago, Illinois,
San Francisco, California, and Los Angeles, California.
"Capital Lease" means, for any Person, any lease of property (whether real,
-------------
personal or mixed) which, in accordance with GAAP, would, at the time a
determination is made, be required to be recorded as a capital lease in respect
of which such Person is liable as lessee.
"Cash Flow" means, for any period, Consolidated Net Income excluding any
---------
extraordinary items for such period plus depreciation expense, amortization
----
expense, increases in deferred taxes and other non-cash expenses which were
deducted in determining Consolidated Net Income, of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Change of Control" shall be deemed to have occurred at such time as a "person"
-----------------
or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
and Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Securities and Exchange Act), directly or indirectly, of more than 20% of
the total voting power of all classes of stock then outstanding of the Borrower
normally entitled to vote in elections of directors.
"Closing Date" has the meaning set forth in Section 7.1.
------------ -----------
"Commitment" means, when used with reference to any Bank at the time any
----------
determination thereof is to be made, the amount set forth opposite the name of
such Bank on the signature pages of this Agreement (and on the signature pages
of any future amendment to the Credit Agreement adding a financial institution
as a signatory to the Credit Agreement (an "Additional Bank"), to the extent of
the amount set forth opposite the name of each such Additional Bank on the
signature pages of any such future amendment, evidencing the acceptance by each
such Additional Bank of its obligation to make Loans up to such amount on the
terms and conditions set forth in this Agreement; provided that the amount of
the obligation of any such Additional Bank shall not exceed the difference
between $100,000,000 and the total of the Commitments set forth opposite the
names of the Banks on the signature pages to this Agreement, as from time to
time reduced pursuant to Section 4.1, or, where the context so requires, the
-----------
obligation of such Bank to make Loans up to such amount on the terms and
conditions set forth in this Agreement.
"Compliance Certificate" means a certificate of the treasurer or the chief
----------------------
financial officer of the Borrower, in substantially the form of Exhibit C-1,
-----------
with such changes thereto as the Agent or the Banks may from time to time
reasonably request.
"Consolidated Interest Expense" means, for any period, interest expense
-----------------------------
(including that attributable to Capital Leases) of the Borrower and its
Subsidiaries on a consolidated basis, including all commissions, discounts and
other fees and charges owed with respect to standby letters of credit, as
determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income of the Borrower
-----------------------
and its Subsidiaries on a consolidated basis for such period taken as a single
accounting period, as determined in accordance with GAAP; provided that there
--------
shall be excluded therefrom the net income of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary.
"Consolidated Tangible Net Worth" means, as of any date of determination, the
-------------------------------
Borrower's stockholders' equity minus: (i) all assets which would be classified
-----
as intangible assets in accordance with GAAP, including, without limitation,
goodwill (including howsoever designated any cost of investment in excess of net
tangible value (based on pre-acquisition book value) of assets acquired to the
extent such excess is not allocated to specific assets, whether arising pursuant
to Accounting Principles Board Opinion No. 16 or otherwise), organizational
expense, research and development expense, patent applications, patents,
trademarks, trade names, brands, copyrights, trade secrets, customer lists,
licenses, franchises and covenants not to compete; (ii) all unamortized debt
discount and expense; (iii) all treasury stock; and (iv) all cost of investment
in excess of market value of marketable securities.
-4-
<PAGE>
"Consolidated Total Assets" means, as of any date of determination, the total
-------------------------
assets of the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Consolidated Total Liabilities" means, as of any date of determination, the
------------------------------
total liabilities of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"Default" means an Event of Default or an event or condition which with notice
-------
or lapse of time or both would constitute an Event of Default.
"Dollars" and the sign "$" each means lawful money of the United States.
------- -
"EBITDA" means, for any period, Consolidated Net Income plus Consolidated
------ ----
Interest Expense plus depreciation expense, amortization expense, increases in
----
deferred taxes and other noncash expenses which were deducted in determining
Consolidated Net Income, of the Borrower and its Subsidiaries on a consolidated
basis, less decreases in deferred taxes, all as determined in accordance with
----
GAAP.
"Environmental Laws" means all federal, state or local laws, statutes, common
------------------
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directives, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the California Hazardous Waste Control Law, the
California Solid Waste Management Law, Resource Recovery and Recycling Act, the
California Water Code and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, including
-----
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
---------------
which is under common control with the Borrower within the meaning of Section
4001(a)(14) of ERISA.
"Eurodollar Business Day" means a Business Day on which dealings in Dollar
-----------------------
deposits are carried on in the London interbank market.
"Eurodollar Rate" means for each Interest Period for each Eurodollar Rate
---------------
Portion the rate per annum (rounded upward, if necessary, to the nearest 1/16 of
1%) determined by the Agent pursuant to the following formula:
Eurodollar Rate = Interbank Rate
---------------------------------------------
100% - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Portion" means each portion of a Loan bearing interest at a
-----------------------
rate determined by reference to the Eurodollar Rate.
"Eurodollar Reserve Percentage" means the maximum reserve requirement percentage
-----------------------------
(including any ordinary, supplemental, marginal and emergency reserves), as
determined by the Agent, then applicable under Regulation D in respect of
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities") of a
member bank in the Federal Reserve System with deposits exceeding
$1,000,000,000.
"Event of Default" has the meaning set forth in Section 10.1.
---------------- ------------
"Event of Loss" means with respect to any asset of the Borrower or its
-------------
Subsidiaries any of the following:
any loss, destruction or damage of such asset;
any pending or threatened institution of any proceedings for the
condemnation or seizure of such asset or of any right of eminent domain; or
any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such asset, or confiscation of such asset or
requisition of the use of such asset.
-5-
<PAGE>
"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if
------------------
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates of overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day as published by the
Federal Reserve Bank of San Francisco on the Business Day immediately following
such day; provided, however, that (a) if the day for which such rate is to be
-------- -------
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the immediately preceding Business Day as
published on the immediately following Business Day, and (b) if such rate is not
published for any Business Day, the average of the quotations for such day on
such transactions received by Bank from three (3) federal funds brokers of
recognized standing selected by Bank.
"GAAP" means generally accepted accounting principles in the U.S. as in effect
----
from time to time.
"Governmental Authority" means any federal, state, local or other governmental
----------------------
department, commission, board, bureau, agency, central bank, court, tribunal or
other instrumentality, domestic or foreign.
"Hazardous Substances" means any toxic or hazardous substances, materials or
--------------------
wastes, contaminants or pollutants, including asbestos, PCBs, petroleum products
and byproducts, substances defined or listed as "hazardous substances,"
"hazardous materials" or "toxic substances" or similarly identified in or
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Hazardous Materials Transportation Act and the Resource
Conservation and Recovery Act, any chemical substance or mixture regulated under
the Toxic Substances Control Act of 1976, any "toxic pollutants" under the
Federal Water Pollution Control Act of 1972, any hazardous air pollutant under
the Clean Air Act, any hazardous or toxic substance, waste or pollutant
regulated under any other applicable Environmental Law, or any other substance
or material which may cause or be claimed to cause any liability of any owner or
operator of any property to any Person, any owner of any other property, or any
Governmental Authority in connection with any Environmental Law.
"Healthcare Property" means a property operating as a nursing home, an acute
-------------------
care hospital, a rehabilitation hospital, an assisted living facility, an adult
congregate living facility, a personal care facility, a medical office building,
or any combination of the foregoing; provided that any of the foregoing may also
--------
include independent living units as a part of any such property.
"IRS" means the Internal Revenue Service, or any successor thereto.
---
"Indebtedness" means, for any Person:
------------
(i) all indebtedness or other obligations of such Person for borrowed
money or for the deferred purchase price of property or services;
all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property);
all obligations under Capital Leases;
all reimbursement or other obligations of such Person under or in
respect of letters of credit, bankers acceptances, interest rate swaps, caps,
floors and collars, currency swaps, or other similar financial products;
all indebtedness of another Person of the types referred to in clause
(i), (ii), (iii) or (iv) above, guaranteed directly or indirectly in any manner
by the Person for whom Indebtedness is being determined, or in effect guaranteed
directly or indirectly by such Person through an agreement (A) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (C) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether or not such property is received or such services are
rendered) or (D) otherwise to assure a creditor against loss; and
-6-
<PAGE>
all indebtedness of another Person of the types referred to in clause
(i), (ii), (iii) or (iv) above secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
the Person for whom Indebtedness is being determined, even though such Person
has not assumed or become liable for the payment of such indebtedness of such
other Person.
"1997 Indenture" means that certain Indenture, dated as of August 19, 1997, from
--------------
the Borrower to The Bank of New York, as Trustee, providing for the issuance
from time to time of unsecured and unsubordinated debentures, notes or other
evidences of indebtedness of the Borrower.
"1999 Indenture" means that certain Indenture, dated as of January 13, 1999,
--------------
from the Borrower to Chase Manhattan Bank and Trust Company, National
Association, as Trustee, providing for the issuance from time to time of
unsecured and unsubordinated debentures, notes or other evidences of
indebtedness of the Borrower.
"1997 Indenture Indebtedness" means Indebtedness of the Borrower incurred under
---------------------------
or pursuant to the 1997 Indenture.
"1999 Indenture Indebtedness" means Indebtedness of the Borrower incurred under
---------------------------
or pursuant to the 1999 Indenture.
"Interbank Rate" means, for each Interest Period, the rate per annum determined
--------------
exclusively by the Agent to be the average (rounded upward, if necessary, to the
nearest 1/16 of 1%) of the rates at which deposits in immediately available
funds in Dollars are offered by prime banks in the interbank Eurodollar market
where the Eurodollar funding operations of Wells Fargo Bank are customarily
conducted, at approximately 9:00 A.M. (California time), two Eurodollar Business
Days before the first day of such Interest Period for deposit on the first day
of such Interest Period, in an amount substantially equal to the proposed
Eurodollar Rate Portion and for a period of time comparable to such Interest
Period.
"Interest Payment Date" means a date specified for the payment of interest
---------------------
pursuant to Section 3.1(c).
--------------
"Interest Period" means, with respect to any Eurodollar Rate Portion, the period
---------------
determined in accordance with Section 3.1(b) applicable thereto.
--------------
"Internal Revenue Code" means the Internal Revenue Code of 1986, including
---------------------
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.
"Lending Office" has the meaning set forth in Section 2.4.
-------------- -----------
"Licenses" has the meaning set forth in Section 9.3(h).
-------- --------------
"Lien" means any mortgage, deed of trust, pledge, security interest, assignment,
----
deposit arrangement, charge or encumbrance, lien (statutory or other), or other
preferential arrangement (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing or any agreement to give any security interest).
"Loan Documents" means this Agreement, the Notes and all Compliance Certificates
--------------
delivered to the Agent or the Banks under this Agreement.
"Loan" has the meaning set forth in Section 2.1(a).
---- --------------
"Majority Banks" means at any time at least two (2) of the Banks holding at
--------------
least an aggregate 67% of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding, at least two (2) of
the Banks having at least 67% of the aggregate Commitments.
"Material Adverse Effect" means, with respect to the Borrower and its
-----------------------
Subsidiaries, a material adverse effect upon the business, prospects, assets or
other properties, liabilities or condition (financial or otherwise) or results
of operations of the Borrower and its Subsidiaries, taken as a whole, or the
ability of the Borrower to perform or observe its material obligations under the
Loan Documents.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Cash Proceeds" means the excess, if any, of: (a) the gross cash proceeds
-----------------
received by the Borrower or any of its Subsidiaries from the sale or disposition
of any asset of the Borrower or such Subsidiary plus, as and when received, all
----
cash payments received subsequent to such sale or disposition representing any
deferred portion of the purchase price therefor; less (b) the sum of: (i) a
----
reasonable reserve for taxes payable incident to such sale or disposition, the
amount of which shall be adjusted to reflect the actual taxes paid in connection
therewith; plus (ii) the out-of-pocket costs and expenses incurred by the
----
Borrower or such Subsidiary in connection with such sale or disposition
(including
-7-
<PAGE>
underwriting fees and commissions, brokers' fees, and attorneys' fees); all as
reflected in an officer's certificate delivered by the chief executive officer,
the treasurer, or the chief financial officer of the Borrower or such
Subsidiary, as applicable, to the Agent. The parties acknowledge that Net Cash
Proceeds does not include any portion of the gross proceeds from such a sale or
disposition which are received and applied by, or applied for the benefit of,
the Borrower or such Subsidiary in order to discharge or obtain the release of
any Lien encumbering the property which is the subject of such sale or
disposition.
"Net Real Estate Property Assets" means the Borrower's gross investment in real
-------------------------------
estate properties (excluding mortgage loan receivables) less the accumulated
depreciation on such gross investment.
"NHPFC" means Nationwide Health Properties Finance Corporation, a Delaware
-----
corporation and wholly-owned subsidiary of the Borrower.
"Note" means an Amended and Restated Promissory Note of the Borrower payable to
----
the order of a Bank, substantially in the form of Exhibit N-1.
-----------
"Notice" means a Notice of Borrowing, a Notice of Conversion or Continuation or
------
a Notice of Prepayment.
"Notice of Borrowing" has the meaning set forth in Section 2.2(a); such notice
------------------- --------------
to be substantially in the form of Exhibit E-1.
-----------
"Notice of Conversion or Continuation" has the meaning set forth in Section
------------------------------------ -------
3.5(c); such notice to be substantially in the form of Exhibit E-2.
- ------ -----------
"Notice of Prepayment" has the meaning set forth in Section 4.3(c).
-------------------- --------------
"Operating Lease" means, for any Person, any lease of any property of any kind
---------------
by that Person as lessee which is not a Capital Lease.
"Operator" means any Person who leases a Premises from the Borrower or any of
--------
its Subsidiaries for the purpose of operating such Premises as a Healthcare
Property, together with all Affiliates of such Person.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.
----
"Permitted Investments" means any of the following Dollar denominated
---------------------
investments, maturing within one year from the date of acquisition, selected by
the Borrower:
(ii) obligations issued directly or guaranteed or insured as to
principal and interest by the United States or any agency thereof;
certificates of deposit issued by and bankers acceptances of and
interest bearing deposits with United States, Australian, Canadian, European or
Japanese commercial banks having capital, surplus and undivided profits of at
least $100,000,000 or the equivalent;
commercial paper or corporate promissory notes bearing a credit rating
of Prime-1 or better from Moody's Investors Service or A-1 or better from
Standard & Poor's Corporation; and
proprietary instruments of Wells Fargo (including master notes and
third party repurchase agreements) that are backed by or of equal or better
credit standing with the investments described in clauses (i), (ii) or (iii).
"Permitted Liens" means:
---------------
(iii) (A) the existing Liens listed in Schedule P-1; or (B) Liens
------------
incurred in connection with the extension, renewal or refinancing of the
Indebtedness secured by such existing Liens, provided that any extension,
--------
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien;
Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings and which are adequately reserved for in accordance with GAAP;
-8-
<PAGE>
Liens of materialmen, mechanics, warehousemen, carriers or employees
or other like Liens arising in the ordinary course of business and securing
obligations either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP;
deposits or pledges to secure the payment of worker's compensation,
unemployment insurance or other social security benefits or obligations, or to
secure the performance of bids, trade contracts, leases, public or statutory
obligations, surety or appeal bonds or other obligations of a like nature
incurred in the ordinary course of business;
easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real property and irregularities in
the title to such property which do not in the aggregate materially impair the
use or value of such property or risk the loss or forfeiture of title thereto;
statutory landlord's Liens under leases to which the Borrower or any
of its Subsidiaries is a party; and
any judgment, attachment or similar Lien, unless the judgment or order
it secures constitutes an Event of Default under Section 10.1(g).
---------------
"Person" means an individual, corporation, partnership, joint venture, trust,
------
unincorporated organization or any other juridical entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer Plan)
----
maintained for employees of the Borrower or any ERISA Affiliate and covered by
Title IV of ERISA.
"Premises" means any and all real property, including all buildings and
--------
improvements now or hereafter located thereon and all appurtenances thereto, now
or hereafter owned, leased, occupied or used by the Borrower and its
Subsidiaries.
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System.
"Regulatory Change" has the meaning set forth in Section 5.3.
----------------- -----------
"Responsible Officer" means the president, chief executive officer, chief
-------------------
financial officer, treasurer, controller, or any vice president of the Borrower.
"Subordinated Debt" means (a) any Indebtedness of the Borrower or any Subsidiary
-----------------
of the Borrower set forth in Schedule 9.4(a) that is subordinated in right of
---------------
repayment to the Borrower's obligations to the Banks hereunder, and (b) any
Indebtedness of the Borrower or any Subsidiary incurred after the date hereof in
accordance with Section 9.4(a)(vii).
