SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 15, 1997
----------------------------
INTEGRATED HEALTH SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-12306 23-2428312
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10065 Red Run Boulevard, Owings Mills, Maryland 21117
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 998-8400
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On September 15, 1997, IHS entered into a $1.75 billion revolving credit
and term loan facility with Citibank, N.A., as Administrative Agent, and certain
other lenders (the "New Credit Facility") to replace its existing $700 million
revolving credit facility. The New Credit Facility consists of a $750 million
term loan facility (the "Term Facility") and a $1 billion revolving credit
facility, including a $100 million letter of credit subfacility and a $10
million swing line subfacility (the "Revolving Facility"). The Term Facility,
all of which was borrowed on September 17, 1997, matures on December 31, 2004
and will be amortized beginning December 31, 1998 as follows: 1998 -- $7.5
million; each of 1999, 2000, 2001 and 2002 -- $7.5 million (payable in equal
quarterly installments); 2003 -- $337.5 million (payable in equal quarterly
installments); and 2004 -- $375 million (payable in equal quarterly
installments). Any unpaid balance will be due on the maturity date. The Term
Facility will bear interest at a rate equal to, at the option of IHS, either (i)
in the case of Eurodollar loans, the sum of (x) one and three-quarters percent
or two percent (depending on the ratio of IHS' Debt (as defined in the New
Credit Facility) to earnings before interest, taxes, depreciation, amortization
and rent, pro forma for any acquisitions or divestitures during the measurement
period (the "Debt/EBITDAR Ratio")) and (y) the interest rate in the London
interbank market for loans in an amount substantially equal to the amount of
borrowing and for the period of borrowing selected by IHS or (ii) the sum of (a)
the higher of (1) Citibank, N.A.'s base rate or (2) one percent plus the latest
overnight federal funds rate plus (b) a margin of one-half percent or
three-quarters of one percent (depending on the Debt/EBITDAR Ratio). The Term
Facility can be prepaid at any time in whole or in part without penalty.
The Revolving Facility will reduce to $800 million on September 30, 2001
and $500 million on September 30, 2002, with a final maturity on September 15,
2004; however, the $100 million letter of credit subfacility and $10 million
swing line subfacility will remain at $100 million and $10 million,
respectively, until final maturity. The Revolving Facility will bear interest at
a rate equal to, at the option of IHS, either (i) in the case of Eurodollar
loans, the sum of (x) between three-quarters of one percent and one and
three-quarters percent (depending on the Debt/EBITDAR Ratio) and (y) the
interest rate in the London interbank market for loans in an amount
substantially equal to the amount of borrowing and for the period of borrowing
selected by IHS or (ii) the sum of (a) the higher of (1) Citibank, N.A.'s base
rate or (2) one percent plus the latest overnight federal funds rate plus (b) a
margin of between zero percent and one-half percent (depending on the
Debt/EBITDAR Ratio). Amounts repaid under the Revolving Facility may be
reborrowed prior to the maturity date.
The New Credit Facility limits IHS' ability to incur indebtedness or
contingent obligations, to make additional acquisitions, to sell or dispose of
assets, to create or incur liens on assets, to pay dividends, to purchase or
redeem IHS' stock and to merge or consolidate with any other person. In
addition, the New Credit Facility requires that IHS meet certain financial
ratios, and provides the banks with the right to require the
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payment of all amounts outstanding under the facility, and to terminate all
commitments under the facility, if there is a change in control of IHS or if any
person other than Dr. Robert N. Elkins, IHS' Chairman and Chief Executive
Officer, or a group managed by Dr. Elkins, owns more than 40% of IHS' stock. The
New Credit Facility is guaranteed by all of IHS' subsidiaries (other than
inactive subsidiaries) and secured by a pledge of all of the stock of
substantially all of IHS' subsidiaries.
The New Credit Facility replaced IHS' $700 million credit facility (the
"Prior Credit Facility"). As a result, IHS anticipates that it will record an
extraordinary loss on extinguishment of debt of approximately $2.4 million (net
of related tax benefit of approximately $1.6 million) in the third quarter of
1997 resulting from the write-off of deferred financing costs of $4.0 million
related to the Prior Credit Facility.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
10 $1,750,000,000 Revolving Credit and Term Loan Agreement, dated as of
September 15, 1997, among Integrated Health Services, Inc., the
lenders named therein, Citibank, N.A., as administrative agent, The
Toronto- Dominion Bank, as documentation agent, and Citicorp
Securities, Inc., as arranger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED HEALTH SERVICES, INC.
Date: September 19, 1997 By: /s/ W. Bradley Bennett
----------------------
Name: W. Bradley Bennett
Title: Executive Vice President-Chief
Accounting Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10 $1,750,000,000 Revolving Credit and Term Loan Agreement, dated as of
September 15, 1997, among Integrated Health Services, Inc., the
lenders named therein, Citibank, N.A., as administrative agent, The
Toronto- Dominion Bank, as documentation agent, and Citicorp
Securities, Inc., as arranger.
EXECUTION COPY
$1,750,000,000
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of September 15, 1997
Among
INTEGRATED HEALTH SERVICES, INC.,
as Borrower,
The Lenders from time to time party hereto,
CITIBANK, N.A.,
as Administrative Agent,
THE TORONTO-DOMINION BANK
as Documentation Agent,
and
CITICORP SECURITIES, INC.,
as Arranger
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms........................................ 1
SECTION 1.02. Accounting Terms............................................. 30
SECTION 1.03. Other Definitional Provisions................................ 31
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Revolving Facility, Term Loan and Swing Line.................. 31
(a)(i) Revolving Borrowings........................................ 31
(ii) Term Loan................................................... 32
(iii) Swing Line.................................................. 32
(b) Amount of Revolving Borrowings............................... 32
(c) Notice of Revolving Borrowing................................ 33
(d) Telephonic Notice of Revolving Borrowing..................... 33
(e) Funding of Advances.......................................... 33
(f) Assumption of Funding........................................ 33
(g) Failure of Lender to Fund.................................... 34
(h) Swing Line Advances.......................................... 34
(i) ........................................................... 35
SECTION 2.02. Letter of Credit Subfacility.................................. 35
(a) Issuance of the Letters of Credit............................. 35
(b) LC Application............................................... 35
(c) Reimbursement................................................ 36
(d) Reimbursement Obligation Absolute............................ 36
(e) Revolving Lender Participation............................... 37
(f) Commercial Practices......................................... 37
(g) Replacement of LC Bank....................................... 38
SECTION 2.03. Evidence of Debt.............................................. 38
SECTION 2.04. Fees.......................................................... 39
(a) Closing Fees................................................. 39
(b) Commitment Fees.............................................. 39
(c) Letter of Credit Fees........................................ 39
(d) Facing Fees.................................................. 39
(e) Letter of Credit Administration.............................. 40
(f) Fees......................................................... 40
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ii
SECTION 2.05. Voluntary and Scheduled Facility Reductions................... 40
SECTION 2.06. Principal Payments and Swing Line Payments.................... 40
(a) Final Maturity............................................... 40
(b) Excess Revolving Credit Exposure............................. 41
(c) Excess LC Exposure........................................... 41
(d) Payment on Date of Change of Control......................... 41
(e) Revolving Facility Reduction for Receivables Sale Program.... 41
(f) Application of LC Cash Collateral............................ 41
(g) Swing Line Payments.......................................... 42
SECTION 2.07. Interest...................................................... 42
(a) Base Rate Advances........................................... 42
(b) Eurodollar Rate Advances..................................... 43
(c) Default Interest............................................. 43
SECTION 2.08. Additional Interest on Eurodollar Rate Advances............... 43
SECTION 2.09. Interest Rate Determination and Protection.................... 44
(a) Determination of Eurodollar Rate............................. 44
(b) Notice of Eurodollar Rate.................................... 44
(c) Failure to Provide Information............................... 44
(d) Suspension of Eurodollar Rate Advances....................... 44
(e) Failure to Specify Duration.................................. 45
(f) Agent's Determination Conclusive............................. 45
SECTION 2.10. Voluntary Conversion of Advances.............................. 45
(a) Notice of Continuance/Conversion............................. 45
(b) Telephonic Notice............................................ 45
(c) Requirements................................................. 45
(d) Base Rate Advances........................................... 46
SECTION 2.11. Prepayments................................................... 46
SECTION 2.12. Funding Losses................................................ 46
SECTION 2.13. Increased Costs............................................... 47
(a) Increase in Cost............................................. 47
(b) Increase in Capital Requirements............................. 47
(c) Replacement Lenders and Participants......................... 47
SECTION 2.14. Illegality.................................................... 48
SECTION 2.15. Payments and Computations..................................... 49
(a) Payments..................................................... 49
(b) Charging of Accounts......................................... 49
(c) Computations................................................. 49
(d) Payment on Business Day...................................... 49
(e) Presumption of Payment....................................... 49
SECTION 2.16. Taxes......................................................... 50
(a) Net Payments................................................. 50
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iii
(b) Payment of Other Taxes....................................... 50
(c) Indemnification.............................................. 50
(d) Evidence of Payments......................................... 51
(e) Withholding Tax Exemption.................................... 51
(f) Withholding Taxes............................................ 52
(g) Subsequent Lenders........................................... 52
(h) Refund, Deduction or Credit of Taxes......................... 52
(i) Exclusion of Certain Taxes................................... 52
(j) Additional Cooperation....................................... 53
SECTION 2.17. Sharing of Payments........................................... 53
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent on the Closing Date...................... 53
(a) Loan Documents............................................... 54
(b) Corporate Documents.......................................... 54
(c) Governmental Consents........................................ 55
(d) No Injunction................................................ 55
(e) Other Deliveries............................................. 55
(f) Legal Opinions............................................... 56
(g) Payout and Release Agreement................................. 56
(h) Payment of Existing Facility................................. 56
(i) Payment of Fees.............................................. 57
SECTION 3.02. Conditions Precedent to Each Extension of Credit.............. 57
(a) Notice....................................................... 57
(b) Certification................................................ 57
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower................ 58
(a) Organization................................................. 58
(b) Power and Authority.......................................... 58
(c) Due Authorization............................................ 58
(d) Subsidiaries and Ownership of Capital Stock.................. 58
(e) Health Care Facilities....................................... 59
(f) Governmental Approval........................................ 59
(g) Binding and Enforceable...................................... 59
(h) Financial Information........................................ 59
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iv
(i) Material Adverse Change...................................... 60
(j) Compliance................................................... 60
(k) Litigation................................................... 60
(l) No Conflict.................................................. 60
(m) No Default................................................... 60
(n) Payment of Taxes............................................. 60
(o) Margin Regulations........................................... 60
(p) Conduct of Business.......................................... 61
(q) Health Care Permits.......................................... 61
(r) Environmental Matters........................................ 62
(s) ERISA Compliance............................................. 62
(t) Title to Assets.............................................. 63
(u) Collateral Documents......................................... 63
(v) Senior Indebtedness.......................................... 63
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Financial Covenants........................................... 64
(a) Maximum Debt/EBITDAR Ratio................................... 64
(b) Minimum Fixed Charge Coverage Ratio.......................... 64
(c) Minimum Net Worth............................................ 66
SECTION 5.02. Affirmative Covenants......................................... 66
(a) Compliance with Laws......................................... 66
(b) Inspection of Property and Books and Records................. 66
(c) Reporting Requirements....................................... 66
(d) Preservation of Corporate Existence, Etc..................... 69
(e) New Subsidiaries............................................. 70
(f) Maintenance of Property...................................... 70
(g) Insurance.................................................... 70
(h) Payment of Obligations....................................... 71
(i) Environmental Laws........................................... 72
(j) Use of Proceeds.............................................. 72
(k) Health Care Permits and Approvals............................ 72
(l) Further Assurances........................................... 72
(m) Delivery of Promissory Note.................................. 73
SECTION 5.03. Negative Covenants............................................ 73
(a) Liens........................................................ 74
(b) Disposition of Assets........................................ 76
(c) Investments.................................................. 77
(d) Limitation on Indebtedness................................... 80
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v
(e) Transactions with Affiliates................................. 83
(f) Accommodation Obligations.................................... 83
(g) Leases of Health Care Facilities............................. 84
(h) Restricted Junior Payments................................... 84
(i) Mergers, Etc................................................. 86
(j) Conduct of Business.......................................... 87
(k) Unpledged Assets............................................. 87
(l) Compliance with ERISA........................................ 87
(m) Health Care Permits and Approvals............................ 88
(n) Retained Interest Criteria................................... 88
(o) Payment Restrictions Affecting Subsidiaries.................. 88
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default............................................. 88
(a) Non-Payment of Principal..................................... 88
(b) Non-Payment of Interest or Fees.............................. 88
(c) Representations and Warranties............................... 89
(d) Financial, Lien and Debt Covenants........................... 89
(e) Reporting Covenants.......................................... 89
(f) Negative Covenants........................................... 89
(g) Covenants.................................................... 89
(h) Debt......................................................... 89
(i) Leases....................................................... 90
(j) Bankruptcy................................................... 90
(k) Judgments.................................................... 90
(l) Guaranty..................................................... 91
(m) Collateral Documents......................................... 91
(n) ERISA........................................................ 91
SECTION 6.02. Rights Not Exclusive........................................... 92
ARTICLE VII
THE AGENT AND THE ARRANGER
SECTION 7.01. Authorization and Action...................................... 92
SECTION 7.02. Agent Not Liable.............................................. 93
SECTION 7.03. Rights as Lender.............................................. 93
SECTION 7.04. Lender Credit Decision........................................ 94
SECTION 7.05. Indemnification............................................... 94
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vi
SECTION 7.06. Successor Agent............................................... 94
SECTION 7.07. Release of Collateral......................................... 95
SECTION 7.08. Release of Guarantor upon Sale of Stock....................... 95
SECTION 7.09. The Arranger, etc............................................. 95
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments.................................................... 96
SECTION 8.02. Notices....................................................... 97
SECTION 8.03. No Waiver; Remedies........................................... 97
SECTION 8.04. Costs and Expenses............................................ 97
SECTION 8.05. Right of Set-off.............................................. 98
SECTION 8.06. Indemnity..................................................... 98
(a) General Indemnity............................................ 98
(b) Environmental Indemnity...................................... 98
SECTION 8.07. Assignments and Participations................................ 99
(a) Permitted Assignment......................................... 99
(b) Effect of Assignment......................................... 99
(c) Maintenance of Agreements.................................... 100
(d) Procedure.................................................... 100
(e) Participations............................................... 101
(f) Additional Information....................................... 101
(g) Permitted Assignments........................................ 101
SECTION 8.08. Binding Effect................................................ 101
SECTION 8.09. Governing Law; Consent to Jurisdiction; Venue................. 102
SECTION 8.10. Waiver of Jury Trial.......................................... 102
SECTION 8.11. Limitation of Liability....................................... 102
SECTION 8.12. Entire Agreement.............................................. 103
SECTION 8.13. Survival...................................................... 103
SECTION 8.14. Execution in Counterparts..................................... 103
SECTION 8.15. Acknowledgements ..................................... 103
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vii
EXHIBITS
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Note
Forms of Loan Administration Documents
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Continuance/Conversion
Exhibit B-3 Form of LC Application
Exhibit B-4 Form of Pricing Certificate
Exhibit B-5 Form of Notice of Swing Line Advance
Forms of Certain Loan Documents
Exhibit C-1 Form of Subsidiary Guaranty
Exhibit C-2 Form of IHS Pledge and Security Agreement
Exhibit C-3 Form of Subsidiary Pledge and Security Agreement
Exhibit C-4 Form of Confirmation and Agreement of Guarantors
Forms of Opinion of Counsel
Exhibit D-1 Form of Opinion of Counsel for the Borrower and the Guarantors
Exhibit D-2 Form of Opinion of Special Local Counsel for a Guarantor
Other Forms
Exhibit E-1 Form of Compliance Certificate
Exhibit E-2 Form of Assignment and Acceptance
Exhibit E-3 Form of Payment and Release Agreement
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SCHEDULES
Schedule I List of Lenders, Commitments, Revolving Pro Rata Shares,
Term Pro Rata Shares and Closing Fees
Schedule 1.01(a) List of Senior Debt Excluded from Current Portion of
Long-Term Debt
Schedule 1.01(b) List of "Schedule 1.01(b) Assets" Designated for Sale
Schedule 4.01(d) List of Subsidiaries
Schedule 4.01(e) List of Health Care Facilities
Schedule 4.01(f) List of Government Approvals
Schedule 4.01(r) List of Environmental Matters
Schedule 4.01(s) List of ERISA Matters
Schedule 5.03(c) List of Loans and Investments
Schedule 5.03(c)(xiii) List of Permitted Acquisitions
Schedule 5.03(d) List of Liens and Debt
Schedule 5.03(f) List of Accommodation Obligations
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REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of
September 15, 1997, among INTEGRATED HEALTH SERVICES, INC., ("IHS"), a Delaware
corporation, the financial institutions signatory hereto as Revolving Lenders,
the financial institutions signatory hereto as Term Lenders, CITIBANK, N.A., a
national banking association, as Administrative Agent for all such Lenders, and
CITICORP SECURITIES, INC., as Arranger.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement:
"ACCOMMODATION OBLIGATION" means, as applied to any Person,
any direct or indirect guaranty, endorsement or other liability of that Person
with respect to any Debt, lease, dividend, letter of credit or other obligation
(the "PRIMARY OBLIGATION") of another Person (the "PRIMARY OBLIGOR"), including
any obligation of that Person, whether or not contingent, (i) to purchase,
repurchase or otherwise acquire any such primary obligation or any property
constituting direct or indirect security therefor, or (ii) to advance or provide
funds (A) for the payment or discharge of any such primary obligation, or (B) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet item, level of income
or financial condition of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof. The amount of
any Accommodation Obligation shall be deemed to be an amount equal to the
maximum stated or determinable amount of the primary obligation in respect of
which such Accommodation Obligation is made or, if not stated or if
indeterminable, the maximum reasonably estimated potential liability in respect
thereof.
"ADVANCE" means a revolving loan or term loan, as the case may
be, by a Revolving Lender or a Term Lender, respectively, or a Swing Line
Advance in each case pursuant to Article II.
"ADJUSTED STOCKHOLDERS' EQUITY" means the sum of (i)
stockholders' equity (common and preferred) of the Borrower and its
Subsidiaries, determined as of a particular time on a consolidated basis in
accordance with GAAP and (ii) the principal amount of Convertible Subordinated
Debt then outstanding.
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2
"AFFILIATE" of a specified Person means any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person specified. For this
purpose, "control," "controlled by" and "under common control with" with respect
to any Person 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" means Citibank, in its capacity as administrative
agent for the Lenders hereunder, and any successor appointed pursuant to Section
7.06.
"AGREEMENT" means this Revolving Credit and Term Loan
Agreement, as hereafter amended, modified or supplemented.
"APPLICABLE LENDING OFFICE" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance
and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"ASSET SALE" means the sale, transfer or other disposition of
any asset, business or property of the Borrower or any of its Subsidiaries, or
the issuance or sale of any capital stock of or other equity, ownership or
profit interest in any Subsidiary of the Borrower (except a dividend on any such
stock or interest declared and payable solely in additional shares of such stock
or interest), to any Person other than the Borrower or a wholly-owned Subsidiary
of the Borrower, for a total consideration in an amount greater than $10,000,000
in a single transaction or series of related transactions. A disposition of
accounts receivable (i) shall not be an Asset Sale if made pursuant to a
Receivables Sale Program permitted under this Agreement and (ii) shall be an
Asset Sale only if disposed of as part of a disposition of all or substantially
all of the operating assets of the business from which such accounts receivable
arose.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, in substantially the form of
Exhibit E-2, and accepted by the Agent, or such other form of assignment and
acceptance agreement acceptable from time to time to the Agent.
"AUTHORIZED OFFICER" means the principal financial officer,
the chief accounting officer, the controller, the treasurer or the executive or
senior vice president-finance of the Borrower.
"BASE RATE" means, for any day, a fluctuating interest rate
per annum equal to the higher of (i) the then effective rate of interest
announced publicly by Citibank in New York, New York, from time to time, as
Citibank's base rate, or (ii) the then Federal Funds Rate plus one percent per
annum.