-------------------
"Subsidiary" means any corporation, association, partnership, joint venture or
----------
other business entity of which more than 50% of the voting stock or other equity
interest is owned directly or indirectly by any Person or one or more of the
other Subsidiaries of such Person or a combination thereof.
"Termination Date" means, unless extended pursuant to Section 4.1(b), March 31,
---------------- --------------
2002.
"Termination Event" means any of the following:
-----------------
(iv) a Reportable Event described in Section 4043 of ERISA and the
regulations issued thereunder (other than a Reportable Event not subject to the
provisions for 30-day notice to the PBGC under such regulations);
the withdrawal of the Borrower or any of its ERISA Affiliates from a
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA;
the filing of a notice of intent to terminate a Plan or the
termination of a Plan or the treatment of a Plan amendment as a termination of a
Plan under Section 4041 of ERISA;
the institution of proceedings to terminate a Plan by the PBGC; or
-9-
<PAGE>
any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction.
---
"United States" and "U.S." each means the United States of America.
------------- ----
"Wells Fargo" means Wells Fargo Bank, National Association.
-----------
Accounting Terms; GAAP Changes.
- -------------------------------
Accounting Terms.
- ----------------
Unless otherwise defined or the context otherwise requires, all accounting terms
used herein shall be construed in accordance with GAAP, and, except where
otherwise specified, all financial data required to be delivered hereunder shall
be prepared in accordance with GAAP.
GAAP Changes.
- ------------
If any changes in GAAP from those used in the preparation of the financial
statements referred to in Section 8.1(p) ("GAAP Changes") hereafter occasioned
--------------
by the promulgation of rules, regulations, pronouncements and opinions by or
required by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) result in a change in the method of calculation of any of the
financial covenants, standards or other terms or conditions found in this
Agreement, the parties hereto agree to enter into negotiations to amend such
provisions so as to reflect equitably such GAAP Changes with the desired result
that the criteria for evaluating the financial condition and performance of the
Borrower and its Subsidiaries shall be the same after such GAAP Changes as if
such GAAP Changes had not been made.
Interpretation.
- ---------------
In this Agreement and the other Loan Documents, except to the extent the context
otherwise requires:
Any reference to an Article, a Section, a Schedule or an Exhibit is a reference
to an article or section hereof or thereof, or a schedule or an exhibit hereto
or thereto, respectively, and 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.
The words "hereof," "herein," "hereto," "hereunder" and the like mean and refer
to this Agreement or such other Loan Document as a whole and not merely to the
specific Article, Section, subsection, paragraph or clause in which the
respective word appears.
The meaning of defined terms shall be equally applicable to both the singular
and plural forms of the terms defined.
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 and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of the Loan Documents.
References to statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation referred to.
Any table of contents, captions and headings are for convenience of reference
only and shall not affect the construction of this Agreement or such other Loan
Document.
THE LOANS
The Loans. Each Bank severally agrees, on the terms and conditions hereinafter
- ----------
set forth, to make revolving loans (each a "Loan" and, collectively, the
"Loans") to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination Date, in an aggregate principal
amount up to but not exceeding at any time outstanding such Bank's Commitment.
Within the limits of each Bank's Commitment, during such period the Borrower may
borrow, repay the Loans in whole or in part, and reborrow, all in accordance
with the terms and conditions hereof. Loans may consist of Base Rate Portions or
Eurodollar Rate Portions, as elected by the Borrower pursuant to Section 2.2 or
-----------
Section 3.5.
- -----------
Borrowing Procedure.
- --------------------
Notice to the Agent. Each Borrowing shall be made upon written or telephonic
- -------------------
notice (in the latter case to be confirmed promptly in writing) from the
Borrower to the Agent, which notice shall be received by the Agent not later
than 9:00 A.M. (California time) (i) at least one Business Day prior to the date
of a Borrowing consisting of any Base
-10-
<PAGE>
Rate Portions or (ii) at least three Eurodollar Business Days prior to the date
of a Borrowing consisting of any Eurodollar Rate Portions. Each such notice (a
"Notice of Borrowing") shall, except as provided in Section 5.1, be irrevocable
-----------
and binding on the Borrower and shall specify:
the proposed date of the Borrowing, which shall be a Business Day;
for each Borrowing of Loans, whether the Borrowing consists of Base Rate
Portions or Eurodollar Rate Portions;
the aggregate amount of the Borrowing, which (1) in the case of the Base Rate
Portions thereof shall be in the amount of $500,000 or a greater amount which is
an integral multiple of $100,000, and (2) in the case of the Eurodollar Rate
Portions thereof shall be in the amount of $2,000,000 or a greater amount which
is an integral multiple of $100,000;
if the Borrowing consists of any Eurodollar Rate Portions, the duration of the
initial Interest Period with respect thereto; and
in accordance with Section 9.3(j), the purpose for which the proceeds of each
--------------
Borrowing of Loans shall be used.
Notice to the Banks. The Agent shall give each Bank prompt notice by telephone
- -------------------
(confirmed promptly in writing) or by telex or telecopier of each Borrowing,
specifying the information contained in the Borrower's Notice and such Bank's
ratable portion of the Borrowing. On the date of each Borrowing, each Bank shall
make available such Bank's ratable portion of such Borrowing, in immediately
available funds, to the Agent for the Agent's Account, not later than 11:00 A.M.
(California time). Upon fulfillment of the applicable conditions set forth in
Article VII and after receipt by the Agent of any such funds, the Agent shall
- -----------
make such funds available to the Borrower by crediting the Borrower's Account
with immediately available funds on such Borrowing date.
Non-Receipt of Funds.
- ---------------------
Unless the Agent shall have received notice from a Bank prior to the date of any
Borrowing that such Bank shall not make available to the Agent such Bank's
ratable portion of such Borrowing, the Agent may assume that such Bank has made
such portion available to the Agent on the date of such Borrowing in accordance
with Section 2.2(b) and the Agent may, in reliance upon such assumption, make
--------------
available to the Borrower on such date a corresponding amount. If and to the
extent such Bank shall not have so made such ratable portion available to the
Agent, such Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at the rate per annum equal to the
cost of funding such amount through the purchase of funds in the overnight
Federal funds market. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan as part of such
Borrowing for purposes of this Agreement.
Lending Offices.
- ----------------
The Loans made by each Bank may be made from and maintained at such offices of
such Bank or its Affiliates (each a "Lending Office") as such Bank may from time
to time designate (whether or not such office or Affiliate is specified on the
signature pages hereof). A Bank shall not elect a Lending Office that, at the
time of making such election, increases the amounts which would have been
payable by the Borrower to such Bank under this Agreement in the absence of such
election. With respect to Eurodollar Rate Portions made from and maintained at
any Bank's foreign offices or Affiliates, the obligation of the Borrower to
repay such Eurodollar Rate Portions shall nevertheless be to such Bank and
shall, for all purposes of this Agreement (including for purposes of the
definition of the term "Majority Banks") be deemed made or maintained by it, for
the account of any such office or Affiliate.
-11-
<PAGE>
Evidence of Indebtedness.
- -------------------------
Notes.
- -----
As additional evidence of the Indebtedness of the Borrower to each Bank
resulting from the Loans made by such Bank, the Borrower shall execute and
deliver for the account of each Bank pursuant to Article VII a Note, dated the
-----------
Closing Date, setting forth such Bank's Commitment as the maximum principal
amount thereof.
Recordkeeping.
- -------------
Each Bank shall record in its internal records the date and amount of each Loan
made, each conversion to a different interest rate, each relevant Interest
Period, the amount of principal and interest due and payable from time to time
hereunder, each payment thereof and the resulting unpaid principal balance of
such Loan. Any such recordation shall be rebuttable presumptive evidence of the
accuracy of the information so recorded. Any failure so to record or any error
in doing so shall not, however, limit or otherwise affect the obligations of the
Borrower hereunder and under any Note to pay the principal of and interest on
the Loans.
INTEREST AND FEES; CONVERSION OR CONTINUATION
Interest.
- ---------
Interest Rate. The Borrower shall pay interest on the unpaid principal amount of
- -------------
each Loan from the date of such Loan until the maturity thereof, at the
following rates:
in respect of each Base Rate Portion thereof, at a fluctuating rate per annum
equal at all times to the Base Rate; and
in respect of each Eurodollar Rate Portion thereof, at a rate per annum equal at
all times during each Interest Period for such Eurodollar Rate Portion to the
Eurodollar Rate for such Interest Period plus the Applicable Eurodollar Rate
----
Margin.
Interest Periods. The initial and each subsequent Interest Period for the
- ----------------
Eurodollar Rate Portions shall be a period of one, two, three or (if available)
six months, or such other period as requested by the Borrower and acceptable to
the Banks, in each case as specified in the applicable Notice. The determination
of Interest Periods shall be subject to the following provisions:
in the case of immediately successive Interest Periods, each successive Interest
Period shall commence on the day on which the next preceding Interest Period
expires;
if the last day of any Interest Period would otherwise occur on a day which is
not a Business Day, such Interest Period shall be extended to expire on the next
succeeding Business Day; provided that if such extension would cause the last
--------
day of any Interest Period to occur in the next following calendar month, such
Interest Period shall expire on the next preceding Business Day;
no Interest Period shall extend beyond the Termination Date;
there shall be no more than six Interest Periods in effect at any one time; and
if an Interest Period commences on a date for which there is no corresponding
date in the month in which such Interest Period is to end, such Interest Period
shall end on the last Business Day of such month.
Interest Payment Dates. Subject to Section 3.2, interest on the Loans shall be
- ---------------------- -----------
payable in arrears at the following times:
interest on each Base Rate Portion shall be payable quarterly on the last
Business Day in each calendar quarter, on the date of any prepayment or
conversion of any such Base Rate Portion as to the amount prepaid or converted,
and at maturity; and
interest on each Eurodollar Rate Portion shall be payable on the last day of
each Interest Period for such Eurodollar Rate Portion, provided that (A) in the
--------
case of any such Interest Period which is greater than three months, interest on
such Eurodollar Rate Portion shall be payable on the date three months after the
beginning of such Interest Period and on the last day of such Interest Period
and (B) if any prepayment, conversion and continuation is effected other than on
the last day of such Interest Period, accrued interest on such Eurodollar Rate
Portion shall be due on such prepayment, conversion or continuation date as to
the principal amount of such Eurodollar Rate Portion prepaid, converted or
continued.
Notice to the Borrower and the Banks. Each determination by the Agent hereunder
- ------------------------------------
of a rate of interest and of any change therein, including any changes in (A)
the Applicable Eurodollar Rate Margin, (B) the Base Rate during any periods in
which Base Rate Portions shall be outstanding, and (C) the Eurodollar Reserve
Percentage during any periods in which Eurodollar Rate Portions shall be
outstanding, in the absence of manifest error shall be conclusive and binding on
the parties hereto and shall be promptly notified by the Agent to the Borrower
and the Banks. Such notice shall set forth in reasonable detail the basis for
any such determination or change. Not
-12-
<PAGE>
more than ten Business Days prior to each regularly scheduled Interest Payment
Date, the Agent shall give notice to the Borrower of the amount of interest due
on such Interest Payment Date, and not more than ten days prior to each payment
date for any fees due hereunder, the Agent shall give notice to the Borrower of
the amount of the fee due on such date. For the purpose of such notice, interest
on the Loans for the period from the date of such notice until such Interest
Payment Date shall be computed on the basis of the interest rate as in effect on
the date of such notice. If the interest rate shall change during such period as
a result of the events described in clauses (B) or (C), the difference between
the amount of interest notified and the amount of interest due after giving
effect to such change (as notified by the Agent to the Borrower) shall
immediately be paid by the Borrower or reimbursed by the Banks to the Borrower
(in each case through the Agent). The failure of the Agent to give any such
notice specified in this subsection shall not affect the Borrower's obligation
to pay such interest or fees.
Interest on Overdue Payments.
- -----------------------------
In the event that any amount of principal of or interest on any Loan, or any
other amount payable hereunder or under the Notes, is not paid in full when due
(whether at stated maturity, by acceleration or otherwise), the Borrower agrees
to pay interest on such unpaid principal or other amount, from the date such
amount becomes due until the date such amount is paid in full, payable on
demand, at the higher of (a) the rate applicable to any such Loan pursuant to
the terms of Section 3.1 plus 2% per annum and (b) a fluctuating rate per annum
----------- ----
equal at all times to the Base Rate plus 2% per annum.
----
Fees.
- -----
Facility Fee. The Borrower agrees to pay to the Agent for the account of each
- ------------
Bank a facility fee on such Bank's Commitment as in effect from time to time
from the date that each Bank executes this Agreement (as set forth below such
Bank's name on the signature pages hereof) until the Termination Date at the
Applicable Facility Fee Rate, payable quarterly in arrears on the last Business
Day of March, June, September and December in each year, commencing on the first
such date after the date of this Agreement, and on the earlier of the date such
Bank's Commitment is terminated hereunder or the Termination Date.
Agency and Arrangement Fees. The Borrower agrees to pay to the Agent such fees
- ---------------------------
for agency and arrangement services rendered by it as shall be separately agreed
upon between the Borrower and the Agent.
Computations.
- -------------
All computations of fees and of interest in respect of Loans shall be made on
the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
fees or interest is payable. Notwithstanding the foregoing, if any Loan is
repaid on the same day on which it is made, such day shall be included in
computing interest on such Loan.
-13-
<PAGE>
Conversion or Continuation.
- ---------------------------
Election. At any time prior to the Termination Date, the Borrower may elect (i)
- --------
to convert all or any part of (A) outstanding Base Rate Portions into Eurodollar
Rate Portions, or (B) outstanding Eurodollar Rate Portions into Base Rate
Portions or (ii) to continue all or any part of a Loan with one type of interest
rate as such. The continued or converted Base Rate and Eurodollar Rate Portions
shall be allocated to the Banks ratably in accordance with their respective
Commitments. Any conversion or continuation of Eurodollar Rate Portions shall be
made on the last day of the current Interest Period for such Eurodollar Rate
Portions. No outstanding Loan may be converted into or continued as a Eurodollar
Rate Portion if any Event of Default has occurred and is continuing.
Automatic Conversion. On the last day of any Interest Period for any Eurodollar
- --------------------
Rate Portions, such Eurodollar Rate Portions shall, if not repaid, automatically
convert into Base Rate Portions unless the Borrower shall have elected to
continue such Eurodollar Rate Portions as such for an additional Interest Period
or to convert such Eurodollar Rate Portions, in each case as provided in
subsection (a).
Notice to the Agent. The conversion or continuation of any Loans contemplated by
- -------------------
subsection (a) shall be made upon written or telephonic notice (in the latter
case to be confirmed promptly in writing) from the Borrower to the Agent, which
notice shall be received by the Agent not later than 9:00 A.M. (California time)
(i) at least one Business Day prior to the date of any proposed conversion of
any Loans into Base Rate Portions and (ii) at least three Eurodollar Business
Days prior to the date of any proposed conversion into or continuation of any
Loans as Eurodollar Rate Portions. Each such notice (a "Notice of Conversion or
Continuation") shall, except as provided in Section 5.1, be irrevocable and
-----------
binding on the Borrower and shall specify:
the proposed date of the conversion or continuation, which shall be a Business
Day;
the outstanding Loans (or parts thereof) to be converted into or continued as
Base Rate or Eurodollar Rate Portions;
the aggregate amount of the Loans that are the subject of such continuation or
conversion, which in the case of a conversion into or continuation of Eurodollar
Rate Portions shall be in the amount of $2,000,000 or a greater amount which is
an integral multiple of $100,000; and
if the conversion or continuation consists of any Eurodollar Rate Portions, the
duration of the Interest Period with respect thereto.
Notice to the Banks. The Agent shall give each Bank prompt notice by telephone
- -------------------
(confirmed promptly in writing) or by telex or telecopier of (i) the proposed
conversion or continuation of any Loans, specifying the information contained in
the Borrower's Notice and such Bank's ratable portion thereof or (ii) if timely
notice was not received from the Borrower, the details of any automatic
conversion under subsection (b).
Highest Lawful Rate.
- --------------------
Anything herein to the contrary notwithstanding, the obligations of the Borrower
hereunder and under the Notes shall be subject to the limitation that payments
of interest shall not be required, for any period for which interest is computed
hereunder and under the Notes, to the extent that contracting for or receiving
such payment by the respective Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank.
-14-
<PAGE>
REDUCTION OF COMMITMENTS; REPAYMENT; PREPAYMENT
Reduction or Termination of the Commitments.
- --------------------------------------------
Optional Reduction or Termination. The Borrower may, upon at least five Business
- ---------------------------------
Days' written notice to the Agent, terminate in whole or reduce ratably in part,
as of the date specified by the Borrower in such notice, any then unused portion
of the respective Commitments, provided that each partial reduction shall be in
--------
the aggregate amount of $5,000,000 or a greater amount which is an integral
multiple of $1,000,000.
Mandatory Termination.
- ---------------------
The Commitments shall terminate on the Termination Date.
(ii) Notwithstanding Section 4.1(b)(i), not later than January 31 of each year,
the Borrower may (at its option) give written notice to the Agent and each Bank
that it requests the Banks to extend the Termination Date then in effect for an
additional one year period. Each of the Banks may grant or reject such request
in its sole discretion and shall provide written notice of such grant or
rejection to the Borrower and the Agent not later than May 1 following such
request; provided that failure of any Bank so to provide such written notice to
--------
the Borrower and the Agent shall be deemed a rejection of such request.
In the event that all of the Banks grant such request, the Termination Date then
in effect shall be so extended.
In the event that Banks having more than 25% of the aggregate Commitments reject
such request, the Termination Date then in effect shall not be extended.
In the event that Banks having not more than 25% of the aggregate Commitments
reject such request (each, a "Rejecting Bank"), the Borrower may (at its option)
arrange to have one or more banks or other financial institutions (each, a
"Successor Bank") succeed to all of the Rejecting Banks' rights and obligations
hereunder and under the other Loan Documents on the basis and subject to the
provisions set forth in Section 12.9(b), and each Rejecting Bank agrees to make
---------------
such an assignment to the Successor Bank(s); provided that each Successor Bank
--------
shall have agreed to extend the Termination Date to the date requested by the
Borrower; provided further that such assignment shall be consummated (if at all)
-------- -------
prior to the January 31 following the rejection by the Rejecting Banks of the
proposed extension. In the event that all of such rights and obligations of the
Rejecting Banks are so assigned, the Termination Date then in effect shall be
extended as requested by the Borrower. In the event that all of such rights and
obligations of the Rejecting Banks are not so assigned, the Termination Date
then in effect shall not be extended. In the event that such an assignment is
effected on a date other than the last day of an Interest Period for any
Eurodollar Rate Portion then outstanding, the Borrower shall compensate the
Rejecting Bank for all losses, costs and expenses sustained by such Bank as a
result thereof, in accordance with the provisions of Section 5.2.
-----------
Notice. The Agent shall give each Bank prompt notice of any termination or
- ------
reduction of its Commitment under this Section 4.1.
-----------
Adjustment of Facility Fee; No Reinstatement. From the effective date of any
- --------------------------------------------
reduction or termination prior to the Termination Date, the facility fee payable
under Section 3.3(a) shall be computed on the basis of the Commitments as so
--------------
reduced or terminated. Once reduced or terminated, the Commitments may not be
increased or otherwise reinstated.
Repayment of the Loans. The Borrower shall repay to the Banks in full on the
- -----------------------
Termination Date the aggregate principal amount of the Loans outstanding on such
date.
Prepayments.
- ------------
Optional Prepayments. The Borrower may, upon at least one Business Day's written
- --------------------
notice to the Agent for Base Rate Portions and three Eurodollar Business Day's
written notice to the Agent for Eurodollar Rate Portions, prepay the outstanding
amount of the Loans in whole or ratably in part, without premium or penalty,
subject to a Bank's right to make a request for compensation as provided in
Section 5.2. Partial prepayments of Base Rate Portions shall be in an aggregate
- -----------
principal amount of at least $500,000 or a greater amount which is an integral
multiple of $100,000, and partial prepayments of Eurodollar Rate Portions in
each case shall be in an aggregate principal amount of at least $2,000,000 or a
greater amount which is an integral multiple of $100,000.
Mandatory Prepayments.
- ---------------------
If the Borrower shall create or incur 1997 Indenture Indebtedness or 1999
Indenture Indebtedness, or, with the prior written consent of the Majority
Banks, shall create, incur or assume Indebtedness pursuant to Sections 9.4(a)(v)
------------------
or 9.4(a)(vii), the Borrower shall pay to the Agent as a prepayment in whole or
- --------------
ratably in part of the
-15-
<PAGE>
outstanding amount of the Loans, an amount equal to the Net Cash Proceeds
received by the Borrower from such Indebtedness as created, incurred or assumed
(to the extent of the amount of the Loans then outstanding).
If the Borrower or any of its Subsidiaries sells or otherwise disposes of any
Healthcare Property or any other material asset, the Borrower shall pay to the
Agent as a prepayment in whole or ratably in part of the outstanding amounts of
the Loans, an amount equal to the portion of the Net Cash Proceeds received by
the Borrower or such Subsidiary from such sale or disposition that is in excess
of $500,000 (to the extent of the amount of the Loans then outstanding).
If the Borrower shall issue new shares of its capital stock, the Borrower shall
pay to the Agent as a prepayment in whole or ratably in part of the outstanding
amounts of the Loans, an amount equal to the net proceeds received by the
Borrower from such issuance (to the extent of the amount of the Loans then
outstanding).
Notice; Application. The notice given of any prepayment (a "Notice of
- -------------------
Prepayment") shall specify the date and amount of the prepayment and whether the
prepayment is of Base Rate or Eurodollar Rate Portions or a combination thereof,
and if of a combination thereof the amount of the prepayment allocable to each.
If prepayments of Eurodollar Rate Portions shall be made other than on the last
day of the Interest Period applicable thereto, each Bank shall be entitled to
make a request for compensation as provided in Section 5.2. Upon receipt of the
-----------
Notice of Prepayment, the Agent shall promptly notify each Bank thereof. If the
Notice of Prepayment is given, the Borrower shall make such prepayment and the
prepayment amount specified in such Notice shall be due and payable on the date
specified therein, with accrued interest to such date on the amount prepaid.
YIELD PROTECTION AND ILLEGALITY
Inability to Determine Rates.
- -----------------------------
If the Agent shall determine that adequate and reasonable means do not exist to
ascertain the Eurodollar Rate, or the Majority Banks shall determine that the
Eurodollar Rate does not accurately reflect the cost to the Banks of making or
maintaining Eurodollar Rate Portions, then the Agent shall give telephonic
notice (promptly confirmed in writing) to the Borrower and each Bank of such
determination. Such notice shall specify the basis for such determination and
shall, in the absence of manifest error, be conclusive and binding for all
purposes. Thereafter, the obligation of the Banks to make or maintain
Eurodollar Rate Portions hereunder shall be suspended until the Agent (upon the
instructions of the Majority Banks) revokes such notice. Upon receipt of such
notice, the Borrower may revoke any Notice then submitted by it. If the
Borrower does not revoke such Notice, the Banks shall make, convert or continue
Loans, as proposed by the Borrower, in the amount specified in the Notice
submitted by the Borrower, but such Loans shall be made, converted or continued
as Base Rate Portions instead of Eurodollar Rate Portions.
Funding Losses.
- ---------------
In addition to such amounts as are required to be paid by the Borrower pursuant
to Section 5.3, the Borrower shall compensate each Bank, promptly upon receipt
-----------
of such Bank's written request made through the Agent, for all losses, costs and
expenses (including any loss or expense incurred by such Bank in obtaining,
liquidating or re-employing deposits or other funds from third parties to fund
or maintain its Eurodollar Rate Portions but excluding any loss of margin of
such Bank), if any, which such Bank sustains:
if the Borrower repays, converts or prepays any Eurodollar Rate Portion on a
date other than the last day of an Interest Period for such Eurodollar Rate
Portion (whether as a result of an optional prepayment, mandatory prepayment, a
payment as a result of acceleration or otherwise);
if the Borrower fails to borrow a Eurodollar Rate Portion after giving its
Notice (other than as a result of the operation of Section 5.1 or 5.4);
------------------
if the Borrower fails to convert into or continue a Eurodollar Rate Portion
after giving its Notice (other than as a result of the operation of Section 5.1
-----------
or 5.4); or
- ------
if the Borrower fails to prepay a Eurodollar Rate Portion after giving its
Notice.
Any such request for compensation shall set forth the basis for requesting such
compensation and shall, in the absence of manifest error, be conclusive and
binding for all purposes.
Increased Costs.
- ----------------
If after the date hereof, the adoption of, or any change in, any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any Governmental Authority charged with the
-16-
<PAGE>
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority (a "Regulatory Change") shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement (including any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any Eurodollar Rate
Portion any such requirement included in the calculation of the Eurodollar Rate)
against assets of, deposits with or for the account of, or credit extended by,
any Bank's Lending Office or shall impose on any Bank (or its Lending Office) or
the interbank Eurodollar market any other condition affecting its Eurodollar
Rate Portions or its obligation to make Eurodollar Rate Portions, and the result
of any of the foregoing is to increase the cost to such Bank (or its Lending
Office) of making or maintaining any Eurodollar Rate Portion, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement with respect thereto, by an amount deemed by such Bank to
be material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amounts as shall compensate such Bank for such increased cost or reduction. Any
such request for compensation by a Bank under this Section 5.3 shall set forth
-----------
the basis of calculation thereof and shall, in the absence of manifest error, be
conclusive and binding for all purposes. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
Illegality.
- -----------
If any Bank shall determine that it has become unlawful, as a result of any
Regulatory Change, for such Bank to make, convert into or maintain Eurodollar
Rate Portions as contemplated by this Agreement, such Bank shall promptly give
notice of such determination to the Borrower (through the Agent), and:
the obligation of such Bank to make, convert into or maintain Eurodollar Rate
Portions shall be suspended until such Bank gives notice that the circumstances
causing such suspension no longer exist; and
each of such Bank's outstanding Eurodollar Rate Portions shall, if requested by
such Bank, be converted into a Base Rate Portion not later than upon expiration
of the Interest Period related to such Eurodollar Rate Portion, or, if earlier,
on such date as may be required by the applicable Regulatory Change, as shall be
specified in such request.
Any such determination shall, in the absence of manifest error, be conclusive
and binding for all purposes.
Funding Assumptions.
- --------------------
Solely for purposes of calculating amounts payable by the Borrower to the Banks
under this Article V, each Eurodollar Rate Portion made by a Bank (and each
---------
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the Interbank Rate used in determining the
Eurodollar Rate for such Eurodollar Rate Portion by a matching deposit or other
borrowing in the interbank Eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Portion is in fact so
funded.
Capital Requirements.
- ---------------------
If any Bank shall have determined that the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or application thereof by any Governmental Authority, in
each case adopted or changed after the date hereof, or compliance by such Bank
(or any corporation controlling such Bank) with any request, guideline or
directive regarding capital adequacy (whether or not having the force of law) of
any Governmental Authority after the date hereof, has or shall have the effect
of reducing the rate of return on such Bank's or such corporation's capital as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such corporation would have achieved but for such adoption, change
or compliance (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy), by an amount deemed by such Bank to
be material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amounts as shall compensate such Bank for such reduction. Any such request for
compensation by a Bank under this Section 5.6 shall set forth the basis of the
-----------
calculation of such additional amounts and shall, in the absence of manifest
error, be conclusive and binding for all purposes.
Obligation to Mitigate.
- -----------------------
Each Bank agrees that as promptly as practicable after it becomes aware of the
occurrence of an event that would entitle it to give notice pursuant to
Section 5.3 or 5.4, and in any event if so requested by the Borrower, each Bank
- ------------------
shall use reasonable efforts to make, fund or maintain its affected Eurodollar
Rate Portions through another Lending
-17-
<PAGE>
Office if as a result thereof the increased costs would be avoided or materially
reduced or the illegality would thereby cease to exist and if, in the reasonable
opinion of such Bank, the making, funding or maintaining of such Eurodollar Rate
Portions through such other Lending Office would not in any material respect be
disadvantageous to such Bank or contrary to such Bank's normal banking
practices.
PAYMENTS
Pro Rata Treatment.
- -------------------
Except as otherwise provided in this Agreement, each Borrowing hereunder, each
Commitment reduction, each payment (including each prepayment) by the Borrower
on account of the principal of and interest on the Loans and on account of any
facility fee and each conversion or continuation of Loans, shall be made ratably
in accordance with the Commitments.
Payments.
- ---------
Payments. The Borrower shall make each payment hereunder and under the Notes,
- --------
without set-off or counterclaim, not later than 10:00 A.M. (California time) on
the day when due to the Agent in Dollars and in immediately available funds, to
the Agent's Account. The Agent shall promptly thereafter distribute like funds
relating to the payment of principal or interest, fees or any other amounts
payable to the Banks, ratably (except as a result of the operation of Article V)
---------
to the Banks.
Authorization to Agent. To effectuate any payment of principal and interest by
- ----------------------
the Borrower hereunder, the Agent shall, and the Borrower hereby authorizes the
Agent to, charge any deposit account of the Borrower with the Agent for the
amount of such payment on the due date thereof. If the collected credit balance
of such account on such date shall be insufficient to cover the full payment
due, the Borrower shall immediately upon demand remit to the Agent the full
amount of such deficiency. The Agent may (but shall not be obligated to), and
the Borrower hereby authorizes the Agent to, charge any such account of the
Borrower for the amount of any other payment which is not made by the time
specified in subsection (a). The Agent shall promptly notify the Borrower after
charging any such account.
Authorization to Banks. The Borrower hereby authorizes each Bank, if and to the
- ----------------------
extent the Borrower has failed to pay amounts due hereunder and as a result
payment owed to such Bank is not made when due hereunder, to charge from time to
time any or all of the Borrower's accounts with such Bank for any amount so due.
Each Bank receiving any payment as a result of charging any such account shall
promptly notify the Borrower thereof (through the Agent).
Application. (i) Unless the Agent shall receive a timely election by the
- -----------
Borrower with respect to the application of any principal payments, each payment
of principal by the Borrower shall be applied (A) first, to the Base Rate
Portions then outstanding, and (B) second, to the Eurodollar Rate Portions then
outstanding (in such manner as the Agent shall determine in its sole
discretion). (ii) Each payment by or on behalf of the Borrower hereunder shall,
unless a specific determination is made by the Agent and the Banks with respect
thereto, be applied in the following order:
first, to any fees, costs, expenses and other amounts due the Agent;
second, to any fees, costs, expenses and other amounts (other than principal and
interest) due the Banks;
third, to accrued and unpaid interest due the Banks; and
fourth, to principal due the Banks.
Extension. Whenever any payment hereunder shall be stated to be due, or
- ---------
whenever any Interest Payment Date or any other date specified hereunder would
otherwise occur, on a day other than a Business Day, then, except as otherwise
provided herein, such payment shall be made, and such Interest Payment Date or
other date shall occur, on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of payment of interest
or facility fee hereunder.
Taxes.
- ------
No Reduction of Payments. The Borrower shall pay all amounts of principal,
- ------------------------
interest, fees and other amounts due hereunder free and clear of, and without
reduction for or on account of, any present and future taxes, levies, imposts,
duties, fees, assessments, charges, deductions or withholdings and all
liabilities with respect thereto excluding (i) in the case of each Bank and the
Agent, income and franchise taxes imposed on it by the jurisdiction under the
laws of which such Bank or the Agent is organized or in which its principal
executive offices may be located or any political subordination or taxing
authority thereof or therein, and by the jurisdiction of such Bank's Lending
Office and any
-18-
<PAGE>
political subdivision or taxing authority thereof or therein and (ii) any United
States taxes which the Borrower would be obligated to collect by withholding
pursuant to Section 1442 or 3406 of the Internal Revenue Code (all such
nonexcluded taxes, levies, imposts, duties, fees, assessments, charges,
deductions, withholdings and liabilities being hereinafter referred to as
"Taxes"). If any Taxes shall be required by law to be deducted or withheld from
any payment, the Borrower shall increase the amount paid so that the respective
Bank or the Agent receives when due (and is entitled to retain), after deduction
or withholding for or on account of such Taxes (including deductions or
withholdings applicable to additional sums payable under this Section 6.3), the
-----------
full amount of the payment provided for in this Agreement.
Deduction or Withholding; Tax Receipts. If the Borrower makes any payment
- --------------------------------------
hereunder in respect of which it is required by law to make any deduction or
withholding, it shall pay the full amount to be deducted or withheld to the
relevant taxation or other authority within the time allowed for such payment
under applicable law and promptly thereafter shall furnish to the Agent (for
itself or for redelivery to the Bank to or for the account of which such payment
was made) an original or certified copy of a receipt evidencing payment thereof,
together with such other information and documents as the Agent or any Bank
(through the Agent) may reasonably request.