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3
"BASE RATE ADVANCE" means an Advance which bears interest by
reference to the Base Rate as provided in Section 2.07(a).
"BORROWER" means Integrated Health Services, Inc., a Delaware
corporation.
"BORROWING DATE" means the Closing Date or any subsequent
Business Day on which a Revolving Borrowing or the Term Borrowing is requested
from the Lenders.
"BREAKAGE COSTS" is defined in Section 2.12.
"BUSINESS DAY" means any day except a Saturday or Sunday or a
day when commercial banks are authorized or required by law to be closed in New
York, New York or Baltimore, Maryland and, where used in reference to any
Eurodollar Rate Advance, means such a day on which dealings are carried on in
the London interbank market.
"CAPITAL EXPENDITURES" means expenditures for Hard Costs,
whether paid in cash or accrued as liabilities, made by the Borrower or any
Subsidiary of the Borrower.
"CAPITAL LEASE" means, with respect to any Person, any lease
of any property by that Person as lessee which, in accordance with GAAP, is
required to be accounted for as a capital lease on the balance sheet of that
Person.
"CASH FLOW FROM OPERATIONS" means, with respect to any Person,
the sum, determined as of the last day of any Quarter for such Person and its
subsidiaries on a consolidated basis for the 12-month period including such
Quarter and the immediately preceding three Quarters (taken as a single period),
of (i) net income after taxes minus any extraordinary gain and any non-recurring
gain on any divestiture plus any extraordinary loss and any non-recurring loss
on any divestiture, (ii) depreciation, amortization, and other noncash charges
deducted in determining net income, (iii) Interest Expense, (iv) Lease Expense
and (v) with respect to Cash Flow from Operations of the Borrower and its
Subsidiaries only, Receivables Program Charges, all determined in accordance
with GAAP; provided, however, that (A) income attributable to any other Person
or business that is not at least 50% owned, directly or indirectly, by such
Person shall be counted, in determining net income, only to the extent such
income is received in cash by such Person or a subsidiary of such Person in such
period and is not reinvested in such other Person or business (other than as a
loan payable on demand) within six months thereafter, except that, with respect
to the Borrower only, income from minority Investments existing on the Closing
Date and described in Schedule 5.03(c) of this Agreement shall be counted in
accordance with the Borrower's past practice, (B) no adjustments shall be made
to reflect minority interests in subsidiaries, (C) non-recurring cash charges in
an aggregate amount not in excess of $30,000,000 in connection with the
terminated acquisition of Coram Healthcare Corporation shall be included as an
addback to net income for purposes of this definition, and
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4
(D) non-recurring cash charges in an aggregate amount not in excess of
$40,000,000 in connection with the acquisition of RoTech and CCA shall be
included as an addback to net income for purposes of this definition to the
extent such charges are included in the December 31, 1997 financial statements
of the Borrower.
"CASH PROCEEDS OF SALE" means all cash and cash equivalents
received by the Borrower or any of its Subsidiaries as the cash consideration in
any Asset Sale or from any payment or distribution on, or sale or liquidation
of, any promissory note or other property received as non-cash consideration in
any Asset Sale.
"CCA" means Community Care of America, Inc.
"CHANGE OF CONTROL" means (i) a "change in control" as that
term is defined in any of the Subordinated Debt Indentures, (ii) a transaction
or series of transactions whereby any Person or group within the meaning of
Section 13(d)(3) of the 1934 Act and the rules and regulations promulgated
thereunder (other than Robert N. Elkins, M.D. or a group managed by Robert N.
Elkins, M.D.) acquires beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act), directly or indirectly, of securities of the Borrower (or other
securities convertible into such securities) representing 40% of the combined
voting power of all securities of the Borrower entitled to vote in the election
of directors (a "CONTROLLING PERSON") or (iii) at any time, a majority of the
Borrower's directors are persons who were not (A) in office on the Closing Date,
(B) initially nominated by directors who were in office on the Closing Date or
by successor directors elected or appointed upon the initial nomination of such
directors or successor directors or (C) initially nominated by a group managed
by Robert N. Elkins, M.D. For this purpose, a Person or group shall not be a
Controlling Person if such Person or group holds voting power in good faith and
not for the purpose of circumventing the effect of the occurrence of a Change of
Control as an agent, bank, broker, nominee, trustee, or holder of revocable
proxies given in response to a solicitation pursuant to the 1934 Act, for one or
more beneficial owners who do not individually, or, if they are a group acting
in concert, as a group, have the voting power specified in the previous
sentence.
"CITIBANK" means Citibank, N.A., a national banking
association.
"CLOSING DATE" means the date on which all of the conditions
precedent set forth in Section 3.01 are satisfied or waived in writing by the
Lenders.
"CODE" means the Internal Revenue Code of 1986 and the
regulations thereunder.
"COLLATERAL" means all property which at any time is subject
or is to become subject to any Lien granted or created under any of the
Collateral Documents.
<PAGE>
5
"COLLATERAL DOCUMENTS" means the Pledge and Security
Agreements and all other security agreements, collateral assignments and other
instruments, documents and agreements at any time delivered to the Agent to
create or evidence Liens to secure the Obligations.
"COMMITMENT FEE RATE" means, for commitment fees accruing in
any Pricing Period, the rate per annum set forth below opposite the Pricing
Ratio determined for such Pricing Period:
Pricing Ratio Commitment Fee Rate
------------- -------------------
greater than 5.50 0.400%
greater than 5.00 but less 0.350%
than or equal to 5.50
greater than 4.25 but less 0.300%
than or equal to 5.00
greater than 3.75 but less 0.250%
than or equal to 4.25
greater than 3.25 but less 0.225%
than or equal to 3.75
less than or equal to 3.25 0.20%
"CONVERTIBLE SUBORDINATED DEBT" means the Debt outstanding
under the 1992 Convertible Subordinated Debt Indenture and the 1993 Convertible
Subordinated Debt
Indenture.
"CURRENT PORTION OF LONG-TERM DEBT" means that portion of Debt
of the Borrower and its Subsidiaries on a consolidated basis (including, without
limitation, the Advances, but excluding Subordinated Debt and the senior Debt
listed on Schedule 1.01(a)) that is, at the end of any Quarter, due and payable
within the next 12 months.
"DEBT," as applied to any Person and in each case determined
on a consolidated basis in conformity with GAAP, means (without duplication) (i)
all indebtedness for borrowed money (whether by loan or the issuance of debt
securities or otherwise); (ii) all obligations issued, undertaken or assumed as
the deferred purchase price of property or services or interest thereon, except
accounts and accrued expenses currently payable; (iii) all reimbursement
obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar instruments, whether or not contingent; (iv) all
monetary obligations under any Capital Lease; (v) all obligations (contingent or
otherwise) to purchase, retire or redeem any capital stock or any other equity
interest of such Person; (vi) all monetary obligations measured by, or
determined on the basis of, the value of any capital stock of such
<PAGE>
6
Person; and (vii) all obligations, whether or not such obligations constitute
Debt as defined in clauses (i) through (vi) above, secured by (or for which the
holder of the obligation has an existing right, contingent or otherwise, to be
secured by) any Lien upon any property of such Person or any Subsidiary of such
Person, except any such obligation secured by a Lien that is imposed by law and
not voluntarily granted; provided, however, that the contingent payments which
may become payable in connection with the First American Merger, including any
payments made to the Health Care Financing Administration or the Department of
Justice as required under the First American Merger Agreement in a total amount
not in excess of $162 million, shall not constitute Debt for purposes of this
Agreement.
"DEBT/EBITDAR RATIO" means the ratio, as of the last day of
any Quarter, of (i) the sum of (A) the difference, if any, between (x) the sum
of (1) Funded Debt and (2) eight times the Specified Lease Expense of the
Borrower and its Subsidiaries for the 12-month period then ending, less (y)
Quarter-End Excess Cash, and (B) the Purchasers' Aggregate Net Investment
outstanding on such day; to (ii) EBITDAR of the Borrower and such Subsidiaries
for the 12-month period then ending, after pro forma (1) adding to Specified
Lease Expense of the Borrower and such Subsidiaries, all amounts that would
constitute additional Specified Lease Expense of the Borrower and such
Subsidiaries for such period if any acquisition of a company that was made at
any time during such period by the Borrower or any of its Subsidiaries had been
consummated at the commencement of such period; (2) adding to Specified Lease
Expense of the Borrower and such Subsidiaries, all amounts that would constitute
additional Specified Lease Expense of the Borrower and such Subsidiaries for
such period if any lease of a Health Care Facility that was entered into by the
Borrower or any of its Subsidiaries at any time during such period had been so
entered into at the commencement of such period; (3) adding to EBITDAR of the
Borrower and such Subsidiaries, the EBITDAR and Non-Recurring Charges determined
solely for any such acquired company or Health Care Facility, for the portion of
such period that preceded the acquisition; provided however that for Quarters
ending during the 12-month period immediately following the closing of the First
American Merger, EBITDAR of First American for the period from the closing to
the date of determination, annualized for the 12- month period then ended shall
be added to EBITDAR of the Borrower and such Subsidiaries; provided, further,
that for Quarters ending during the 12-month period immediately following the
closing of the acquisition of CCA, EBITDAR of CCA for the period from the
closing to the date of determination, annualized for the 12-month period then
ended shall be added to EBITDAR of the Borrower and such Subsidiaries; (4)
subtracting from Specified Lease Expense of the Borrower and such Subsidiaries,
the Specified Lease Expense for such period attributable to any business or
facility that was sold or closed by the Borrower or any of its Subsidiaries in
such period; and (5) subtracting from EBITDAR of the Borrower and such
Subsidiaries, the EBITDAR for such period of any business or facility that was
so sold or closed.
<PAGE>
7
"DOLLARS" and "$" mean United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States of
America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance by which it
became a Lender or such other office of such Lender as such Lender may from time
to time specify to the Borrower and the Agent.
"EBITDAR" means, with respect to any Person, the sum of (i)
Cash Flow from Operations of such Person for any period and (ii) all charges for
taxes counted in determining the consolidated net income of such Person for such
period.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, and, in the case of
any assignment by a Revolving Lender of its Revolving Borrowings and related
Commitments hereunder, having total assets in excess of $5,000,000,000; (ii) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and, in the case of any assignment by a
Revolving Lender of its Revolving Borrowings and related Commitments hereunder,
having total assets in excess of $3,000,000,000; (iii) a commercial bank
organized under the laws of any other country which is a member of the OECD, or
a political subdivision of any such country, and, in the case of any assignment
by a Revolving Lender of its Revolving Borrowings and related Commitments
hereunder, having total assets in excess of $5,000,000,000, if such bank is
acting through a branch or agency located in the United States; (iv) the central
bank of any country which is a member of the OECD; (v) a finance company,
insurance company or other financial institution that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and, in the case of any assignment by a Revolving Lender of its
Revolving Borrowings and related Commitments hereunder, having total assets in
excess of $3,000,000,000; (vi) a fund that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and, in the case of any assignment by a Revolving Lender of its Revolving
Borrowings and related Commitments hereunder, having total assets in excess of
$200,000,000; (vii) any existing Lender and any Affiliates or Related Fund of
such existing Lender; and (viii) any other Person approved by the Agent, the LC
Bank and, except during the continuance of any Event of Default, the Borrower,
which approval in each case shall not be unreasonably withheld or delayed;
provided, however, that no Person who is a non-resident alien or a foreign
entity for United States income tax purposes (except a commercial bank of the
type described in clause (iii) above), may be an Eligible Assignee unless each
Note to be acquired by such Person is reissued in registered form prior to
transfer.
<PAGE>
8
"ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial claims, demands, directives, proceedings, orders, decrees
and judgments relating in any way to any Environmental Law or any Environmental
Permit.
"ENVIRONMENTAL LAWS" means all federal, state and local laws,
statutes, rules, regulations, ordinances and codes, and any binding judicial or
administrative interpretation thereof or requirement thereunder, including any
judicial or administrative order, by any Governmental Authority, relating to the
regulation or protection of human health, safety, the environment and natural
resources.
"ENVIRONMENTAL PERMIT" means any license, permit,
authorization, registration or approval issued or required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" means any entity which is (or at any
relevant time was) a member of a "controlled group of corporations," under
"common control" or a member of an "affiliated service group" with the Borrower
as defined in Section 414(b), (c) or (m) of the Code.
"ERISA EVENT" means (i) any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, with respect to a Pension Plan;
(ii) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA); (iii) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan; (iv) the filing of a notice of intent to terminate, the
treatment of a plan amendment as a termination under Section 4041 or 4041A of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan
or Multiemployer Plan subject to Title IV of ERISA; (v) a failure to make
required contributions to a Pension Plan or Multiemployer Plan; (vi) the
imposition of any liability under Title VI of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower or any
ERISA Affiliate; (vii) an application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code with respect to any
Pension Plan; (viii) the Borrower or ERISA Affiliate engages in a nonexempt
prohibited transaction or otherwise becomes liable with respect to a nonexempt
prohibited transaction, the consequences of which, in the aggregate, constitute
or could reasonably be expected to result in a Material Adverse Change; or (ix)
a violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by the Borrower or any
ERISA Affiliate with respect to any Pension Plan for which the Borrower or any
of its Subsidiaries may be liable, the consequences of which, in the aggregate,
constitute or could reasonably be expected to result in a Material Adverse
Change.
<PAGE>
9
"EUROCURRENCY LIABILITIES" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance by which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Agent as its Eurodollar Lending Office.
"EURODOLLAR RATE" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Revolving Borrowing or Term
Borrowing, as the case may be, an interest rate per annum equal to the displayed
rate at 11:00 AM (London time) two Business Days before the first day of such
Interest Period on Telerate page 3750 (or such other page as may replace such
page on the Telerate Service for the purpose of displaying interest rates in the
London interbank markets) for deposits in U.S. dollars in an amount
substantially equal to such Revolving Borrowing or Term Borrowing, as the case
may be, and for a period equal to such Interest Period. To the extent that such
interest rate is unavailable on the Telerate Service, the Eurodollar Rate for
any Interest Period for each Eurodollar Rate Advance comprising part of the same
Revolving Borrowing or Term Borrowing, as the case may be, shall be an interest
rate per annum equal to the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the
rate per annum at which deposits in U.S. dollars are offered by the principal
office of each of the Reference Banks in London to prime banks in the interbank
market for U.S. Dollar Deposits at 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period in an amount substantially equal to
such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing
(or, if such Reference Bank is not a Lender, 10% of such Borrowing) and for a
period equal to such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance which bears
interest by reference to the Eurodollar Rate as provided in Section 2.07(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Lender for any day
in the Interest Period for any Eurodollar Rate Advance means the reserve
percentage applicable for such day under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) for such Lender with respect
to liabilities or assets consisting of or including Eurocurrency liabilities
having a term equal to such Interest Period.
<PAGE>
10
"EVENTS OF DEFAULT" has the meaning provided in Section 6.01.
"EXISTING FACILITY" means the Revolving Credit Agreement,
dated as of May 15, 1996, by and among the Borrower, Citibank, N.A., as
administrative agent thereunder, and the other financial institutions signatory
thereto as lenders, as amended.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Citibank from three Federal funds brokers of
recognized standing selected by it.
"FIRST AMERICAN" means First American Health Care of Georgia,
Inc., a Georgia corporation.
"FIRST AMERICAN MERGER" means the merger of IHS Acquisition
XIV, Inc., a Delaware corporation and a wholly owned Subsidiary of the Borrower,
with and into First American, pursuant to which First American became a
wholly-owned Subsidiary of the Borrower.
"FIRST AMERICAN MERGER AGREEMENT" means the merger agreement,
dated as of February 21, 1996, among the Borrower, IHS Acquisition XIV, Inc., a
Delaware corporation and wholly owned subsidiary of the Borrower, First American
and certain principal shareholders thereof, as amended as of March 12, 1996 and
as of September 9, 1996.
"FIXED CHARGE COVERAGE RATIO" means the ratio, as of the last
day of any Quarter, of (i) EBITDAR minus Capital Expenditures of the Borrower
and its Subsidiaries for the 12-month period then ending to (ii) the sum of (A)
Interest Expense, (B) Current Portion of Long-Term Debt, (C) taxes paid in cash,
(D) Lease Expense and (E) all cash dividends paid on the Borrower's common stock
and preferred stock, each during the 12- month period then ending.
"FUNDED DEBT" means all Debt of the type described in clauses
(i), (ii) and (iv) of the definition of "Debt", plus all Accommodation
Obligations, except those described in clauses (i) through (iv) of Section
5.03(f), owed by the Borrower or any of its Subsidiaries and outstanding, on a
consolidated basis, on the last day of any Quarter.
"FUNDED LC EXPOSURE" means the aggregate principal amount, as
of any date of determination, of all payments that were made by the LC Bank
under any Letter of Credit
<PAGE>
11
but have not been reimbursed to the LC Bank by the Borrower pursuant to Section
2.02(c) or converted into Advances pursuant to Section 2.02(e).
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, which are applicable
to the facts and circumstances on the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation, state, sovereign or
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTOR" means each Subsidiary of the Borrower that
executes, or joins in, the Guaranty.
"GUARANTOR CONFIRMATION" means a Confirmation and Agreement of
Guarantors in substantially the form of Exhibit C-4, duly authorized, executed
and delivered by the Guarantors, setting forth the Guarantor Liability Limit as
to a particular Guarantor.
"GUARANTOR LIABILITY LIMIT" means:
(i) In respect of any Subsidiary that is (either
directly or indirectly through one or more wholly-owned Subsidiaries of
the Borrower) a wholly-owned Subsidiary of the Borrower, an unlimited
amount, and
(ii) In respect of any Subsidiary that is not such a
wholly-owned Subsidiary of the Borrower, an amount determined as of the
last day of the then most recently ended Quarter for which financial
statements are available by multiplying (A) EBITDAR plus any
Non-Recurring Charges, determined solely for such Subsidiary and its
Subsidiaries and any business, assets or entity directly or indirectly
owned by such Subsidiary at such time, on a consolidated basis, for the
four Quarters most recently ended prior to the date on which such
Subsidiary first became a Subsidiary not (directly or indirectly)
wholly-owned by the Borrower by (B) six and further by (C) a fraction,
the numerator of which is the number of shares of capital stock or
other equity, ownership or profit interests in such Subsidiary directly
or indirectly owned by the Borrower at such time and after giving
effect to any transaction then being consummated and the denominator of
which is the total number of all such shares and interests outstanding
at such time and after giving effect to any such transaction; provided,
however, that if the Borrower elects, in respect of any such
<PAGE>
12
Subsidiary no later than the date that is 10 Business Days after such
Subsidiary first became a Subsidiary not (directly or indirectly)
wholly-owned by the Borrower, voluntarily to reduce the Revolving
Facility Amount effective as of such date in accordance with Section
2.05 by an amount equal to the amount so determined, then the Guarantor
Liability Limit as to such Subsidiary (and only as to such Subsidiary)
shall be zero.
"GUARANTY" means the guaranty by the Borrower's Subsidiaries,
except Inactive Subsidiaries, delivered pursuant to Section 3.01(a) and each
joinder therein by any other Subsidiary of the Borrower and all Guarantor
Confirmations, guaranties, instruments and agreements at any time delivered by
any Subsidiary of the Borrower in respect of or in exchange or substitution for
or in replacement of such guaranty or to evidence its guaranty of payment of any
of the Obligations.
"HARD COSTS" means the direct costs of building, improving or
maintaining any Health Care Facility or other property used by the Borrower or
any of its Subsidiaries (including the cost of land, construction, bricks,
mortar, painting and related building maintenance, carpeting, roof repair and
replacement, parking lot replacement and maintenance, landscaping, HVAC
equipment and sprinkler systems and other items generally considered hard costs
under construction industry practice but not including the purchase price of an
existing Health Care Facility or any allocated overhead and administrative
expenses and other items generally considered soft costs under construction
industry practice) and the purchase price of any fixed, movable or mobile
equipment located on or used in connection with any such Health Care Facility or
otherwise used in conducting business if such equipment is or is required to be
reflected as property, plant and equipment on the consolidated balance sheet of
the Borrower and its Subsidiaries.