Indemnity. If any Bank or the Agent is required by law to make any payment on
- ---------
account of Taxes, or any liability in respect of any Tax is imposed, levied or
assessed against any Bank or the Agent, the Borrower shall indemnify the Agent
and the Banks for and against such payment or liability, together with any
incremental taxes, interest or penalties, and all costs and expenses, payable or
incurred in connection therewith, including Taxes imposed on amounts payable
under this Section 6.3, whether or not such payment or liability was correctly
-----------
or legally asserted. A certificate of the Agent or any Bank as to the amount of
any such payment shall, in the absence of manifest error, be conclusive and
binding for all purposes.
Forms 1001 and 4224. Each Bank that is incorporated under the laws of any
- -------------------
jurisdiction outside the United States agrees to deliver to the Borrower on or
prior to the date that such Bank executes this Agreement, and in a timely
fashion thereafter, Form 1001, Form 4224 or such other documents and forms of
the United States Internal Revenue Service, duly executed and completed by such
Bank, as are required under United States law to establish such Bank's status
for United States withholding tax purposes.
Mitigation. Each Bank agrees that as promptly as practicable after it becomes
- ----------
aware of the occurrence of an event that would cause the Borrower to make any
payment in respect of Taxes to such Bank or a payment in indemnification with
respect to any Taxes, and in any event if so requested by the Borrower, each
Bank shall use reasonable efforts to make, fund or maintain its affected Loans
(or relevant part thereof) through another Lending Office if as a result thereof
the additional amounts so payable by the Borrower would be avoided or materially
reduced and if, in the reasonable opinion of such Bank, the making, funding or
maintaining of such Loan (or relevant part thereof) through such other Lending
Office would not in any material respect be disadvantageous to such Bank or
contrary to such Bank's normal banking practices.
Non-Receipt of Funds.
- --------------------
Unless the Agent shall have received notice from the Borrower prior to the date
on which any payment is due to any of the Banks hereunder that the Borrower
shall not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the rate per annum equal to the cost of funding such amount through
the purchase of funds in the overnight Federal funds market.
Sharing of Payments.
- -------------------
If any Bank shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) on account of the Loans made
by it (other than pursuant to Sections 5.2, 5.3, 5.6 or 6.3) in excess of its
-----------------------------
ratable share of payments on account of the Loans obtained by all the Banks,
such Bank shall forthwith advise the Agent of the receipt of such payment, and
within five Business Days of such receipt purchase from the other Banks (through
the Agent) such participations in the Loans made by them as shall be necessary
to cause such purchasing Bank to share the excess payment ratably with each of
them; provided that if all or any portion of such excess
--------
-19-
<PAGE>
payment is thereafter recovered by or on behalf of the Borrower from such
purchasing Bank, the purchase shall be rescinded and the purchase price restored
to the extent of such recovery, with interest if and to the extent the
purchasing Bank is required to pay interest on the amounts so recovered. The
Borrower agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section 6.5 may exercise all its rights of payment (including
-----------
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation. No documentation other than notices and the like referred to in
this Section 6.5 shall be required to implement the terms of this Section 6.5.
----------- -----------
The Agent shall keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased pursuant to this
Section 6.5 and shall in each case notify the Banks following any such
- -----------
purchases.
CONDITIONS PRECEDENT
Conditions Precedent to the Initial Loans.
- ------------------------------------------
The effectiveness of this Agreement and the continuing obligation of each Bank
to make Loans hereunder shall be subject to the satisfaction of each of the
following conditions precedent on or before August 9, 1999 (the "Closing Date"):
Fees and Expenses. The Borrower shall have paid (i) all fees then due in
- -----------------
accordance with Section 3.3(b) and (ii) all invoiced costs and expenses then due
--------------
in accordance with Section 12.4(a).
---------------
Loan Documents. The Agent shall have received the Notes executed by the
- --------------
Borrower.
Additional Closing Documents. The Agent shall have received the following, in
- ----------------------------
form and substance satisfactory to it:
a certificate of the secretary or an assistant secretary of Borrower, dated as
of the Closing Date, certifying that all (A) authorizations or approvals of any
Governmental Authorities or (B) approvals or consents of any other Person,
required in connection with the execution, delivery and performance of the Loan
Documents shall have been obtained;
(in sufficient copies for the Banks) the audited consolidated balance sheet of
the Borrower and its Subsidiaries as at December 31, 1998, and the related
consolidated statements of income and cash flows for the fiscal year then ended;
a certificate of the treasurer or the chief financial officer of the Borrower,
dated the Closing Date, certifying that (A) the representations and warranties
contained in Section 8.1 and in the other Loan Documents are true and correct on
-----------
and as of the Closing Date as though made on and as of such date and (B) on and
as of the Closing Date, no Default shall have occurred and be continuing or
shall result from the initial Borrowing; and
a certificate of the secretary or assistant secretary of the Borrower, dated the
Closing Date, certifying (A) the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of the Loan
Documents and (B) the incumbency, authority and signatures of each Authorized
Officer who will act as such in connection with the Loan Documents.
Market Disruption. No material change or disruption, as determined in the sole
- -----------------
discretion of the Agent, shall have occurred in the capital markets or the loan
syndication market.
Compliance with ADA. The Agent shall have received a certificate of the
- -------------------
secretary, assistant secretary, or the chief financial officer of Borrower,
dated as of the Closing Date, certifying that, as of the Closing Date, the
Borrower is in compliance with the ADA, and that, as of the Closing Date, any
renovations of any facilities of the Borrower that are required to bring such
facilities into compliance with the ADA have been performed or completed.
Conditions Precedent to All Loans.
- ----------------------------------
The obligation of each Bank to make a Loan on the occasion of each Borrowing
shall be subject to the satisfaction of each of the following conditions
precedent:
Notice. The Borrower shall have given the Notice of Borrowing as provided in
- ------
Section 2.2(a).
- --------------
Representations and Warranties; No Default. On the date of such Borrowing, both
- ------------------------------------------
before and after giving effect thereto and to the application of proceeds
therefrom:
the representations and warranties contained in Section 8.1 and in the other
-----------
Loan Documents shall be true and correct on and as of the date of such Borrowing
as though made on and as of such date; and
no Default shall have occurred and be continuing or shall result from such
Borrowing.
For purposes of this Section 7.2(b), clause (i) shall be deemed instead to refer
--------------
to the last day of the most recent fiscal quarter and fiscal year for which
financial statements have then been delivered with regard to the
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<PAGE>
representations and warranties contained in subsections (p) and (q) of
Section 8.1 and shall not be deemed to refer to any other representations and
- -----------
warranties which relate solely to an earlier date (provided that such other
--------
representations and warranties shall be true and correct as of such earlier
date). The acceptance by the Borrower of the proceeds of each Borrowing
following the Closing Date shall be deemed a certification to the Agent and the
Banks that on and as of the date of such Borrowing such statements are true.
Additional Documents. The Agent shall have received, in form and substance
- --------------------
satisfactory to it, such additional approvals, opinions, documents and other
information as the Agent or any Bank (through the Agent) may reasonably request.
REPRESENTATIONS AND WARRANTIES
Representations and Warranties.
- -------------------------------
The Borrower represents and warrants to each Bank and the Agent that:
Organization and Powers. Each of the Borrower and its Subsidiaries is a
- -----------------------
corporation duly organized, validly existing and in good standing under the law
of the jurisdiction of its incorporation, is qualified to do business and is in
good standing in each jurisdiction in which the failure so to qualify or be in
good standing would have a Material Adverse Effect, and has all requisite power
and authority to own its assets and carry on its business and, with respect to
the Borrower, to execute, deliver and perform its obligations under the Loan
Documents.
Authorization; No Conflict. The execution, delivery and performance by the
- --------------------------
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action of the Borrower and do not and will not:
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties is bound or to which it or
its properties is subject;
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree or the like binding on the Borrower; or
except as contemplated by this Agreement, result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties of the
Borrower.
Binding Obligation. The Loan Documents constitute, or when delivered under this
- ------------------
Agreement will constitute, legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
Governmental Consents. No authorization, consent, approval, license, exemption
- ---------------------
of, or filing or registration with, any Governmental Authority is required for
the due execution, delivery or performance by the Borrower of any of the Loan
Documents.
No Defaults. Neither the Borrower nor any of its Subsidiaries is in default
- -----------
under any material contract, lease, agreement, judgment, decree or order to
which it is a party or by which it or its properties is bound, except in any
such case where the consequences, direct and indirect, of such default or
defaults, if any, would not have or could not reasonably be expected to have a
Material Adverse Effect.
Title to Properties; Liens. The Borrower and its Subsidiaries have good and
- --------------------------
marketable title to their properties and assets, and there is no Lien upon or
with respect to any of such properties or assets, which secures Indebtedness of
any Person, except for Permitted Liens.
Litigation. There are no actions, suits or proceedings pending or, to the best
- ----------
of the Borrower's knowledge, threatened against or affecting the Borrower or any
of its Subsidiaries or the properties of the Borrower or any of its Subsidiaries
before any Governmental Authority or arbitrator which (i) if determined
adversely to the Borrower or such Subsidiary could reasonably be expected to
have a Material Adverse Effect, or (ii) purport to affect the legality, validity
or enforceability of any of the Loan Documents.
Compliance with Environmental Laws. Each of the Borrower and its Subsidiaries
- ----------------------------------
is in compliance with all Environmental Laws, whether in connection with the
ownership, use, maintenance or operation of its Premises or the conduct of any
business thereon, or otherwise, except for any failure so to comply which would
not have or could not reasonably be expected to have a Material Adverse Effect.
Neither the Borrower, any of its Subsidiaries nor, to the best of the Borrower's
knowledge, any previous owner, tenant, occupant, user or operator of the
Premises, has used,
-21-
<PAGE>
generated, manufactured, installed, treated, released, stored or disposed of any
Hazardous Substances on, under, or at the Premises, except in compliance with
all applicable Environmental Laws. To the best of the Borrower's knowledge, no
Hazardous Substances have at any time been spilled, leaked, dumped, deposited,
discharged, disposed of or released on, under, at or from the Premises, nor have
any of the Premises been used at any time by any Person as a landfill or waste
disposal site. There are no actions, suits, claims, notices of violation,
hearings, investigations or proceedings pending or, to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries or with respect to the ownership, use, maintenance and operation of
the Premises, relating to Environmental Laws or Hazardous Substances.
Governmental Regulation. Neither the Borrower nor any of its Subsidiaries is
- -----------------------
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce
Act, any state public utilities code or any other federal or state statute or
regulation limiting its ability to incur Indebtedness.
ERISA.
- -----
The Borrower has met its minimum funding requirements under ERISA with respect
to all its Plans and otherwise is in compliance in all material respects with
all applicable provisions of ERISA;
no Termination Event has occurred and is continuing with respect to any Plan;
the aggregate amount of unfunded accrued benefits under all Plans (computed
separately with respect to each Plan) does not exceed $250,000; and
neither the Borrower nor any ERISA Affiliate is a member of, or contributes to,
any Multiemployer Plan.
Subsidiaries. The name, capital structure and ownership of each Subsidiary of
- ------------
the Borrower on the date of this Agreement is as set forth in Schedule 8.1(k).
---------------
All of the outstanding capital stock or other interest of each such Subsidiary
has been validly issued, and is fully paid and nonassessable. Except as set
forth in such Schedule, on the date of this Agreement the Borrower has no
material equity interest in any Person.
Margin Regulations. The Borrower is not engaged in the business of extending
- ------------------
credit for the purpose of purchasing or carrying "margin stock" (within the
meaning of Regulations G or U of the Board of Governors of the Federal Reserve
System of the United States). No part of the proceeds of the Loans will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
Taxes. Each of the Borrower and its Subsidiaries has duly filed all tax and
- -----
information returns required to be filed, and has paid all taxes, fees,
assessments and other governmental charges or levies that have become due and
payable, except to the extent such taxes or other charges are being contested in
good faith and are adequately reserved against in accordance with GAAP.
Patents and Other Rights. Each of the Borrower and its Subsidiaries possesses
- ------------------------
all permits, franchises, licenses, patents, trademarks, trade names, service
marks, copyrights and all rights with respect thereto, free from burdensome
restrictions, that are necessary for the ownership, maintenance and operation of
its business and, to the best of the Borrower's knowledge, neither the Borrower
nor any of its Subsidiaries is in violation of any rights of others with respect
to the foregoing.
Insurance. The properties of the Borrower and its Subsidiaries are insured,
- ---------
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the localities
where the Borrower or such Subsidiary operates.
Financial Statements. The audited consolidated balance sheet of the Borrower
- --------------------
and its Subsidiaries as at December 31, 1998, and as of each subsequent fiscal
period of Borrower and its Subsidiaries with respect to which Borrower shall
deliver a financial statements to Agent pursuant to Section 9.1(a), and the
--------------
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal period then ended, are complete and correct and fairly present
the financial condition of the Borrower and its Subsidiaries as at such date and
the results of operations of the Borrower and its Subsidiaries for the periods
covered by such statements, in each case in accordance with GAAP consistently
applied. Since December 31, 1998, no event or condition has occurred that has or
could reasonably be expected to have a Material Adverse Effect.
Liabilities. Neither the Borrower nor any of its Subsidiaries has any material
- -----------
liabilities, fixed or contingent, that are not reflected in the financial
statements referred to in subsection (p), in the notes thereto or otherwise in
writing to the Banks, other than liabilities arising in the ordinary course of
business since December 31, 1998.
-22-
<PAGE>
Labor Disputes, Etc. There are no strikes, lockouts or other labor disputes
- -------------------
against the Borrower or any of its Subsidiaries, or, to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries, and no Event of Loss has occurred with respect to any assets or
property of the Borrower or any of its Subsidiaries, which could reasonably be
expected to have a Material Adverse Effect.
Leases. All of the leases of real property in which the Borrower or any of its
- ------
Subsidiaries is the lessor are listed on Schedule 8.1(s). To the best of the
---------------
Borrower's knowledge, with respect to each such lease, the lease has been duly
authorized, executed and delivered by the lessee, is in full force and effect
and the obligations of the lessee are valid, binding and enforceable, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally. To the best of the Borrower's knowledge,
there exists no material breach, default, or event or condition which, with
notice or lapse of time or both, would constitute such a material breach or
default by the lessee, and there are no existing claims, defenses or offsets
against rental due or to become due, under the terms of any such lease.
Disclosure. None of the representations or warranties made by the Borrower in
- ----------
the Loan Documents as of the date of such representations and warranties, and
none of the statements contained in each exhibit or report furnished by or on
behalf of the Borrower to the Agent and the Banks in connection with the Loan
Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading.
Compliance with Securities Laws. Each of the Borrower and its Subsidiaries is
- -------------------------------
in compliance in all material respects with all applicable federal and state
securities laws, rules, regulations and orders of any Governmental Authority
with respect to the 1997 Indenture and the Indebtedness issued and to be issued
pursuant to the 1997 Indenture, and with respect to the 1999 Indenture and the
Indebtedness issued and to be issued pursuant to the 1999 Indenture.
COVENANTS
Reporting Covenants.