"HAZARDOUS MATERIALS" means (i) flammable explosives,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls and petroleum products, and (ii)
chemicals, materials, substances or wastes which are now or hereafter become
defined as or included in the definition, listing or identification of
"hazardous substances," "hazardous wastes," hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "medical waste," "infectious waste," "biomedical waste,"
"biohazardous waste," or words of similar import, under any applicable
Environmental Law.
"HEALTH CARE COMPANY" means a Person that is principally
engaged, directly or indirectly through its Subsidiaries, in the business of
owning, operating or managing Health Care Facilities or healthcare operations or
providing healthcare services.
<PAGE>
13
"HEALTH CARE FACILITY" means a facility which provides any
healthcare services at such facility, whether licensed as a skilled nursing
facility, intermediate care facility, personal care facility or a hospital.
"HEALTH CARE PERMIT" means every accreditation, authorization,
certificate of need, license or permit that is required pursuant to applicable
federal or state law to own, lease, operate or manage a Health Care Facility or
conduct the business of a Health Care Company.
"HEDGING CONTRACT" means any interest rate swap agreement,
currency swap agreement, commodities swap agreement, equity option or put
arrangement, cap, floor or collar agreement, insurance relating to the
respective risk protection or other similar agreement or arrangement designed to
provide such risk protection entered into by the Borrower and the Agent or any
Lender.
"INACTIVE SUBSIDIARY" means a Subsidiary of the Borrower that
carries on no business operations or other activities and has an aggregate
capitalization of $1,500 or less.
"INDEMNIFIED LIABILITIES" is defined in Section 8.06(a).
"INDEMNIFIED PERSON" is defined in Section 8.06(a).
"INTANGIBLE ASSETS" means, with respect to the Borrower and
its Subsidiaries on a consolidated basis, all assets properly classified as
intangible assets under GAAP, including goodwill, patents, copyrights,
trademarks, trade names, franchises, licenses, organization costs, deferred
charges, and deferred pre-opening costs, but excluding all intangible assets
classified as such under the provisions of Statements 87, 88 and 106 of the
Financial Accounting Standards Board relating to Accounting for Pensions and
Post- Retirement Benefits other than Pensions, so long as such intangible asset
has a related liability under GAAP of equal or substantially equal amount on the
consolidated balance sheet of the Borrower and its Subsidiaries as of the date
of determination.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
dated as of the date hereof among Citibank, N.A., as collateral agent, the Agent
and the agent under the Participation Agreement.
"INTEREST EXPENSE" means, with respect to any Person, for any
period for such Person and its subsidiaries on a consolidated basis, interest
expense net of interest income, determined in conformity with GAAP.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance
comprising part of the same Revolving Borrowing or Term Borrowing, as the case
may be, the
<PAGE>
14
period commencing on the date of such Advance or the date of the conversion of
any Advance into such an Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such Interest
Period shall be 1, 2, 3 or 6 months, as the Borrower may select by notice
received by the Agent not later than 11:00 a.m. (New York City time) three
Business Days prior to the first day of such Interest Period; provided, however,
that:
(a) the Borrower may not select any Interest Period
in respect of any Revolving Borrowings which ends after the Maturity
Date or in respect of the Term Borrowing which ends after the scheduled
maturity date therefor;
(b) the Borrower may not select any Interest Period
which ends after any date on which any payment on the respective
Advances (including any payment of the Revolving Borrowing which may
result from a Revolving Facility Reduction) is due unless, after giving
effect to such selection, the aggregate unpaid principal amount of Base
Rate Advances and Eurodollar Rate Advances in respect of Revolving
Borrowings or the Term Borrowing, as the case may be, having Interest
Periods which end on or prior to such date is at least equal to the
principal amount of Advances due and payable on and prior to such date;
(c) Interest Periods commencing on the same date for
Advances comprising part of the same Revolving Borrowing or Term
Borrowing shall be of the same duration;
(d) whenever the last day of any Interest Period
would otherwise occur on a day that is not a Business Day, the last day
of such Interest Period shall be extended to the next succeeding
Business Day, except that if such extension would cause the last day of
such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall be the next preceding Business
Day; and
(e) the Borrower may not have more than 15 Interest
Periods in effect at any one time.
"INVESTMENT" means (i) the acquisition of any interest in any
property, assets or business from any Person, whether by sale, lease or
otherwise, (ii) the funding of any loan, extension of credit, accommodation or
capital contribution to or for the benefit of any Person, and (iii) the
acquisition of any debt or equity securities of or claim against or interest in
any Person, whether upon original issuance, by purchase or otherwise.
<PAGE>
15
"LC APPLICATION" means an application for a Letter of Credit
in substantially the form of Exhibit B-3, setting forth the information
described therein and such other information as the LC Bank may reasonably
request and signed by an Authorized Officer.
"LC BANK" means The Bank of Nova Scotia and any Revolving
Lender which agrees to become, and is designated as, a replacement LC Bank
pursuant to Section 2.02(g).
"LC CASH COLLATERAL ACCOUNT" means a general deposit account
established at and maintained by Citibank in the name of and for the benefit of
the Agent on behalf of the Lenders and under the exclusive dominion and control
of the Agent.
"LC EXPOSURE" means the sum, as of any date of determination,
of the Unfunded LC Exposure and the Funded LC Exposure.
"LC FEE RATE" means, for any day, the then Revolving Borrowing
Eurodollar Rate Margin less 0.025% per annum.
"LC SUBCOMMITMENT" means the lesser, as of any date of
determination, of (i) $100,000,000 and (ii) the Revolving Facility Amount.
"LEASE EXPENSE" means, with respect to any Person, for any
period for such Person and its subsidiaries on a consolidated basis, lease and
rental expense accrued during such period under all leases and rental
agreements, other than Capital Leases and leases of personal property, of Health
Care Facilities, determined in conformity with GAAP.
"LENDER" means each Revolving Lender and each Term Lender.
"LETTER OF CREDIT" means a letter of credit that (i) is
available for funding in Dollars until an expiry date no later than the Maturity
Date, (ii) is issued by the LC Bank at the request and for the account of the
Borrower, (iii) is governed by the Uniform Customs and Practices for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication 500,
except as otherwise agreed by the LC Bank, and (iv) is in form reasonably
satisfactory to the LC Bank.
"LIEN" means any mortgage, deed of trust, lien, pledge,
charge, security interest, hypothecation, assignment, deposit arrangement or
encumbrance of any kind in respect of any asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital or
finance lease or other title retention agreement relating to such asset.
"LITHOTRIPSY" means the Lithotripsy Division of Coram
Healthcare Corporation.
<PAGE>
16
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranty, the Letters of Credit, the Collateral Documents, each Hedging Contract
and all other guaranties and other agreements, instruments and written indicia
of the Obligations delivered to the Agent or any Lender by or on behalf of the
Borrower or any other Loan Party pursuant to or in connection with the
transactions contemplated hereby and thereby.
"LOAN PARTIES" means the Borrower and each Subsidiary of the
Borrower that is a party to any Loan Document.
"LYRIC" means Lyric Health Care LLC, a Delaware limited
liability company.
"MATERIAL ADVERSE CHANGE" means any materially adverse change
in the financial condition, assets, nature of the assets, liabilities,
operations or prospects of the Borrower and its Subsidiaries, taken as a whole.
"MATERIAL ENVIRONMENTAL CLAIM" means any Environmental Claim,
regardless of merit, which does or can reasonably be expected to (i) result in
the Borrower or any of its Subsidiaries expending in the aggregate an amount in
excess of $10,000,000 to defend against, settle or satisfy, or (ii) prevent or
enjoin the Borrower or any of its Subsidiaries from operating a Health Care
Facility on any property on which it conducts operations.
"MATERIAL LEASE" means (A) any lease agreement in which the
aggregate annual rental payments due thereunder exceed $20,000,000 or (B) any
lease entered into in connection with the Synthetic Lease Facility.
"MATERIAL SUBSIDIARY" means each Subsidiary of the Borrower
which has (i) as of the end of the most recent Quarter, total assets (other than
Intangible Assets) representing ten percent or more of the consolidated total
assets (other than Intangible Assets) of the Borrower and its Subsidiaries, (ii)
for the most recent four Quarters, total revenues representing ten percent or
more of the consolidated revenues of the Borrower and its Subsidiaries, or (iii)
for the most recent four Quarters, net income representing ten percent or more
of the consolidated net income of the Borrower and its Subsidiaries.
"MATURITY DATE" means the sixth anniversary of the Closing
Date.
"MINIMUM NET WORTH" means the sum, as of the last day of any
Quarter, of (i) $635,000,000, and after the acquisition of RoTech
$1,120,000,000, less up to $25,000,000 of extraordinary losses (determined in
accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated
basis incurred at any time after June 30, 1997, plus (ii) 75% of the aggregate
net income (determined in accordance with GAAP) of the Borrower and its
Subsidiaries on a consolidated basis earned in the Quarter ended June 30, 1997
and in each Quarter thereafter, if net income was earned in such Quarter (and
not reduced for a net
<PAGE>
17
loss in any Quarter), plus (iii) 100% of all additions to Adjusted Stockholders'
Equity resulting at any time after December 31, 1996 from the sale or issuance
of any common or preferred stock of the Borrower or from the conversion of any
Convertible Subordinated Debt.
"MOODY'S" means Moody's Investors Service, Inc., and its
successors.
"MULTIEMPLOYER PLAN" means any Plan which is a "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS OF SALE" means, with respect to any Asset
Sale, the Cash Proceeds of Sale of such sale less (i) all reasonable brokerage,
legal and accounting fees and disbursements, and any governmental fees and taxes
incurred (or reasonably expected to be incurred) in connection with such sale
which are not payable to Affiliates of the Borrower (or, if to Affiliates, are
in amounts no greater than would be payable in an arm's-length transaction);
(ii) any Debt secured by the assets subject to such Asset Sale repaid with such
proceeds (to the extent such repayment is permitted under the Loan Documents);
and (iii) reserves against any liabilities incurred as a result of such Asset
Sale reflected on the balance sheet of the Borrower or any of its Subsidiaries
in accordance with GAAP; provided, however, that in the event any such reserve
is subsequently decreased, other than as a result of the accrual or payment of
any liability for which such reserve was established, Net Cash Proceeds of Sale
with respect to such Asset Sale shall be increased by a like amount.