- -------------------
So long as any Loan or any other amount payable by the Borrower hereunder shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees that:
Financial Statements and Other Reports. The Borrower will furnish to the Agent
- --------------------------------------
in sufficient copies for distribution to the Banks:
as soon as available and in any event within 45 days after the end of the first
three fiscal quarters of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter, and the related consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such quarter, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the corresponding period in the preceding fiscal year,
together with a certificate of the treasurer or chief financial officer of the
Borrower stating that such financial statements fairly present the financial
condition of the Borrower and its Subsidiaries as at such date and the results
of operations of the Borrower and its Subsidiaries for the period ended on such
date and have been prepared in accordance with GAAP consistently applied,
subject to changes resulting from normal, year-end audit adjustments;
as soon as available and in any event within 90 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such fiscal year, and the related consolidated
statements of income, shareholders' equity and cash flows of the Borrower and
its Subsidiaries for such fiscal year, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the previous fiscal year, accompanied by a report thereon
of Arthur Andersen LLC or another firm of independent certified public
accountants of recognized national standing acceptable to the Majority Banks,
which report shall be unqualified as to scope of audit or the status of the
Borrower and its Subsidiaries as a going concern, together with a certificate of
such independent public accountants stating that (A) their audit examination of
the Borrower and its Subsidiaries has included a review of the terms of this
Agreement as they relate to accounting matters; (B) in the course of such audit
examination, which audit was conducted by such accountants in accordance with
generally accepted auditing standards, such accountants have obtained no
knowledge that any Default has occurred and is continuing, or, if such Default
has occurred and is continuing, indicating the nature thereof; provided that
--------
such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default that would not be disclosed in the course of their
audit
-23-
<PAGE>
examination; and (C) based on their audit examination nothing has come to
their attention which causes them to believe that the matters set forth in the
Compliance Certificate delivered pursuant to clause (iii) for the applicable
fiscal year with respect to compliance with the provisions of Section 9.2 and
-----------
subsections (f) and (g) of Section 9.4 are not stated in accordance with the
-----------
terms of this Agreement;
together with the financial statements required pursuant to clauses (i) and
(ii), a Compliance Certificate stating that such officer has no knowledge that
any Default has occurred and is continuing, or, if such Default has occurred and
is continuing, indicating the nature thereof and the action which the Borrower
proposes to take with respect thereto, and demonstrating in reasonable detail as
of the end of such fiscal quarter or year compliance with the provisions of
Section 9.2 and subsections (f) and (g) of Section 9.4;
- ----------- -----------
promptly upon receipt thereof, copies of all reports submitted to the Borrower
by its independent certified public accountants in connection with each annual,
interim or special audit examination of the Borrower and its Subsidiaries made
by such accountants, including the "management letter" submitted by such
accountants to the Borrower in connection with their annual audit;
as soon as available and in any event not more than 90 days after the start of
each fiscal year of the Borrower and its Subsidiaries, a consolidated financial
forecast for the Borrower and its Subsidiaries for such fiscal year and each of
the two fiscal years thereafter, including forecasted consolidated balance
sheets, consolidated statements of income, shareholders' equity and cash flows
of the Borrower and its Subsidiaries, and forecasted capital expenditure and
acquisition information which forecast shall (A) state the assumptions used in
the preparation thereof, (B) contain such other information as requested by any
Bank and (C) be in form satisfactory to the Majority Banks; and
promptly after the giving, sending or filing thereof, copies of all reports, if
any, which the Borrower or any of its Subsidiaries sends to the holders of its
respective capital stock or other securities and of all reports or filings, if
any, by the Borrower or any of its Subsidiaries with the Securities and Exchange
Commission or any national securities exchange.
Additional Information. The Borrower will furnish to the Agent:
- ----------------------
promptly after the Borrower has knowledge or becomes aware of the occurrence of
any Event of Loss with respect to its property or assets aggregating $500,000 or
more, a statement of an Authorized Officer setting forth the details of such
Event of Loss and the action which the Borrower proposes to take with respect
thereto;
promptly after the Borrower has knowledge or becomes aware of the occurrence of
any Default, a statement of the treasurer or the chief financial officer of the
Borrower setting forth details of such Default and the action which the Borrower
proposes to take with respect thereto;
prompt written notice of all material actions, suits, claims, notices of
violation, hearings, investigations or proceedings pending, or to the best of
the Borrower's knowledge, threatened against or affecting the Borrower or any of
its Subsidiaries or with respect to the ownership, use, maintenance and
operation of the Premises, relating to Environmental Laws or Hazardous
Substances, together with a statement of an Authorized Officer setting forth the
details thereof and the action which the Borrower proposes to take with respect
thereto;
prompt written notice of all actions, suits and proceedings before any
Governmental Authority or arbitrator pending, or to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries which (A) if adversely determined would involve an aggregate
liability of $500,000, (B) otherwise could reasonably be expected to have a
Material Adverse Effect or (C) purport to affect the legality, validity or
enforceability of any of the Loan Documents;
promptly and in any event within 30 days after the Borrower has knowledge that
any Termination Event has occurred, a statement of an Authorized Officer setting
forth details as to such Termination Event and the action which the Borrower
proposes to take with respect thereto, together with a copy of any notice of
such Termination Event to the PBGC; and promptly after the Borrower becomes
aware thereof, the details concerning any action taken or proposed to be taken
by the IRS, PBGC, Department of Labor or other Person with respect thereto;
promptly after filing or receipt thereof by the Borrower or any of its ERISA
Affiliates, copies of the following:
each annual report (IRS Form 5500 series), together with all accompanying
schedules, reports and information, filed with the IRS;
any notice received from the PBGC of intent to terminate or have a trustee
appointed to administer any Plan;
-24-
<PAGE>
any notices received from the plan sponsor of any Multiemployer Plan concerning
the imposition or amount of withdrawal liability pursuant to Section 4202 of
ERISA; and
any demand by the PBGC under Subtitle D of Title IV of ERISA;
prompt written notice of any other condition or event which has, or could
reasonably be expected to have, a Material Adverse Effect;
promptly after the consummation of any sale or disposition of any asset of the
Borrower or any of its Subsidiaries subject to the mandatory prepayment
provisions of Section 4.3(b)(ii), an officer's certificate setting forth in
------------------
reasonable detail the Net Cash Proceeds of such sale or disposition and the
computations made to determine such amount;
as soon as reasonably practical and, in any event, not less than two days prior
to the consummation thereof, written notice of (A) the proposed incurrence or
issuance of 1997 Indenture Indebtedness or 1999 Indenture Indebtedness, or (B)
any proposed supplement or amendment to the 1997 Indenture or 1999 Indenture;
within five Business Days after any long-term senior debt rating change by
Moody's, S&P or Duff with respect to the Borrower, written notice setting forth
such rating change;
promptly after consummation of any purchase of a Healthcare Property for a
purchase price (including the estimated costs of any renovations committed at
the time of purchase) greater than or equal to $15,000,000, a description of
such transaction, in reasonable detail, together with copies of all materials
presented to the Borrower's Board of Directors in connection with the approval
of such transaction; and
such other information respecting the operations, properties, business or
condition (financial or otherwise) of the Borrower or its Subsidiaries as any
Bank (through the Agent) may from time to time reasonably request.
Financial Covenants.
- --------------------
So long as any Loan or any other amount payable by the Borrower hereunder shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees that:
Leverage Ratio. The Borrower will not permit the ratio of Consolidated Total
- --------------
Liabilities to Consolidated Tangible Net Worth to be greater than 1.50 to 1.00;
Minimum Consolidated Tangible Net Worth. The Borrower will maintain
- ---------------------------------------
Consolidated Tangible Net Worth of not less than $550,000,000.
Debt Service Coverage Ratio. The Borrower will maintain a ratio of (i) EBITDA
- ---------------------------
to (ii) the sum of (A) Consolidated Interest Expense plus (B) regularly
----
scheduled principal payments (other than payments due on any final maturities)
on Indebtedness (including such payments attributable to Capital Leases but
excluding such payments relating to Indebtedness to trade creditors for goods
and services incurred in the ordinary course of business on customary terms), of
the Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP, for any period of four consecutive fiscal quarters of the
Borrower of not less than 2.50 to 1.00.
Additional Affirmative Covenants.
- ---------------------------------
So long as any Loan or any other amount payable by the Borrower hereunder shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees that:
Preservation of Existence, Etc. The Borrower will, and will cause each of its
- ------------------------------
Subsidiaries to, maintain and preserve its corporate existence and its right to
transact business and all other rights, franchises and privileges necessary or
desirable in the normal course of its business and operations and the ownership
of its properties. The Borrower will maintain its stature as a qualified real
estate investment trust for federal income tax purposes, pursuant to the
Internal Revenue Code.
Payment of Taxes, Etc. The Borrower will, and will cause each of its
- ---------------------
Subsidiaries to, pay and discharge all taxes, fees, assessments and governmental
charges or levies imposed upon it or upon its properties or assets prior to the
date on which penalties attach thereto, and all lawful claims for labor,
materials and supplies which, if unpaid, might become a Lien upon any properties
or assets of the Borrower or any such Subsidiary, except to the extent such
taxes, fees, assessments or governmental charges or levies, or such claims, are
being contested in good faith by appropriate proceedings and are adequately
reserved against in accordance with GAAP.
Maintenance of Insurance. The Borrower will, and will cause each of its
- ------------------------
Subsidiaries to, carry and maintain in full force and effect, at its own expense
and with financially sound and reputable insurance companies, insurance in such
amounts, with such deductibles and covering such risks as is customarily carried
by companies engaged in the same or similar businesses and owning similar
properties in the localities where the Borrower or such Subsidiary operates.
-25-
<PAGE>
The Borrower shall furnish to the Agent from time to time upon the request of
the Agent or any Bank information concerning the Borrower's insurance, including
evidence of insurance.
Keeping of Records and Books of Account. The Borrower will, and will cause each
- ---------------------------------------
of its Subsidiaries to, keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrower and its Subsidiaries.
Inspection Rights. The Borrower will at any reasonable time and from time to
- -----------------
time permit the Agent and the Banks or any of their respective agents or
representatives to visit and inspect any of the properties of the Borrower and
its Subsidiaries and to examine and make copies of and abstracts from the
records and books of account of the Borrower and its Subsidiaries, and to
discuss the business affairs, finances and accounts of the Borrower and any such
Subsidiary with any of the officers, employees or accountants of the Borrower or
such Subsidiary.
Compliance with Laws, Etc. The Borrower will, and will cause each of its
- -------------------------
Subsidiaries to, comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
(including the ADA, ERISA and all Environmental Laws) and the terms of any
indenture, contract or other instrument to which it may be a party or under
which it or its properties may be bound.
Maintenance of Properties, Etc. The Borrower will, and will cause each of its
- ------------------------------
Subsidiaries to, maintain and preserve all of its properties necessary or useful
in the proper conduct of its business in good working order and condition in
accordance with the general practice of other corporations of similar character
and size, ordinary wear and tear excepted.
Licenses. The Borrower will, and will cause each of its Subsidiaries to, obtain
- --------
and maintain all licenses, authorizations, consents, filings, exemptions,
registrations and other governmental approvals (collectively, "Licenses")
necessary in connection with the execution, delivery and performance of the Loan
Documents, the consummation of the transactions therein contemplated or the
operation and conduct of its business and ownership of its properties.
Action Under Environmental Laws. The Borrower will, and will cause each of its
- -------------------------------
Subsidiaries to, upon becoming aware of the presence of any Hazardous Substance
or the existence of any environmental liability under applicable Environmental
Laws with respect to the Premises, take all actions, at the cost and expense of
the Borrower, such Subsidiary or any lessee of the Borrower or such Subsidiary,
as shall be necessary or advisable to investigate and clean up the condition of
the Premises, including all removal, containment and remedial actions, and
restore the Premises to a condition in compliance with applicable Environmental
Laws.
Use of Proceeds. The Borrower will use the proceeds of the Loans solely for (i)
- ---------------
the acquisition of Healthcare Properties, (ii) the investment in mortgage loans
on Healthcare Properties, (iii) payment of quarterly dividends to holders of the
Borrower's common stock, and (iv) general corporate purposes; provided that no
--------
proceeds of the Loans shall be used in connection with any hostile acquisition.
Further Assurances and Additional Acts. The Borrower will execute, acknowledge,
- --------------------------------------
deliver, file, notarize and register at its own expense all such further
agreements, instruments, certificates, documents and assurances and perform such
acts as the Majority Banks shall deem necessary or appropriate to effectuate the
purposes of the Loan Documents, and promptly provide the Agent with evidence of
the foregoing satisfactory in form and substance to the Majority Banks.
Year 2000 Complaint. Borrower shall perform such acts as may be reasonably
- -------------------
necessary to reasonably ensure that Borrower and any business in which Borrower
owns a substantial interest become Year 2000 Compliant within a reasonable time.
Such acts shall include, without limitation, Borrower's performance of a
reasonable review and assessment of its material systems. With respect to
Borrower's customers, suppliers and vendors that are material to Borrower's
business, Borrower shall make a reasonable effort to (i) assess the risks posed
to Borrower's business by the failure of any such entity that is material to
Borrower's business to become Year 2000 Compliant within a reasonable time, (ii)
make reasonable inquiries or other reasonable assessment of such entities as to
whether they will become Year 2000 Compliant within a reasonable time, and (iii)
develop a reasonable plan for dealing with such entities which do not become
Year 2000 Compliant within a reasonable time. As used in this paragraph, "Year
2000 Compliant" shall mean, in regard to any entity, that all software,
hardware, firmware, equipment, goods or systems material to the business
operations or financial condition of such entity will properly perform date
sensitive functions before, during, and after the year 2000. Borrower shall,
within 30 days of written request by Agent, provide to Agent a written report
summarizing in reasonable detail Borrower's actions to comply with this covenant
and the
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<PAGE>
results of such actions; provided, however, that Borrower shall not be
-------- -------
obligated to respond to more than one such request per six month period.
Negative Covenants.
- -------------------
So long as any Loan or any other amount payable by the Borrower hereunder shall
remain unpaid or any Bank shall have any Commitment, the Borrower agrees that:
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<PAGE>
Additional Indebtedness. The Borrower will not, and will not permit any of its
- -----------------------
Subsidiaries to, create, incur, assume or otherwise become liable for or suffer
to exist any Indebtedness, other than:
Indebtedness of the Borrower to the Banks hereunder;
accounts payable to trade creditors for goods and services and current operating
liabilities (not the result of the borrowing of money) incurred in the ordinary
course of the Borrower's or such Subsidiary's business in accordance with
customary terms and paid within the specified time, unless contested in good
faith by appropriate proceedings and reserved for in accordance with GAAP;
Indebtedness consisting of guarantees resulting from endorsement of negotiable
instruments for collection by the Borrower or any such Subsidiary in the
ordinary course of business;
existing Indebtedness of the Borrower and its Subsidiaries set forth in Schedule
--------
9.4(a) or extensions, renewals and refinancings of such Indebtedness, provided
- ------ --------
that the principal amount of such Indebtedness being extended, renewed or
refinanced does not increase;
with the prior written consent of the Majority Banks, unsecured privately-placed
or publicly-issued Indebtedness of the Borrower in an aggregate principal amount
and upon such terms as are satisfactory to the Majority Banks in their sole
discretion;
Indebtedness of the Borrower and its Subsidiaries under Capital Leases in an
aggregate principal amount not to exceed $200,000 at any time outstanding;
Indebtedness subordinated on terms satisfactory to the Majority Banks to the
Borrower's obligations to the Banks hereunder in an aggregate principal amount
satisfactory to the Majority Banks;
Indebtedness of the Borrower to any wholly-owned Subsidiary or of any wholly-
owned Subsidiary to another wholly-owned Subsidiary; and
Indebtedness in connection with the acquisition of any Healthcare Property
permitted pursuant to Section 9.4(f)(iii) which is secured by a Lien permitted
-------------------
pursuant to Section 9.4(b)(iii) upon such Healthcare Property, whether or not
-------------------
the Borrower has assumed or become liable for payment of such Indebtedness;
1997 Indenture Indebtedness; provided, however, that: (a) the maximum aggregate
-------- -------
principal amount of 1997 Indenture Indebtedness at any time outstanding shall
not exceed $300,000,000; (b) without the prior written consent of the Majority
Banks, no regularly scheduled principal payment on any 1997 Indenture
Indebtedness shall be required prior to the fifth (5th) anniversary of the
issuance of the debenture, note or other evidence of indebtedness evidencing
such 1997 Indenture Indebtedness (without regard to the effect of the
acceleration provisions set forth in Section 502 of the 1997 Indenture); (c) all
1997 Indenture Indebtedness shall be unsecured; (d) in connection with the
incurrence or issuance of any 1997 Indenture Indebtedness, no covenant
(financial or otherwise) shall be imposed upon, or agreed to by, the Borrower
that is more restrictive (in the judgment of the Majority Banks) than the
covenants set forth in this Agreement; and (e) prior to the effectiveness
thereof, the Majority Banks shall have approved, in their sole discretion, each
supplement or amendment to the 1997 Indenture; and
1999 Indenture Indebtedness; provided, however, that: (a) the maximum aggregate
-------- -------
principal amount of 1999 Indenture Indebtedness at any time outstanding shall
not exceed $500,000,000; (b) without the prior written consent of the Majority
Banks, no regularly scheduled principal payment on any 1999 Indenture
Indebtedness shall be required prior to the fifth (5th) anniversary of the
issuance of the debenture, note or other evidence of indebtedness evidencing
such 1999 Indenture Indebtedness (without regard to the effect of the
acceleration provisions set forth in Section 502 of the 1999 Indenture); (c) all
1999 Indenture Indebtedness shall be unsecured; (d) in connection with the
incurrence or issuance of any 1999 Indenture Indebtedness, no covenant
(financial or otherwise) shall be imposed upon, or agreed to by, the Borrower
that is more restrictive (in the judgment of the Majority Banks) than the
covenants set forth in this Agreement; and (e) prior to the effectiveness
thereof, the Majority Banks shall have approved, in their sole discretion, each
supplement or amendment to the 1999 Indenture.
Liens. Without the prior written consent of the Majority Banks, the Borrower
- -----
will not, and will not permit any of its Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon or with respect to any of its properties or
assets, whether now owned or hereafter acquired, other than:
Liens in favor of the Agent for the ratable benefit of the Banks to secure
Indebtedness of the Borrower to the Banks hereunder;
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<PAGE>
Permitted Liens;
Liens securing Indebtedness that is incurred pursuant to Section 9.4(a)(ix)
------------------
hereof in an aggregate principal amount outstanding not to exceed a principal
amount equal to seven and one-half percent (7.5%) of Consolidated Total Assets
at any time of determination.
Change in Nature of Business. The Borrower will not, and will not permit any of
- ----------------------------
its Subsidiaries to, engage in any material line of business substantially
different from those lines of business carried on by it at the date hereof.
Restrictions on Fundamental Changes. Without the prior written consent of the
- -----------------------------------
Majority Banks, the Borrower will not, and will not permit any of its
Subsidiaries to, (i) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or (ii) merge with or consolidate into, or acquire
all or substantially all of the assets of, any Person, or sell, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets, except that:
any wholly-owned Subsidiary of the Borrower may merge with, consolidate into or
transfer all or substantially all of its assets to another wholly-owned
Subsidiary of the Borrower or to the Borrower;
the Borrower or any such Subsidiary may sell or dispose of assets in accordance
with the provisions of subsection (e); and
the Borrower or any such Subsidiary may make any investment permitted by
subsection (f).
Sales of Assets. The Borrower will not, and will not permit any of its
- ---------------
Subsidiaries to, sell, transfer, lease, or otherwise dispose of, or part with
control of (whether in one transaction or a series of transactions) any material
assets (including, without limitation, any shares of stock in any of its
Subsidiaries or any other Person), except:
leases of assets outstanding as of the date hereof or permitted by subsection
(o);
sales or other dispositions of assets (other than Healthcare Properties) in the
ordinary course of business; and
sales or other dispositions of assets by any wholly-owned Subsidiary of the
Borrower to another wholly-owned Subsidiary or the Borrower or to the Borrower.
Loans and Investments. The Borrower will not, and will not permit any of its
- ---------------------
Subsidiaries to, purchase or otherwise acquire the capital stock, assets,
obligations or other securities of or any interest in any Person, or otherwise
extend any credit to or make any additional investments in any Person, other
than in connection with:
extensions of credit by the Borrower to a wholly-owned Subsidiary or by a
wholly-owned Subsidiary to another wholly-owned Subsidiary or the Borrower;
Permitted Investments;
additional purchases of Healthcare Properties of other Persons and any
renovation of the subject Healthcare Properties committed at the time of
purchase, the consideration (whether in cash or in kind) for which together with
the estimated costs of any such committed renovation or expansion (exclusive of
expenditures permitted under subsection (g)) does not exceed (A) $30,000,000
individually and (B) $275,000,000 in aggregate in any fiscal year (or such
greater amounts as shall be approved by the prior written consent of the
Majority Banks); provided that, after giving effect to such purchase, no Default
shall have occurred and be continuing;
investments in mortgage loans secured by Healthcare Properties in an aggregate
amount not to exceed thirty percent (30%) of the aggregate amount (before
depreciation and amortization) then invested by the Borrower in fixed or capital
assets of Healthcare Properties; or
investments in development or construction projects (including new construction
and renovations); provided that the aggregate amount thereof, as of the end of
any fiscal quarter of the Borrower, shall not exceed seven and one-half percent
(7.5%) of Consolidated Total Assets.
Capital Expenditures. Without the prior written consent of the Majority Banks,
- --------------------
the Borrower will not, and will not permit any of its Subsidiaries to, make any
expenditures (exclusive of investments permitted under clauses (iii) and (v) of
subsection (f)) for fixed or capital assets, including obligations under Capital
Leases, in an aggregate amount in excess of $5,000,000 in any fiscal year.
Operating Leases. The Borrower will not, and will not permit any of its
- ----------------
Subsidiaries to, make any expenditures in respect of Operating Leases, except
for:
Operating Leases between the Borrower and any wholly-owned Subsidiary of the
Borrower or between wholly-owned Subsidiaries of the Borrower; and
Operating Leases which would not cause the Borrower and its Subsidiaries, on a
consolidated basis, to make payments exceeding $200,000 in any fiscal year of
the Borrower.
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<PAGE>
Sales and Leasebacks. The Borrower will not, and will not permit any of its
- --------------------
Subsidiaries to, become liable, directly or indirectly, with respect to any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real, personal or mixed), whether now owned or hereafter acquired, (i) which the
Borrower or such Subsidiary has sold or transferred or is to sell or transfer to
any other Person or (ii) which the Borrower or such Subsidiary intends to use
for substantially the same purposes as any other property which has been or is
to be sold or transferred by the Borrower or such Subsidiary to any other Person
in connection with such lease.
Distributions. The Borrower will not declare or pay any dividends in respect of
- -------------
the Borrower's capital stock, or purchase, redeem, retire or otherwise acquire
for value any of its capital stock now or hereafter outstanding, return any
capital to its shareholders as such, or make any distribution of assets to its
stockholders as such, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value any stock of the Borrower, except that
the Borrower may:
declare and deliver dividends and distributions payable only in common stock of
the Borrower;
purchase, redeem, retire, or otherwise acquire shares of its capital stock with
the proceeds received from (A) a substantially concurrent issue of new shares of
its capital stock or (B) a substantially concurrent cash dividend declared by
the Borrower in order to obtain shares to issue to its stockholders pursuant to
any dividend reinvestment plan adopted by the Borrower; and
declare and pay dividends (including dividends payable in common stock at the
then current market price, in lieu of cash, pursuant to any dividend
reinvestment plan adopted by the Borrower) to its stockholders during any fiscal
year of the Borrower if (A) after giving effect thereto the aggregate amount of
such dividends paid during any fiscal year of the Borrower is not in excess of
95% of Cash Flow for the then current fiscal year and (B) immediately prior
thereto and after giving effect thereto, no Default shall have occurred and be
continuing.
Amendments of Certain Documents. The Borrower will not, and will not permit any
- -------------------------------
of its Subsidiaries to, agree to or permit any amendment, modification or waiver
of any provision of any agreement related to any Subordinated Debt (including
any amendment, modification or waiver pursuant to an exchange of other
securities or instruments for outstanding Subordinated Debt) if the effect of
such amendment, modification or waiver is to (i) increase the interest rate on
such Subordinated Debt or change (to earlier dates) the dates upon which
principal and interest are due thereon; (ii) alter the redemption, prepayment or
subordination provisions thereof; (iii) alter the covenants and events of
default in a manner which would make such provisions more onerous or restrictive
to the Borrower or such Subsidiary; or (iv) otherwise increase the obligations
of the Borrower in respect of such Subordinated Debt or confer additional rights
upon the holders thereof which individually or in the aggregate would be adverse
to the Borrower, any of its Subsidiaries or the Banks.
Redemption of Subordinated Debt. The Borrower will not, and will not permit any
- -------------------------------
of its Subsidiaries to, make any voluntary or optional payment or repayment on,
redemption, exchange or acquisition for value of, or any sinking fund or similar
payment with respect to, any Subordinated Debt.
Transactions with Related Parties. The Borrower will not, and will not permit
- ---------------------------------
any of its Subsidiaries to, enter into any transaction, including the purchase,
sale or exchange of property or the rendering of any services, with any
Affiliate, any officer or director thereof or any Person which beneficially owns
or holds 5% or more of the equity securities, or 5% or more of the equity
interest, thereof (a "Related Party"), or enter into, assume or suffer to exist,
or permit any Subsidiary to enter into, assume or suffer to exist, any
employment or consulting contract with any Related Party, except a transaction
or contract which is in the ordinary course of the Borrower's or such
Subsidiary's business and which is upon fair and reasonable terms not less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person not a Related Party;
provided, however, that nothing in this subsection shall prohibit any
- -------- -------
transactions between the Borrower and its wholly-owned Subsidiaries or between
the Borrower's wholly-owned Subsidiaries.
Hazardous Substances. The Borrower will not, and will not permit any of its
- --------------------
Subsidiaries to, use, generate, manufacture, install, treat, release, store or
dispose of any Hazardous Substances, except in compliance with all applicable
Environmental Laws.
Lease of Premises. The Borrower will not, and will not permit any of its
- -----------------
Subsidiaries to, lease or enter into any agreement to lease any Premises now or
hereafter owned by it to any lessee unless such lessee (A) has a long-term
senior debt rating of Baa3 or better as determined by Moody's Investors Service,
BBB- or better as determined by Standard and Poor's Corporation, or BBB- or
better as determined by Duff & Phelps Inc.; or (B) provides to
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<PAGE>
Borrower or such Subsidiary an irrevocable standby letter of credit or deposit
in an amount not less than six months base rent under the subject lease as
security for the lessee's obligations under such lease; or (C) has credit
quality acceptable to the Majority Banks in their sole discretion. The
provisions of the preceding sentence shall not apply to any lessee with regard
to any lease in effect as of May 20, 1993 between such lessee and the Borrower
or any such Subsidiary. In addition, the provisions of the first sentence of
this subparagraph shall not apply to any lessee so long as the Borrower has a
long-term senior debt rating of Baa3 or better as determined by Moody's
Investors Service, or BBB- or better as determined by Standard and Poor's
Corporation, or BBB- or better as determined by Duff & Phelps Inc. (each an
"Investment Grade Rating"), or to any lessee with regard to any lease entered
into between such lessee and the Borrower or any such Subsidiary as of a date
when the Borrower held such an Investment Grade Rating.
EVENTS OF DEFAULT
Events of Default.
- ------------------
Any of the following events which shall occur shall constitute an "Event of
Default":
Payments. The Borrower shall fail to pay when due any amount of principal of,
- --------
or interest on, any Loan or Note, or any fee or other amount payable hereunder,
when due.
Representations and Warranties. Any representation or warranty by the Borrower
- ------------------------------
under this Agreement or the other Loan Documents shall prove to have been
incorrect in any material respect when made or deemed made.
Failure by Borrower to Perform Certain Covenants. The Borrower shall fail in any
- ------------------------------------------------
material respect to perform or observe any term, covenant or agreement contained
in subsection (b)(ii) of Section 9.1, Section 9.2, subsections (a) and (j) of
----------- -----------
Section 9.3 or Section 9.4.
- ----------- -----------
Failure by Borrower to Perform Other Covenants. The Borrower shall fail in any
- ----------------------------------------------
material respect to perform or observe (i) any other term, covenant or agreement
contained in this Agreement or any other Loan Document (other than subsections
(c) and (e) of Section 9.3) on its part to be performed or observed and any such
-----------
failure shall remain unremedied or unwaived for a period of 30 days from receipt
by the Borrower of written notice from the Agent of such failure (unless the
Majority Banks reasonably determine that such failure is not capable of remedy);
or (ii) any term, covenant or agreement contained in subsections (c) and (e) of
Section 9.3 and any such failure shall remain unremedied or unwaived for a
- -----------
period of 15 days from the earlier of (A) receipt by the Borrower of written
notice from the Agent of such failure; or (B) the date upon which any
Responsible Officer has knowledge of such failure.
Bankruptcy. The Borrower or any of its Subsidiaries shall admit in writing its
- ----------
inability to, or shall fail generally or be generally unable to, pay its debts
(including its payrolls) as such debts become due, or shall make a general
assignment for the benefit of creditors; or the Borrower or any such Subsidiary
shall file a voluntary petition in bankruptcy or a petition or answer seeking
reorganization, to effect a plan or other arrangement with creditors or any
other relief under the Bankruptcy Code or under any other state or federal law
relating to bankruptcy or reorganization granting relief to debtors, whether now
or hereafter in effect, or shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary petition filed against
the Borrower or any such Subsidiary pursuant to the Bankruptcy Code or any such
other state or federal law; or the Borrower or any such Subsidiary shall be
adjudicated a bankrupt, or shall make an assignment for the benefit of
creditors, or shall apply for or consent to the appointment of any custodian,
receiver or trustee for all or any substantial part of the Borrower's or any
such Subsidiary's property, or shall take any action to authorize any of the
actions set forth above in this subsection; or an involuntary petition seeking
any of the relief specified in this subsection shall be filed against the
Borrower or any such Subsidiary and shall not be dismissed within 30 days; or
any order for relief shall be entered against the Borrower or any such
Subsidiary in any involuntary proceeding under the Bankruptcy Code or any such
other state or federal law referred to in this subsection (e).
Default Under Other Indebtedness. The Borrower or any Subsidiary shall (i) fail
- --------------------------------
to make any payment of any principal of, or interest or premium on, any
Indebtedness (other than in respect of the Loans) in an aggregate principal
amount outstanding of at least $100,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Indebtedness, or (ii) fail to perform or observe
any term, covenant or condition on its part to be performed or observed under
any agreement or instrument relating to any such Indebtedness, when required to
be performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such failure to perform or observe is to
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<PAGE>
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof.
Certain Judgments and Orders. A final judgment or order for the payment of money
- ----------------------------
in excess of $100,000 which is not fully covered by insurance (less any
applicable deductibles) shall be rendered against the Borrower or any Subsidiary
and remain unpaid, unbonded, unvacated or unstayed for a period of 30 days after
the entry thereof.
ERISA. Any Termination Event with respect to a Plan of the Borrower or any ERISA
- -----
Affiliate shall have occurred which can reasonably be expected to result in a
liability of the Borrower or any ERISA Affiliate which would have a Material
Adverse Effect; or the Borrower or any ERISA Affiliate as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal from such
Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that it has incurred a withdrawal liability
which could reasonably be expected to have a Material Adverse Effect; or the
Borrower or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under a Multiemployer Plan.
Material Adverse Change. An event or condition shall have occurred or been
- -----------------------
disclosed to the Banks which, in the reasonable judgment of the Majority Banks,
has a Material Adverse Effect.
Invalidity of Subordination Provisions. The subordination provisions of any
- --------------------------------------
agreement or instrument governing any Subordinated Debt shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect, any
Person shall contest in any manner the validity or enforceability thereof or
deny that it has any further liability or obligation thereunder, or the
Indebtedness hereunder shall for any reason be subordinated or shall not have
the priority contemplated by this Agreement or such subordination provisions.
Franchises and Licenses. The Borrower or any of its Subsidiaries shall fail to
- -----------------------
obtain and maintain for its use and benefit any franchise or License the failure
of which to be obtained or maintained has a Material Adverse Effect.
Capital Markets. A change or disruption in the capital markets shall have
- ---------------
occurred which, in the reasonable judgment of the Majority Banks, has a Material
Adverse Effect.
Change of Control. At any time from and after the Closing Date, a Change of
- -----------------
Control shall occur.
Change of Senior Management. At any time from and after the Closing Date, R.
- ---------------------------
Bruce Andrews ceases to be the Chief Executive Officer of the Borrower; provided
--------
that neither a Default nor an Event of Default shall be deemed to have occurred
or be continuing under this subsection (p) if (i) the Borrower immediately takes
all action necessary to replace R. Bruce Andrews with another similarly
qualified and experienced individual; and (ii) the replacement individual is
reasonably satisfactory to the Majority Banks, in their sole determination.
Effect of Event of Default.
- ---------------------------
If any Event of Default shall occur and be continuing, the Agent shall, at the
request of the Majority Banks, (i) by notice to the Borrower, (A) declare the
Commitments of each Bank to be terminated, whereupon the same shall forthwith
terminate, and (B) declare the entire unpaid principal amount of the Loans and
the Notes, all interest accrued and unpaid thereon and all other amounts payable
under or in connection with this Agreement and the other Loan Documents to be
forthwith due and payable, whereupon the Loans and the Notes, all such accrued
interest and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower, provided that if an event
--------
described in Section 10.1(e) shall occur, the result which would otherwise occur
---------------
only upon giving of notice by the Agent to the Borrower as specified in
subclause (A) or (B) of this clause (i) shall occur automatically, without the
giving of any such notice; and (ii) whether or not the actions referred to in
clause (i) have been taken, proceed to enforce all other rights and remedies
available to the Agent and the Banks under applicable law.
THE AGENT
Authorization and Action.