"1934 ACT" means the Securities Exchange Act of 1934 and the
regulations thereunder.
"1992 CONVERTIBLE SUBORDINATED DEBT INDENTURE" means the
Indenture, dated as of December 1, 1992, between the Borrower, as Issuer, and
Signet Trust Company, as Trustee.
"1993 CONVERTIBLE SUBORDINATED DEBT INDENTURE" means the
Amended and Restated Supplemental Indenture dated as of September 15, 1994,
between the Borrower, as Issuer, and NationsBank of Virginia, N.A., as Trustee.
"1994 SUBORDINATED DEBT INDENTURE" means the Indenture dated
as of July 1, 1994, between the Borrower, as Issuer, and Signet Trust Company,
as Trustee.
"1995 SUBORDINATED DEBT INDENTURE" means the Indenture dated
as of May 15, 1995, between the Borrower, as Issuer, and Signet Trust Company,
as Trustee.
"1996 SUBORDINATED DEBT INDENTURE" means the Indenture dated
as of May 15, 1996, between the Borrower, as Issuer, and Signet Trust Company,
as Trustee.
<PAGE>
18
"1997 SUBORDINATED DEBT INDENTURE" means the Indenture dated
as of May 30, 1997, between the Borrower, as Issuer, and First Union National
Bank of Virginia, as Trustee.
"1997 B SUBORDINATED DEBT INDENTURE" means the Indenture dated
August 27, 1997, between the Borrower and First Union National Bank of Virginia,
as Trustee.
"NON-RECURRING CHARGES" means all charges against the income
of a company or facility acquired by any Person that (i) were taken by the
owners of such company or facility prior to or concurrently with the
acquisition, on the initiative solely of such owners or their management or
accountants and without any demand or influence from such acquiring Person or
any Person acting for it, and (ii) either (A) reflect the direct costs of the
acquisition, including fees and expenses of attorneys, accountants, advisors,
architects, engineers, consultants and agents, and environmental and travel
costs, or (B) are charges taken in the current year to make adjustments for
charges for accruals, bad debt provisions or valuation allowances in a prior
year, if (x) the charges in the current year would be entirely eliminated if the
prior year's income was restated, in accordance with GAAP, to reflect such
adjustments, and (y) such acquiring Person provides such information relating to
the adjustments and the restatement of the prior year's income as the Agent or
Requisite Lenders may reasonably request.
"NOTES" means the revolving notes and term notes of the
Borrower which may be required to be delivered pursuant to Section 5.02(m) and
all promissory notes and other evidence of indebtedness at any time delivered by
the Borrower in exchange or substitution therefor or in replacement thereof or
as additional evidence of the Borrower's indebtedness for the Advances.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit B-1.
"NOTICE OF CONTINUANCE/CONVERSION" means a notice
substantially in the form of Exhibit B-2.
"NOTICE OF SWING LINE ADVANCE" means a notice substantially in
the form of Exhibit B-5.
"OBLIGATIONS" means all present and future Debts, obligations
and liabilities of every type and description of the Borrower or any other Loan
Party at any time arising under or in connection with this Agreement, any other
Loan Document or any Hedging Contract, due or to become due to the Agent, any
Lender, any Person required to be indemnified under any Loan Document or any
other Person and shall include (i) all liability for principal of and interest
on any Advances, (ii) all liability for principal of and interest on any
reimbursement
<PAGE>
19
owed to the LC Bank for a payment made by it under a Letter of
Credit, and (iii) all liability under the Loan Documents for any additional
interest, fees, taxes, compensation, costs, losses, expense reimbursements and
indemnification.
"OECD" means the Organization for Economic Cooperation and
Development.
"OTHER TAXES" is defined in Section 2.16(b).
"OUTSTANDING REVOLVING CREDIT" means the sum, as of any date
of determination, of (i) the aggregate outstanding principal amount of the
Revolving Borrowings, and (ii) the LC Exposure.
"PARTIAL DISPOSITION LIMIT" means, in respect of any proposed
Retained Interest Sale in which the Retained Interest Criteria are not met, that
(i) the sum of (A) that portion of EBITDAR of the Borrower and its Subsidiaries
(determined for the four Quarters most recently ended prior to the consummation
of such Retained Interest Sale) that is attributable to the businesses and
entities that are to be sold or disposed of in such Retained Interest Sale, and
(B) the amount of such portion of EBITDAR of the Borrower and such Subsidiaries
so computed as of the time of each prior Retained Interest Sale in which the
Retained Interest Criteria were not met is less than (ii) 15% of EBITDAR of the
Borrower and such Subsidiaries for the four Quarters most recently ended prior
to the consummation of such proposed Retained Interest Sale.
"PARTICIPATION AGREEMENT" means the agreement dated as of July
31, 1997 entered into among the Borrower, Integrated Health Services at
Highlands Park, Inc., IHS Development - Highlands Park, Inc., State Street Bank
and Trust Company of Connecticut, National Association, as Corporate Owner
Trustee, Eric J. Donaghey, as the Individual Owner Trustee, the certificate
holder party thereto, the note holders party thereto and Citicorp USA, Inc., as
Agent in connection with the Synthetic Lease Facility.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
"PENSION PLAN" means any Plan which is (i) an "employee
pension benefit plan" as defined in Section 3(2) of ERISA and (ii) not a
Multiemployer Plan.
"PERMITTED CASH INVESTMENTS" means:
(a) securities issued or fully guaranteed or insured
by the United States Government or any agency thereof and backed by the
full faith and credit of the United States maturing not more than one
year from the date of acquisition;
<PAGE>
20
(b) certificates of deposit, time deposits,
Eurodollar time deposits, bankers' acceptances or deposit accounts
having in each case a remaining term to maturity of not more than one
year, which are either (i) fully insured by the Federal Deposit
Insurance Corporation or (ii) issued by any Lender or by any commercial
bank under the laws of any State or any national banking association
that has combined capital and surplus of not less than $800,000,000 and
whose short-term securities are rated at least A-1 by S&P or P-1 by
Moody's;
(c) commercial paper that is rated at least A-1 by
S&P or P-1 by Moody's, issued by a company that is incorporated under
the laws of the United States or of any State and directly issues its
own commercial paper, and has a remaining term to maturity of not more
than one year;
(d) a repurchase agreement with (i) any commercial
bank that is organized or licensed under the laws of any State or any
national banking association and that has total assets of at least
$1,000,000,000, or (ii) any investment bank that is organized under the
laws of any State and that has total assets of at least $1,000,000,000,
if such agreement is secured by any one or more of the securities and
obligations described in clauses (a), (b) or (c) of this definition
having a market value (exclusive of accrued interest and valued at
least monthly) at least equal to the principal amount of such
investment;
(e) any money market or other investment fund the
investments of which are limited to investments described in clauses
(a), (b), (c) and (d) of this definition and which is managed by (i) a
commercial bank that is organized under the laws of any State or any
national banking association and that has total assets of at least
$1,000,000,000, or (ii) an investment bank that is organized under the
laws of any State and that has total assets of at least $1,000,000,000;
(f) obligations, debentures, notes, bonds or other
evidences of indebtedness rated at least A- by S&P or A3 by Moody's, so
long as the aggregate amount of investments held under this clause (f)
does not exceed 25% of the total amount then invested by the Borrower
and its Subsidiaries in Permitted Cash Investments;
(g) investments in investment grade auction rate and
adjustable rate preferred equities for issuers whose actual or implied
senior long-term debt is rated at least A- by S&P or A3 by Moody's;
(h) investments in investment grade fixed rate
preferred equities for issuers whose actual or implied senior long-term
debt is rated at least A- by S&P or A3 by Moody's, so long as the
aggregate amount of investments held under this
<PAGE>
21
clause (h) does not exceed 10% of the total amount invested by the
Borrower and its Subsidiaries in Permitted Cash Investments;
(i) adjustable rate mortgage-backed securities rated
at least AA by S&P or Aa by Moody's; and
(j) fixed rate mortgage-backed securities rated at
least AA by S&P or Aa by Moody's, so long as the aggregate amount of
investments held under this clause (j) does not exceed 25% of the total
amount invested by the Borrower and its Subsidiaries in Permitted Cash
Investments.
"PERMITTED LIENS" means Liens permitted under Section 5.03(a).
"PERSON" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means any "employee benefit plan" as defined in Section
3(3) of ERISA (i) which the Borrower or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or, within the six
years prior to the Closing Date, maintained, administered, contributed to or was
required to contribute to, or under which the Borrower or any ERISA Affiliate
may incur any liability and (ii) which covers any employee or former employee of
the Borrower or any ERISA Affiliate (with respect to their relationship with
such entities).
"PLEDGE AND SECURITY AGREEMENTS" means the pledge and security
agreements executed by the Borrower and certain of the Borrower's Subsidiaries
and delivered pursuant to Section 3.01(a) and each joinder therein by any other
Subsidiary of the Borrower and each other security agreement at any time
delivered by the Borrower or any Subsidiary of the Borrower to create a Lien
that secures any of the Obligations.
"POTENTIAL DEFAULT" means any event or condition described in
Section 6.01 which, with any notice or passage of time (or both) expressly
described in Section 6.01, would constitute an Event of Default.
"PREFERRED STOCK" means preferred stock of the Borrower in an
amount not in excess of $400,000,000, with a dividend rate not in excess of 12%.
"PRICING CERTIFICATE" means a certificate in substantially the
form of Exhibit B-4.
<PAGE>
22
"PRICING PERIOD" means the period that commences on the
Closing Date and ends on November 25, 1997, and each consecutive period
thereafter that commences on the expiration of the prior period and ends on the
25th day of the next following February, May, August, or November.
"PRICING RATIO" means, for any Pricing Period, the
Debt/EBITDAR Ratio as of the Pricing Test Date for such Pricing Period. If a
Pricing Certificate for the Pricing Test Date for a particular Pricing Period is
not delivered prior to the commencement of such Pricing Period, then until (but
only until) the Business Day on which such Pricing Certificate is delivered to
the Agent, the Pricing Ratio shall be deemed to be the Pricing Ratio for the
immediately preceding Pricing Period.
"PRICING TEST DATE" means, for a particular Pricing Period,
the last day of the Quarter most recently ended prior to the commencement of
such Pricing Period.
"PRO RATA SHARE" means, in respect of any Lender on any date
of determination, the ratio of (i) in the case of a Term Lender, the outstanding
principal amount of Advances by such Lender hereunder on such date and, in the
case of a Revolving Lender, such Revolving Lender's commitment to participate in
the revolving credit hereunder as set forth on Schedule I (or if such Revolving
Lender has entered into one or more Assignments and Acceptances, in the
Register) as it may have been reduced as provided herein or if such Revolving
Lender's commitment has terminated, the outstanding principal amount of Advances
by such hereunder, as of such date to (ii) the sum of the aggregate outstanding
principal amount of Advances by all Term Lenders hereunder on such date and the
aggregate of the commitments of all Revolving Lenders as set forth on Schedule I
(or if any such Revolving Lender has entered into one or more Assignments and
Acceptances, in the Register) as they may have been reduced as provided herein
or if such commitments have terminated, the aggregate outstanding principal
amount of Advances by all Revolving Lenders, as of such date.
"PROPOSED SUBORDINATED DEBT INDENTURE" means the Indenture to
be entered into after the Closing, in either calendar year 1997 or 1998, between
the Borrower, as Issuer, and the trustee thereunder in connection with a
proposed senior subordinated note offering.
"PURCHASE LIMIT" is defined in Section 5.03(h).
"PURCHASERS' AGGREGATE NET INVESTMENT" means the net
unrecovered investment in the accounts receivable of the Borrower and its
Subsidiaries, and proceeds thereof, held by the purchasers in any Receivables
Sale Program or their transferees, without counting any Receivables Program
Charges.
<PAGE>
23
"QUALIFIED PLAN" means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which the Borrower or any ERISA Affiliate sponsors, maintains, or to which it
makes or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five plan
years, but excluding any Multiemployer Plan.
"QUARTER" means, with respect to any Person, a fiscal quarter
of such Person.
"QUARTER-END EXCESS CASH" means the excess, determined as of
the last day of any Quarter (but only if it is a positive number), of (i) cash
and Permitted Cash Investments held by the Borrower and its Subsidiaries, less
(ii) 2% of the sum of the following operating expenses of the Borrower and its
Subsidiaries for the 12-month period then ending, determined and recorded in
accordance with the Borrower's current practice: "salaries, wages and benefits,"
"corporate, administrative and general" and "other operating expenses."
"RECEIVABLES PROGRAM CHARGES" means the discount or yield of
any Receivables Sale Program and all program and administrative costs, back-stop
costs and other related costs, fees and expenses incurred by or charged to the
Borrower or any of its Subsidiaries, and when determined for any period shall
include all such discount, yield, costs, fees and expenses accrued or amortized
during such period.
"RECEIVABLES SALE PROGRAM" means a sale or other disposition
of an interest in the accounts receivable of any of the Borrower's Subsidiaries
and the proceeds thereof and records related thereto to one or more purchasers
or investors, if the sale or other disposition (i) is made without recourse to
the seller, (ii) is not guaranteed by the Borrower or any of its Subsidiaries,
except a guaranty that the seller will perform its obligations in respect of its
representations and warranties, indemnities and servicing commitments, and (iii)
is structured so that the Purchasers' Aggregate Net Investment in respect of any
and all such accounts receivable and proceeds outstanding at any one time will
not exceed $200,000,000.
"REFERENCE BANKS" means Citibank and The Toronto-Dominion
Bank.
"REGISTER" is defined in Section 8.07(c).
"RELATED FUND" means, with respect to any Lender that is a
fund that invests in loans, any other fund that invests in loans and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
<PAGE>
24
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, a withdrawal from a plan
described in Section 4063 of ERISA or a cessation of operations described in
Section 4062(e) of ERISA.
"REQUISITE LENDERS" means Lenders at the time in the aggregate
holding more than 50.1% in Pro Rata Shares.
"REQUISITE REVOLVING LENDERS" means Revolving Lenders at the
time in the aggregate holding more than 50.1% of the Revolving Pro Rata Share.
"REQUISITE TERM LENDERS" means Term Lenders at the time in the
aggregate holding more than 50.1% of the Term Pro Rata Share.
"RETAINED INTEREST" means the stock or equity, ownership or
profit interest which the Borrower or any Subsidiary of the Borrower retains,
acquires or has the right to acquire in any Retained Interest Sale.
"RETAINED INTEREST CRITERIA" means, in respect of any Retained
Interest and the assets, operations, governance, income and profits of any
business or entity to which such Retained Interest directly or indirectly
relates, each and all of the following requirements:
(i) The Borrower or a wholly-owned Subsidiary of the
Borrower must have the exclusive right and power, subject to duties
imposed by law, to manage and control the ordinary business operations
and assets of such business or entity and freely to control and
distribute the cash, income, profits, and asset sale proceeds of such
entity or business and, as to any such entity that is a Subsidiary of
the Borrower, to borrow from such entity;
(ii) The Borrower or a wholly-owned Subsidiary of the
Borrower must effectively have the exclusive right and power, subject
to duties imposed by law, to determine whether, when and on what terms
such business or entity shall be financed, sold, dissolved, liquidated
or merged and to make all other decisions requiring approval of the
owners of such business or entity, either by reason of lawful and
enforceable provisions in the governing documents for such entity or
under a voting trust arrangement, an irrevocable proxy, an option to
acquire or sell the interests of all other Persons that hold or have
the right to acquire an equity or ownership interest in such business
or entity, or other similar arrangements;
(iii) The exercise of such rights and powers by the
Borrower or its wholly-owned Subsidiary must not be barred, limited or
restricted by contract or agreement, except for provisions requiring
performance of duties imposed by law;
<PAGE>
25
(iv) The terms on which the requirements in clauses
(i), (ii) and (iii) herein are met must be such that the Borrower or a
wholly-owned Subsidiary of the Borrower has the exclusive right and
power to maintain such conditions for as long as the Borrower or any
Subsidiary of the Borrower holds such Retained Interest;
(v) At the consummation of the transaction in which
such Retained Interest was kept or acquired, each Subsidiary of the
Borrower to which such Retained Interest directly or indirectly relates
must reaffirm its liability under the Guaranty by executing a Guarantor
Confirmation setting forth its Guarantor Liability Limit after giving
effect to such transaction and each other Guarantor must confirm its
consent and agreement thereto by executing such Guarantor Confirmation;
(vi) No later than the tenth Business Day following
the consummation of the transaction in which such Retained Interest was
kept or acquired, the Borrower must deliver to the Agent and Lenders
written notice of the structure and material terms of the agreements
and arrangements relating to the foregoing and the Retained Interest
and related Retained Interest Sale, accompanied by:
(A) A certificate of an Authorized Officer
of the Borrower stating that at the time of such consummation
the Retained Interest Criteria were met in respect of such
transaction, and
(B) A Guarantor Confirmation signed by the
Guarantors, setting forth the Guarantor Liability Limit of
each Subsidiary affected by such transaction, after giving
effect to such transaction; and
(vii) The Borrower must not receive from the
Requisite Lenders, within 20 Business Days after such notice,
certificate and Guarantor Confirmation were delivered to the Agent and
Lenders, a written statement to the effect that, in the opinion of the
Lenders giving such notice and for reasons generally set forth in such
statement (which opinion, reasons and statement shall be conclusive and
binding on the Borrower and the other Loan Parties if held, determined
and presented by such Lenders in good faith), either:
(A) The Retained Interest Criteria are not
met in respect of such transaction, or
(B) Such Lenders notified the Borrower at
least five Business Days prior to the date of such statement
that the Guarantor Liability Limit of any Subsidiary affected
by such transaction, after giving effect to such transaction,
was not properly determined, set forth or acknowledged in the
<PAGE>
26
Guarantor Confirmation so delivered, and a Guarantor
Confirmation properly determining, setting forth and
acknowledging such Guarantor Liability Limit, duly executed by
such Subsidiary and all other Guarantors, was not received by
the Agent and Lenders within five Business Days after such
notice was given to the Borrower.
"RETAINED INTEREST SALE" means a sale or other disposition of
less than all of the stock of or other equity, ownership or profit interest in a
Subsidiary, or less than the entire ownership of any business, asset or entity,
that was directly or indirectly owned by the Borrower or any of its Subsidiaries
on the Closing Date or any Asset Sale, merger, consolidation, sale and
repurchase, exchange or other transaction in which, after giving effect to such
transaction and all related transactions, the Borrower or any of its
Subsidiaries directly or indirectly retains or acquires or has the right to
acquire any stock of or any equity, ownership or profit interest in any such
Subsidiary, business, asset or entity.
"REVOLVING BORROWING" means the aggregate Base Rate Advances
or Eurodollar Rate Advances made by the Revolving Lenders on a Borrowing Date
pursuant to Section 2.01(a)(i).
"REVOLVING BORROWING BASE RATE MARGIN" means, for any Pricing
Period, the rate per annum set forth below opposite the Pricing Ratio determined
for that Pricing Period:
Pricing Ratio Margin
------------- ------
greater than 5.50 0.50%
greater than 5.00 but less 0.25%
than or equal to 5.50
greater than 4.25 but less 0.00%
than or equal to 5.00
greater than 3.75 but less 0.00%
than or equal to 4.25
greater than 3.25 but less 0.00%
than or equal to 3.75
less than or equal to 3.25 0.00%
"REVOLVING BORROWING EURODOLLAR RATE MARGIN" means, for any
Pricing Period, the rate per annum set forth below opposite the Pricing Ratio
determined for that Pricing Period:
<PAGE>
27
Pricing Ratio Margin
------------- ------
greater than 5.50 1.75%
greater than 5.00 but less 1.50%
than or equal to 5.50
greater than 4.25 but less 1.25%
than or equal to 5.00
greater than 3.75 but less 1.00%
than or equal to 4.25
greater than 3.25 but less 0.875%
than or equal to 3.75
less than or equal to 3.25 0.75%
"REVOLVING FACILITY AMOUNT" means, on any date of
determination, $1,000,000,000 less all Revolving Facility Reductions which are
then effective.