- -------------------------
Each Bank hereby appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers and perform such duties under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto. The duties and obligations of the Agent are strictly limited to those
expressly provided for herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against
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<PAGE>
the Agent. As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including enforcement of the Loans), the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Banks,
and such instructions shall be binding upon all Banks; provided that except for
--------
action expressly required of the Agent hereunder, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder or under the other
Loan Documents unless it shall be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by reason of
taking or continuing to take any such action, and that the Agent shall not in
any event be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
applicable law. Nothing in this Agreement or any other Loan Document shall, or
shall be construed to, constitute the Agent a trustee or fiduciary for any Bank.
In performing its functions and duties hereunder, the Agent shall act solely as
the agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Borrower.
Limitation on Liability; Notices.
- ---------------------------------
Limitation on Liability of Agent. Neither the Agent nor any Affiliate thereof
- --------------------------------
nor any of their respective directors, officers, employees or agents shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Loan Document, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent (i) may treat a Bank as the holder of its
Loan for all purposes hereof unless and until the Agent receives an Assignment
and Assumption Agreement executed by such Bank and the assignee of such Bank,
(ii) may consult with legal counsel (including counsel to the Borrower),
independent public accountants and other experts selected by it, and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, and (iii)
shall incur no liability to any Bank under or in respect of this Agreement or
any other Loan Document by acting upon any notice, consent, certificate,
telegram, telecopy, telex or teletype message, statement or other instrument or
writing believed by it to be genuine and signed or sent by the proper party or
parties or by acting upon any representation or warranty made or deemed to be
made hereunder or under any other Loan Document. Further, the Agent (A) makes no
warranty or representation to any Bank and shall not be responsible to any Bank
for the accuracy or completeness of any information, exhibit or report furnished
hereunder or under any other Loan Document, for any statements, warranties or
representations (whether written or oral) made or deemed made in or in
connection with this Agreement or the other Loan Documents, (B) shall have no
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement or any other Loan Document
on the part of the Borrower or any other Person or to inspect the property,
books or records of the Borrower or any other Person, and (C) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of this Agreement or
any other Loan Document.
Notices. Promptly upon receipt thereof, the Agent shall forward to each Bank
- -------
originals or copies, as specified in this Agreement or any other Loan Document,
of all agreements, instruments, opinions, financial statements, notices and
other documents delivered by the Borrower or any other Person to the Agent
pursuant to this Agreement or any other Loan Document for distribution to the
Banks.
Agent and Affiliates.
- ---------------------
With respect to its Commitment, the Loans made by it and the Notes issued to it,
the Agent shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent; and the
term "Bank" or "Banks" shall, unless otherwise expressly indicated, include the
Agent in its individual capacity. The Agent and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of and generally
engage in any kind of business with the Borrower and any Affiliate thereof, all
as if the Agent were not the Agent hereunder and without any duty to account
therefor to the Banks.
Notice of Defaults.
- -------------------
The Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default hereunder (other than nonpayment of principal of or interest on the
Loans or of any fees or any of its costs and expenses) unless the Agent has
actual knowledge thereof or has received notice in writing from a Bank or the
Borrower referring to this Agreement, describing such event or condition and
expressly stating that such notice is a "notice of default." Should the Agent
receive such notice of the occurrence of a Default, the Agent shall promptly
give notice thereof to the
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<PAGE>
Banks. The Agent thereupon shall take such action with respect to such Default
as shall be reasonably directed by the Majority Banks or all of the Banks where
unanimity is required hereunder; provided that, unless and until the Agent shall
--------
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Banks.
Non-Reliance on Agent.
- ----------------------
Each Bank has itself been, and will continue to be, based on such documents and
information as it has deemed appropriate, solely responsible for making its own
independent appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of the Borrower or any
of its Subsidiaries. Accordingly, each Bank confirms to the Agent that it has
not relied, and will not hereafter rely, on the Agent (i) to check or inquire on
such Bank's behalf into the adequacy, accuracy or completeness of any
information provided by the Borrower or any other Person under or in connection
with this Agreement or the transactions herein contemplated (whether or not such
information has been or is hereafter distributed to such Bank by the Agent), or
(ii) to assess or keep under review on such Bank's behalf the financial
condition, creditworthiness, condition, affairs, status or nature of the
Borrower or any of its Subsidiaries.
Indemnification.
- ----------------
The Banks agree to indemnify the Agent, its Affiliates, and their respective
directors, officers, employees, agents, counsel and other advisors (to the
extent not reimbursed by the Borrower under Section 12.4(b)), ratably according
---------------
to the respective principal amounts of the Loans then outstanding from each of
them (or, if no Loans are at the time outstanding, ratably according to the
respective amounts of their Commitments), against and hold each of them harmless
from any and all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including the reasonable fees and disbursements of counsel to
the Agent (including allocated costs of internal counsel), which may be imposed
on, incurred by, or asserted against the Agent, its Affiliates, or any other
Person to be indemnified, in any way relating to or arising out of this
Agreement or any other Loan Document or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent, its Affiliates or any other
Person to be indemnified in connection with any of the foregoing; provided that
--------
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Agent, its Affiliates or any other Person to be indemnified. Without limitation
of the foregoing, each Bank agrees to reimburse the Agent and its Affiliates
promptly upon demand for such Bank's ratable share of any costs and expenses or
other charges incurred by the Agent or its Affiliates and payable by the
Borrower pursuant to Section 12.4(a) or any other Loan Document, to the extent
---------------
that the Agent or any Affiliate is not reimbursed for such expenses or charges
by the Borrower.
Delegation of Duties.
- ---------------------
The Agent may, in its discretion, employ from time to time one or more agents
(including any of the Agent's Affiliates) to perform any of the Agent's duties
under this Agreement and the other Loan Documents.
Successor Agent.
- ----------------
Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving written notice thereof to the
Banks and the Borrower and may be removed at any time with or without cause by
the Majority Banks. Upon any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent, and the Banks shall use their
best efforts so to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, the retiring
Agent may, on behalf of the Banks, appoint a successor Agent, which in each case
shall be a bank organized or licensed under the laws of the United States or of
any state thereof, or any Affiliate of such bank, and having a combined capital
and surplus of at least $100,000,000. Upon the effectiveness of the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article XI shall inure to its benefit
----------
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
-34-
<PAGE>
MISCELLANEOUS
Amendments and Waivers.
- -----------------------
With the written consent of the Majority Banks (i) the Agent and the Borrower
(or other party thereto) may from time to time enter into a written amendment to
any provision of this Agreement and the other Loan Documents and (ii) the Agent
on behalf of the Banks may from time to time execute and deliver to the Borrower
a written instrument waiving any provision of this Agreement or any other Loan
Document, or consenting to any departure by the Borrower or other party
therefrom. Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
--------
that, without the written consent of all the Banks, no amendment, waiver or
consent shall do any of the following:
increase the amount, or extend the stated expiration or termination date, of the
Commitments of the Banks or subject the Banks to any additional obligations;
reduce the principal of, or interest on, the Loans or any fee or other amount
payable to the Banks hereunder;
postpone any date fixed for any payment in respect of principal of, or interest
on, the Loans or any fee or other amount payable to the Banks hereunder;
change the definition of "Majority Banks" or any definition or provision of this
Agreement requiring the approval of Majority Banks or some other specified
amount of Banks;
release any collateral obtained at any time to secure the Loans, except as
contemplated in the collateral documents relating to the grant of Liens thereon
in favor of the Agent;
amend the provisions of Section 6.1, 6.5 or 12.7; or
------------------------
amend the provisions of this Section 12.1; and
------------
provided further that no amendment, waiver or consent shall, unless in writing
- -------- -------
and signed by the Agent in addition to the Banks required hereinabove to take
such action, affect the rights, obligations or duties of the Agent under this
Agreement or any other Loan Document.
Notices.
- --------
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including by telex or telecopier) and
mailed, sent or delivered to the respective parties hereto at or to their
respective addresses or telex or telecopier numbers set forth below their names
on the signature pages hereof, or at or to such other address or telex or
telecopier number as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be effective
(i) if delivered by hand, upon delivery; (ii) if sent by mail, upon the earlier
of the date of receipt or five Business Days after deposit in the mail, first
class, postage prepaid; (iii) if sent by telex, upon receipt by the sender of an
appropriate answerback; and (iv) if sent by telecopy, upon receipt; provided
--------
that notices and communications to the Agent shall not be effective until
received.
No Waiver; Cumulative Remedies.
- -------------------------------
No failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement and the other Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Agent or any Bank.
-35-
<PAGE>
Costs and Expenses; Indemnification; Other Charges.
- ---------------------------------------------------
Costs and Expenses. The Borrower agrees to pay on demand, whether or not the
- ------------------
transactions contemplated hereby shall be consummated:
the reasonable out-of-pocket costs and expenses of the Agent and any of its
Affiliates, and the reasonable fees and disbursements of counsel to the Agent
(including allocated costs of internal counsel), in connection with the
negotiation, preparation, execution, delivery and administration of the Loan
Documents, and any amendments, modifications or waivers of the terms thereof;
all reasonable audit, consulting, search, recording, filing and similar fees and
expenses incurred by the Agent or any of its Affiliates in connection with the
Loan Documents; and
all reasonable costs and expenses of the Agent, its Affiliates and the Banks,
and reasonable fees and disbursements of counsel (including allocated costs of
internal counsel), in connection with (A) any Default, (B) after a Default has
occurred, the enforcement or attempted enforcement of, and preservation of any
rights under, the Loan Documents and (C) any out-of-court workout or other
refinancing or restructuring or any bankruptcy case, including any reasonable
losses, costs and expenses sustained by the Agent and any Bank as a result of
any failure by the Borrower to perform or observe its obligations contained in
the Loan Documents.
Indemnification. Whether or not the transactions contemplated hereby shall be
- ---------------
consummated, the Borrower hereby agrees to indemnify and defend the Agent and
each Bank, any Affiliate thereof, and their respective directors, officers,
employees, agents, counsel and other advisors (each an "Indemnified Person"),
against and hold each of them harmless from any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person (including
allocated costs of internal counsel), which may be imposed on, incurred by, or
asserted against any Indemnified Person, in connection with any investigation,
litigation or other proceeding, irrespective of whether the Indemnified Person
shall be designated a party thereto, in any way relating to or arising out of
this Agreement or any other Loan Document, the use or intended use of the
proceeds of the Loans, or the transactions contemplated hereby or thereby (the
"Indemnified Liabilities"); provided that the Borrower shall not be liable for
--------
any portion of such Indemnified Liabilities resulting from an Indemnified
Person's gross negligence or willful misconduct. If and to the extent that the
foregoing indemnification is for any reason held unenforceable, the Borrower
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
Other Charges. The Borrower agrees to indemnify the Agent and the Banks against
- -------------
and hold each of them harmless from any and all present and future stamp,
transfer, documentary and other such taxes, levies, fees, assessments and other
charges made by any jurisdiction by reason of the execution, delivery,
performance and enforcement of the Loan Documents.
Right of Set-Off.
- -----------------
Upon the occurrence and during the continuance of any Event of Default, each
Bank hereby is authorized at any time and from time to time, without notice to
the Borrower (any such notice being expressly waived by the Borrower), to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Bank, irrespective of whether or not such
Bank shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Bank agrees promptly to notify the
Borrower (through the Agent) after any such set-off and application made by such
Bank, provided that the failure to give such notice shall not affect the
--------
validity of such set-off and application. The rights of each Bank under this
Section 12.5 are in addition to other rights and remedies (including other
- ------------
rights of set-off) which such Bank may have.
Survival.
- ---------
All covenants, agreements, representations and warranties made in any Loan
Documents and in any certificates, documents or other instruments delivered
pursuant thereto shall, except to the extent otherwise provided therein, survive
the execution and delivery of this Agreement, the making of the Loans and the
execution and delivery of the Notes, and shall continue in full force and effect
so long as the Banks have any Commitments, any Loans remain outstanding or any
obligation to make any payment hereunder or under any Notes remains outstanding
and unpaid or any obligation to perform any other act hereunder or under any
other Loan Document remains unsatisfied. Without
-36-
<PAGE>
limiting the generality of the foregoing, the obligations of the Borrower under
Sections 5.2, 5.3, 5.6, 6.3 and 12.4, and of the Banks under Sections 6.3 and
- ------------------------------------ ----------------
11.6, shall survive the repayment of the Loans and the termination of the
- ----
Commitments.
Obligations Several.
- --------------------
The obligations of the Banks hereunder and under the other Loan Documents are
several. The failure of any Bank or the Agent to carry out its obligations
hereunder or thereunder shall not relieve any other Bank or the Agent of any
obligation hereunder or thereunder, nor shall any Bank or the Agent be
responsible for the obligations of, or any action taken or omitted by, any other
Person hereunder or thereunder. The amounts payable at any time hereunder and
under the Notes to each Bank shall be separate and independent obligations and
each Bank shall be entitled to protect and enforce its rights arising out of
this Agreement and its Notes (including the right to initiate enforcement
proceedings in respect of its rights under this Agreement and its Notes), and it
shall not be necessary for any other Bank or the Agent to be joined as an
additional party in any proceedings for such purpose. Nothing contained in this
Agreement shall be deemed to cause any Bank or the Agent to be considered a
partner of or joint venturer with any other Bank or Banks, the Agent or the
Borrower.
Benefits of Agreement.
- ----------------------
This Agreement and the other Loan Documents are entered into for the sole
protection and benefit of the parties hereto and their successors and assigns,
and no other Person shall be a direct or indirect beneficiary of, or shall have
any direct or indirect cause of action or claim in connection with, this
Agreement or any other Loan Document.
Binding Effect; Assignment.
- ---------------------------
Binding Effect. This Agreement shall become effective when it shall have been
- --------------
executed by the Borrower and the Agent and when the Agent shall have been
notified by each Bank that such Bank has executed it and thereafter shall be
binding upon, inure to the benefit of and be enforceable by the Borrower, the
Agent and each Bank and their respective successors and assigns.
Assignment. The Borrower shall not have the right to assign its rights and
- ----------
obligations hereunder or under the other Loan Documents or any interest herein
or therein without the prior written consent of the Banks. Each Bank may sell,
assign, transfer or grant participations in all or any portion of such Bank's
rights and obligations hereunder and under the other Loan Documents to any Bank
or other bank or financial institution on the basis set forth below in this
subsection (b).
Except in the case of assignments to an Affiliate of any Bank or to another
Bank, any assignment shall be subject to the prior written consent of the
Borrower and the Agent, which consents shall not be unreasonably withheld. Each
assignment shall be in an amount of at least $5,000,000.
In the event of any such assignment, unless and until the conditions for the
Agent's treating such assignee as a Bank pursuant to clause (i) of Section
-------
11.2(a) shall have been satisfied and the Agent shall have received an
- -------
assignment processing fee of $3,000, such assignee shall not be entitled to
exercise the rights of a Bank under this Agreement and the other Loan Documents
with respect to such assignment and the Agent shall not be obligated to make
payment of any amount to which such assignee may become entitled thereunder
other than to the assigning Bank. Upon satisfaction of the foregoing conditions
in connection with any assignment, the assignee shall be deemed a "Bank" for all
purposes of this Agreement and the other Loan Documents with respect to the
rights and obligations assigned to it, and the obligations of the assigning Bank
so assigned shall thereupon terminate.
In connection with any partial assignment, upon the request of the assigning
Bank or the assignee, (A) the Borrower shall execute and deliver substitute
Notes to the assigning Bank or the assignee, dated the effective date of such
assignment, setting forth the respective Commitments of such assigning Bank and
assignee as the maximum principal amount thereof, and containing other
appropriate insertions, and the assigning Bank shall thereupon return the Note
previously held by it; and (B) this Agreement shall be deemed amended to reflect
the adjustment of the Commitments of the Banks resulting therefrom.
In the event of any grant of a participation, the granting Bank shall remain a
"Bank" for purposes of this Agreement, the Borrower, the other Banks and the
Agent shall continue to deal solely and directly with such Bank in connection
with this Agreement and the other Loan Documents and the participant shall not
have any of the rights of a Bank under this Agreement or the other Loan
Documents, except that the participant shall (A) be deemed to have a right of
setoff under Section 12.5 in respect of its participation to the same extent as
------------
if it were a
-37-
<PAGE>
"Bank" hereunder, provided that such participant shall also be considered a
--------
"Bank" for purposes of Section 6.5; and (B) such participant shall also be
-----------
entitled to the benefits of Sections 5.2, 5.3, 5.6, 6.3 and 12.4.
------------------------------------
The Borrower agrees that in connection with any such grant or assignment, such
Bank may deliver to the prospective participant or assignee financial statements
and other relevant information relating to the Borrower and its Subsidiaries.
Governing Law.
- --------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF CALIFORNIA, UNITED STATES.
SECTION 1.1 SUBMISSION TO JURISDICTION.
--------------------------
(a) SUBMISSION TO JURISDICTION. THE BORROWER HEREBY (I) SUBMITS TO
--------------------------
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND THE
FEDERAL COURTS OF THE UNITED STATES SITTING IN THE STATE OF CALIFORNIA FOR THE
PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS, (II) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURTS, (III) IRREVOCABLY WAIVES
(TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY OF THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM AND (IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.
(b) NO LIMITATION. NOTHING IN THIS SECTION 12.11 SHALL AFFECT THE
------------- -------------
RIGHT OF THE AGENT OR THE BANKS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR LIMIT THE RIGHT OF THE AGENT OR THE BANKS TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF OTHER
JURISDICTIONS.
Waiver of Jury Trial.
- ---------------------
THE BORROWER, THE BANKS AND THE AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWER, THE BANKS AND THE AGENT HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS. A COPY OF THIS SECTION 12.12 MAY BE FILED WITH ANY COURT
-------------
AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO
TRIAL BY COURT.
Entire Agreement.
- -----------------
This Agreement and the other Loan Documents reflect the entire agreement among
the Borrower, the Banks and the Agent with respect to the matters set forth
herein and therein and supersede any prior agreements, commitments, discussions
and understandings, oral or written, with respect thereto.
-38-
<PAGE>
Severability.
- -------------
If one or more provisions contained in this Agreement or the other Loan
Documents shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render illegal
or unenforceable any such provision in any other jurisdiction or with respect to
any other party, or any other provisions of this Agreement or the other Loan
Documents.
Counterparts.
- -------------
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
Confidentiality.
- ----------------
Each Bank shall hold all non-public information obtained pursuant to the
requirements of this Agreement in accordance with such Bank's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by the Borrower that in any event a Bank may make disclosures reasonably
required by any bona fide assignee, transferee or participant in connection with
the contemplated assignment or transfer by such Bank of any Loans or any
participation therein pursuant to the terms of this Agreement or as required or
requested by any Governmental Authority or representative thereof or pursuant to
legal process; provided that, each Bank shall endeavor to, where practical,
--------
notify the Borrower of any request by any Governmental Authority or
representative thereof (other than any Governmental Authority having regulatory
jurisdiction over such Bank or any representative of such a Governmental
Authority) for disclosure of any such non-public information prior to disclosure
of such information, but failure to give such notification shall not give rise
to any claim against such Bank.
[Signature pages follow.]
-39-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
the date first above written.
THE BORROWER
------------
NATIONWIDE HEALTH PROPERTIES, INC.
By ______________________________
Title: ______________________________
Address:
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660
Attn.: Mark L. Desmond
Telecopier No. (949) 759-6887
THE AGENT
---------
WELLS FARGO BANK, NATIONAL ASSOCIATION
By ______________________________
Title: _____________________________
Address:
2030 Main Street, Suite 900
Irvine, California 92614
Attn.: Richard R. LaPoint
Telecopier No. (949) 851-9264
-40-
<PAGE>
THE BANKS
---------
Commitment: Bank:
- ----------- -----
$48,000,000 WELLS FARGO BANK, NATIONAL ASSOCIATION
By __________________________________
Title: Vice President
Address:
2030 Main Street, Suite 900
Irvine, California 92614
Attn.: Richard R. LaPoint
Telecopier No. (949) 851-9264
$10,000,000 KBC BANK N.V.
By __________________________________
Title _______________________________
By __________________________________
Title _______________________________
Address:
515 South Figueroa Street, Suite 1920
Los Angeles, California 90071
Attn.: Barbara Read
Telecopier No. (213) 629-5801
$18,000,000 THE BANK OF NEW YORK
By __________________________________
Title _______________________________
Address:
10990 Wilshire Boulevard, Suite 1125
Los Angeles, California 90024
Attn.: Lisa Brown
Telecopier No. (310) 996-8667
-41-
<PAGE>
$24,000,000 BANK OF AMERICA, N.A., formerly known as
NationsBank, N.A.
By __________________________________
Title _______________________________
Address:
700 Louisiana Street, 8th Floor
Houston, Texas 77002
Attn.: F. Scott Singhoff
Telecopier No. (713) 247-6719
-42-
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINITIONS................................................ 2
SECTION 1.1 Certain Defined Terms.............................. 2
---------------------
SECTION 1.2 Accounting Terms; GAAP Changes..................... 10
------------------------------
(a) Accounting Terms................................... 10
----------------
(b) GAAP Changes....................................... 10
------------
SECTION 1.3 Interpretation..................................... 10
--------------
ARTICLE II. THE LOANS................................................. 10
SECTION 2.1 The Loans.......................................... 10
---------
SECTION 2.2 Borrowing Procedure................................ 10
-------------------
(a) Notice to the Agent................................ 10
-------------------
(b) Notice to the Banks................................ 11
-------------------
SECTION 2.3 Non-Receipt of Funds............................... 11
--------------------
SECTION 2.4 Lending Offices.................................... 11
---------------
SECTION 2.5 Evidence of Indebtedness........................... 12
------------------------
(a) Notes.............................................. 12
-----
(b) Recordkeeping...................................... 12
-------------
ARTICLE III. INTEREST AND FEES; CONVERSION OR CONTINUATION............ 12
SECTION 3.1 Interest........................................... 12
--------
(a) Interest Rate...................................... 12
-------------
(b) Interest Periods................................... 12
----------------
(c) Interest Payment Dates............................. 12
----------------------
(d) Notice to the Borrower and the Banks............... 12
------------------------------------
SECTION 3.2 Interest on Overdue Payments....................... 13
----------------------------
SECTION 3.3 Fees............................................... 13
----
(a) Facility Fee....................................... 13
------------
(b) Agency and Arrangement Fees........................ 13
---------------------------
SECTION 3.4 Computations....................................... 13
------------
SECTION 3.5 Conversion or Continuation......................... 14
--------------------------
(a) Election........................................... 14
--------
(b) Automatic Conversion............................... 14
--------------------
(c) Notice to the Agent................................ 14
-------------------
(d) Notice to the Banks................................ 14
-------------------
SECTION 3.6 Highest Lawful Rate................................ 14
-------------------
ARTICLE IV. REDUCTION OF COMMITMENTS; REPAYMENT; PREPAYMENT........... 15
SECTION 4.1 Reduction or Termination of the Commitments........ 15
-------------------------------------------
(a) Optional Reduction or Termination.................. 15
---------------------------------
(b) Mandatory Termination.............................. 15
---------------------
(c) Notice............................................. 15
------
(d) Adjustment of Facility Fee; No Reinstatement....... 15
--------------------------------------------
SECTION 4.2 Repayment of the Loans............................. 15
----------------------
SECTION 4.3 Prepayments........................................ 15
-----------
(a) Optional Prepayments............................... 15
--------------------
(b) Mandatory Prepayments.............................. 15
---------------------
(c) Notice; Application................................ 16
-------------------
ARTICLE V. YIELD PROTECTION AND ILLEGALITY............................ 16
SECTION 5.1 Inability to Determine Rates....................... 16
----------------------------
SECTION 5.2 Funding Losses..................................... 16
--------------
SECTION 5.3 Increased Costs.................................... 16
---------------
SECTION 5.4 Illegality......................................... 17
----------
-43-
<PAGE>
SECTION 5.5 Funding Assumptions................................ 17
-------------------
SECTION 5.6 Capital Requirements............................... 17
--------------------
SECTION 5.7 Obligation to Mitigate............................. 17
----------------------
ARTICLE VI. PAYMENTS.................................................. 18
SECTION 6.1 Pro Rata Treatment................................. 18
------------------
SECTION 6.2 Payments........................................... 18
--------
(a) Payments........................................... 18
--------
(b) Authorization to Agent............................. 18
----------------------
(c) Authorization to Banks............................. 18
----------------------
(d) Application........................................ 18
-----------
(e) Extension.......................................... 18
---------
SECTION 6.3 Taxes.............................................. 18
-----
(a) No Reduction of Payments........................... 18
------------------------
(b) Deduction or Withholding; Tax Receipts............. 19
--------------------------------------
(c) Indemnity.......................................... 19
---------
(d) Forms 1001 and 4224................................ 19
-------------------
(e) Mitigation......................................... 19
----------
SECTION 6.4 Non-Receipt of Funds............................... 19
--------------------
SECTION 6.5 Sharing of Payments................................ 19
-------------------
ARTICLE VII. CONDITIONS PRECEDENT..................................... 20
SECTION 7.1 Conditions Precedent to the Initial Loans.......... 20
-----------------------------------------
(a) Fees and Expenses.................................. 20
-----------------
(b) Loan Documents..................................... 20
--------------
(c) Additional Closing Documents....................... 20
----------------------------
(d) Market Disruption.................................. 20
-----------------
(e) Compliance with ADA................................ 20
-------------------
SECTION 7.2 Conditions Precedent to All Loans.................. 20
---------------------------------
(a) Notice............................................. 20
------
(b) Representations and Warranties; No Default......... 20
------------------------------------------
(c) Additional Documents............................... 21
--------------------
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES.......................... 21
SECTION 8.1 Representations and Warranties..................... 21
------------------------------
(a) Organization and Powers............................ 21
-----------------------
(b) Authorization; No Conflict......................... 21
--------------------------
(c) Binding Obligation................................. 21
------------------
(d) Governmental Consents.............................. 21
---------------------
(e) No Defaults........................................ 21
-----------
(f) Title to Properties; Liens......................... 21
--------------------------
(g) Litigation......................................... 21
----------
(h) Compliance with Environmental Laws................. 21
----------------------------------
(i) Governmental Regulation............................ 22
-----------------------
(j) ERISA.............................................. 22
-----
(k) Subsidiaries....................................... 22
------------
(l) Margin Regulations................................. 22
------------------
(m) Taxes.............................................. 22
-----
(n) Patents and Other Rights........................... 22
------------------------
(o) Insurance.......................................... 22
---------
(p) Financial Statements............................... 22
--------------------
(q) Liabilities........................................ 22
-----------
(r) Labor Disputes, Etc................................ 23
-------------------
(s) Leases............................................. 23
------
-44-
<PAGE>
(t) Disclosure......................................... 23
----------
(u) Compliance with Securities Laws.................... 23
-------------------------------
ARTICLE IX. COVENANTS................................................. 23
SECTION 9.1 Reporting Covenants................................ 23
-------------------
(a) Financial Statements and Other Reports............. 23
--------------------------------------
(b) Additional Information............................. 24
----------------------
SECTION 9.2 Financial Covenants................................ 25
-------------------
(a) Leverage Ratio..................................... 25
--------------
(b) Minimum Consolidated Tangible Net Worth............ 25
---------------------------------------
(c) Debt Service Coverage Ratio........................ 25
---------------------------
SECTION 9.3 Additional Affirmative Covenants................... 25
--------------------------------
(a) Preservation of Existence, Etc..................... 25
------------------------------
(b) Payment of Taxes, Etc.............................. 25
---------------------
(c) Maintenance of Insurance........................... 25
------------------------
(d) Keeping of Records and Books of Account............ 26
---------------------------------------
(e) Inspection Rights.................................. 26
-----------------
(f) Compliance with Laws, Etc.......................... 26
-------------------------
(g) Maintenance of Properties, Etc..................... 26
------------------------------
(h) Licenses........................................... 26
--------
(i) Action Under Environmental Laws.................... 26
-------------------------------
(j) Use of Proceeds.................................... 26
---------------
(k) Further Assurances and Additional Acts............. 26
--------------------------------------
(l) Year 2000 Complaint................................ 26
-------------------
SECTION 9.4 Negative Covenants................................. 27
------------------
(a) Additional Indebtedness............................ 28
-----------------------
(b) Liens.............................................. 28
-----
(c) Change in Nature of Business....................... 29
----------------------------
(d) Restrictions on Fundamental Changes................ 29
-----------------------------------
(e) Sales of Assets.................................... 29
---------------
(f) Loans and Investments.............................. 29
---------------------
(g) Capital Expenditures............................... 29
--------------------
(h) Operating Leases................................... 29
----------------
(i) Sales and Leasebacks............................... 30
--------------------
(j) Distributions...................................... 30
-------------
(k) Amendments of Certain Documents.................... 30
-------------------------------
(l) Redemption of Subordinated Debt.................... 30
-------------------------------
(m) Transactions with Related Parties.................. 30
---------------------------------
(n) Hazardous Substances............................... 30
--------------------
(o) Lease of Premises.................................. 30
-----------------
ARTICLE X. EVENTS OF DEFAULT.......................................... 31
SECTION 10.1 Events of Default.................................. 31
-----------------
(a) Payments........................................... 31
--------
(b) Representations and Warranties..................... 31
------------------------------
(c) Failure by Borrower to Perform Certain Covenants... 31
------------------------------------------------
(d) Failure by Borrower to Perform Other Covenants..... 31
----------------------------------------------
(e) Bankruptcy......................................... 31
----------
(f) Default Under Other Indebtedness................... 31
--------------------------------
(g) Certain Judgments and Orders....................... 32
----------------------------
(h) ERISA.............................................. 32
-----
(i) Material Adverse Change............................ 32
-----------------------
(j) Invalidity of Subordination Provisions............. 32
--------------------------------------
-45-
<PAGE>
(k) Franchises and Licenses............................ 32
-----------------------
(l) Capital Markets.................................... 32
---------------
(m) Change of Control.................................. 32
-----------------
(n) Change of Senior Management........................ 32
---------------------------
SECTION 10.2 Effect of Event of Default......................... 32
--------------------------
ARTICLE XI. THE AGENT................................................. 32
SECTION 11.1 Authorization and Action........................... 32
------------------------
SECTION 11.2 Limitation on Liability; Notices................... 33
--------------------------------
(a) Limitation on Liability of Agent................... 33
--------------------------------
(b) Notices............................................ 33
-------
SECTION 11.3 Agent and Affiliates............................... 33
--------------------
SECTION 11.4 Notice of Defaults................................. 33
------------------
SECTION 11.5 Non-Reliance on Agent.............................. 34
---------------------
SECTION 11.6 Indemnification.................................... 34
---------------
SECTION 11.7 Delegation of Duties............................... 34
--------------------
SECTION 11.8 Successor Agent.................................... 34
---------------
ARTICLE XII. MISCELLANEOUS............................................ 35
SECTION 12.1 Amendments and Waivers............................. 35
----------------------
SECTION 12.2 Notices............................................ 35
-------
SECTION 12.3 No Waiver; Cumulative Remedies..................... 35
------------------------------
SECTION 12.4 Costs and Expenses; Indemnification; Other Charges. 36
(a) Costs and Expenses................................. 36
------------------
(b) Indemnification.................................... 36
---------------
(c) Other Charges...................................... 36
-------------
SECTION 12.5 Right of Set-Off................................... 36
----------------
SECTION 12.6 Survival........................................... 36
--------
SECTION 12.7 Obligations Several................................ 37
-------------------
SECTION 12.8 Benefits of Agreement.............................. 37
---------------------
SECTION 12.9 Binding Effect; Assignment......................... 37
--------------------------
(a) Binding Effect..................................... 37
--------------
(b) Assignment......................................... 37
----------
SECTION 12.10 Governing Law...................................... 38
-------------
SECTION 12.11 SUBMISSION TO JURISDICTION......................... 38
--------------------------
(a) SUBMISSION TO JURISDICTION......................... 38
--------------------------
(b) NO LIMITATION...................................... 38
-------------
SECTION 12.12 Waiver of Jury Trial............................... 38
--------------------
SECTION 12.13 Entire Agreement................................... 38
----------------
SECTION 12.14 Severability....................................... 39
------------
SECTION 12.15 Counterparts....................................... 39
------------
SECTION 12.16 Confidentiality.................................... 39
---------------
SCHEDULES
Schedule P-1 - Existing Liens
Schedule 8.1(k) - Subsidiaries
Schedule 8.1(s) - Leases
Schedule 9.4(a) - Existing Indebtedness
EXHIBITS
Exhibit A-1 - Form of Assignment and Assumption Agreement
Exhibit C-1 - Form of Compliance Certificate
Exhibit E-1 - Form of Notice of Borrowing
Exhibit E-2 - Form of Notice of Conversion or Continuation
Exhibit N-1 - Form of Note
-46-
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