"REVOLVING FACILITY REDUCTION" means each temporary or
permanent reduction of the revolving credit available to the Borrower under this
Agreement, whether voluntarily made or scheduled to be made pursuant to Section
2.05 or required to be made pursuant to Section 2.06, Section 6.01 or any other
provision of this Agreement or otherwise becoming effective in accordance with
this Agreement.
"REVOLVING LENDER" means each financial institution signatory
hereto listed as a Revolving Lender which has committed to participate in the
revolving credit hereunder as set forth in Schedule I, including the LC Bank,
and any other financial institution that pursuant to Section 8.07 becomes a
party to this Agreement for the purpose of participating in the revolving credit
hereunder.
"REVOLVING LOAN AVAILABILITY" means the difference, as of any
date of determination, between (i) the Revolving Facility Amount, and (ii) the
sum of (A) the Outstanding Revolving Credit and (B) the outstanding principal
amount of all Swing Line Advances.
"REVOLVING PRO RATA SHARE" means, in respect of any Revolving
Lender, the ratio of (i) such Revolving Lender's commitment to participate in
the revolving credit hereunder or if such Revolving Lender's commitment has
terminated, the outstanding principal amount of Advances by such hereunder to
(ii) all such commitments, in each case as set forth in Schedule I or, if such
Revolving Lender has entered into one or more Assignments and Acceptances, in
the Register or if such commitments have terminated, the aggregate outstanding
principal amount of Advances by all Revolving Lenders.
<PAGE>
28
"ROTECH" means RoTech Medical Corporation.
"SCHEDULE 1.01(B) ASSETS" means the assets described in
Schedule 1.01(b) and owned by the Borrower or any wholly-owned Subsidiary
thereof and designated for sale thereby.
"S&P" means Standard & Poor's Ratings Services, A Division of
the McGraw-Hill Companies, Inc., and its successors.
"SPECIFIED LEASE EXPENSE" means, with respect to any Person,
for any period, Lease Expense of such Person for such period less that portion
of such Lease Expense representing payments for real estate and personal
property taxes and insurance.
"STATE" means the District of Columbia or any state of the
United States of America.
"SUBORDINATED DEBT" means the Debt outstanding under the
Subordinated Debt Indentures.
"SUBORDINATED DEBT INDENTURES" means the 1992 Convertible
Subordinated Debt Indenture, the 1993 Convertible Subordinated Debt Indenture,
the 1994 Subordinated Debt Indenture, the 1995 Subordinated Debt Indenture, the
1996 Subordinated Debt Indenture, the 1997 Subordinated Debt Indenture, the 1997
B Subordinated Debt Indenture and, upon the effectiveness thereof, the Proposed
Subordinated Debt Indenture.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association, partnership, joint venture or other business entity of
which more than 50% of the voting stock or other equity interests is owned or
controlled directly or indirectly by such Person or one or more Subsidiaries of
such Person or a combination thereof.
"SWING LINE ADVANCE" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(a)(iii) or (b) any Revolving Lender pursuant
to Section 2.01(h).
"SWING LINE BANK" means Citibank, N.A. and any Revolving
Lender which agrees to become, and is designated as, a replacement Swing Line
Bank pursuant to Section 2.01(i).
"SWING LINE FACILITY" has the meaning specified in Section
2.01(a)(iii).
"SYNTHETIC LEASE FACILITY" means the lease entered into
between Eric J. Donaghey, as the Individual Owner Trustee, and Integrated Health
Services at Highlands Park, Inc., as Lessee, and the other leases to be entered
into by Subsidiaries of the Borrower
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29
pursuant to the Participation Agreement and the other transactions by one or
more Loan Parties in connection therewith, pursuant to which the aggregate
amount of the obligations issued to the noteholders and Certificateholder in
connection therewith shall not be in excess of $100,000,000.
"TANGIBLE ASSETS" means the difference, as of any date of
determination, between (i) the total consolidated assets of the Borrower and its
Subsidiaries as determined in accordance with GAAP and required under GAAP to be
shown on a consolidated balance sheet of the Borrower and its Subsidiaries, and
(ii) all such assets that are Intangible Assets.
"TAXES" is defined in Section 2.16(a).
"TERM BORROWING" means the loan made by the Term Lenders on
the Closing Date pursuant to Section 2.01(a)(ii) in the aggregate principal
amount of $750,000,000 and which can bear interest by reference to the Base Rate
or the Eurodollar Rate.
"TERM BORROWING BASE RATE MARGIN" means, for any Pricing
Period, the rate per annum set forth below opposite the Pricing Ratio determined
for that Pricing Period:
Pricing Ratio Margin
------------- ------
greater than 5.25 0.75%
less than or equal to 5.25 0.50%
"TERM BORROWING EURODOLLAR RATE MARGIN" means, for any Pricing
Period, the rate per annum set forth below opposite the Pricing Ratio determined
for that Pricing Period:
Pricing Ratio Margin
------------- ------
greater than 5.25 2.00%
less than or equal to 5.25 1.75%
"TERM LENDER" means each financial institution signatory
hereto listed as a Term Lender which has committed to participate in the term
credit hereunder as set forth in Schedule I, and any financial institution that
pursuant to Section 8.07 becomes a party to this Agreement for the purpose of
participating in the term credit hereunder.
"TERM PRO RATA SHARE" means, in respect of any Term Lender,
the ratio of (i) on the Closing Date such Term Lender's commitment to
participate in the term credit hereunder and thereafter the outstanding
principal amount of its Advances hereunder to (ii) on the Closing Date the
aggregate of all such commitments by the Term Lenders and
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30
thereafter the aggregate outstanding principal amount of the Advances by all
Term Lenders hereunder.
"TERMINATION DATE" means the Maturity Date or such earlier
date as the commitments of the Lenders to extend credit under this Agreement
shall be terminated in whole pursuant to Section 2.05 or the obligation of each
Lender to make Advances and the LC Bank to issue Letters of Credit shall be
terminated pursuant to Section 6.01.
"'34 ACT COMPANY" means a Person that is a reporting company
under the 1934 Act.
"UNFUNDED LC EXPOSURE" means the maximum amount which the LC
Bank may be required, under all Letters of Credit outstanding as of any date of
determination, to pay on such date or at any future time.
"UNFUNDED PENSION LIABILITY" means, with respect to any
Pension Plan that is subject to Title IV of ERISA, the excess of such Pension
Plan's accrued benefits, as defined in Section 3(23) of ERISA, over the current
value of such Pension Plan's assets, as defined in Section 3(26) of ERISA (but
excluding from the definition of "current value" of "assets" of such Pension
Plan, accrued but unpaid contributions).
"UNITED STATES" and "U.S." mean the United States of America.
"WELFARE PLAN" means any Plan which is an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA.
"WITHDRAWAL LIABILITIES" means the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA if the Borrower and each
ERISA Affiliate made a complete withdrawal from all Multiemployer Plans and any
increase in contributions pursuant to Section 4243 of ERISA.
SECTION 1.02. Accounting Terms. All accounting terms not
expressly defined herein shall be construed, except where the context otherwise
requires, and all financial computations required under this Agreement shall be
made in accordance with GAAP applied on a consistent basis. If GAAP changes
during the term of this Agreement so as to affect the calculation of any term
defined herein or any measure of financial performance or financial condition
employed or referred to herein, the Borrower and the Lenders agree to negotiate
in good faith toward an amendment of this Agreement which shall approximate, to
the extent possible, the economic effect of the original provisions hereof after
taking into account such change in GAAP, but until the parties are able to agree
upon such amendment (i) the Borrower shall be deemed in compliance with the
provisions hereof only if and to the extent it would have been in compliance if
such change in GAAP had not occurred
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31
and (ii) the Borrower shall deliver to the Agent, with each financial report
delivered by the Borrower hereunder, information sufficient to confirm such
compliance as if such change in GAAP had not occurred.
SECTION 1.03. Other Definitional Provisions. (a) Unless
otherwise specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any other Loan Document or in any
certificate or other document made or delivered pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section, schedule and
exhibit references are to this Agreement unless otherwise specified. The meaning
of defined terms shall be equally applicable to the singular and plural forms of
the defined terms. The term "including" is not limiting and means "including
without limitation."
(c) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding"; and the word "through"
means "to and including."
(d) References to agreements and other documents 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 any Loan Document.
(e) References to statutes or regulations shall be construed
as including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Revolving Facility, Term Loan and Swing Line.
(a)(i) Revolving Borrowings. Subject to the terms and conditions herein, each
Revolving Lender severally agrees to lend to the Borrower, from time to time on
any Borrowing Date until the Termination Date (or if earlier, the date of a
Change of Control), an amount in Dollars equal to such Revolving Lender's
Revolving Pro Rata Share of a Revolving
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32
Borrowing that (A) is requested by the Borrower for such Borrowing Date and (B)
when aggregated with all other Revolving Lenders' Revolving Pro Rata Share of
such Revolving Borrowing, does not exceed the Revolving Loan Availability as of
such Borrowing Date.
(ii) Term Loan. Subject to the terms and conditions herein,
each Term Lender severally agrees to lend to the Borrower on the Closing Date an
amount in Dollars equal to such Term Lender's Term Pro Rata Share of the Term
Borrowing. Not later than 11:00 a.m. New York City time (A) three Business Days
prior to the Closing Date if the Borrower requests that the Term Borrowing
initially bear interest by reference to the Eurodollar Rate and (B) one Business
Day prior to the Closing Date if the Borrower requests that the Term Borrowing
initially bear interest by reference to the Base Rate, the Borrower shall
deliver a notice to the Agent, which notice shall specify whether the Term
Borrowing initially shall bear interest by reference to the Eurodollar Rate or
the Base Rate, and if at the Eurodollar Rate, the initial interest period
therefor. The Agent shall give each Term Lender prompt notice thereof by
telecopier.
(iii) Swing Line. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank may, if in its sole discretion it elects to do
so, make, on the terms and conditions hereinafter set forth, Swing Line Advances
to the Borrower from time to time on any Business Day during the period from the
date hereof until the Termination Date (or if earlier, the date of a Change of
Control) (i) in an aggregate amount not to exceed at any time outstanding
$10,000,000 (the "SWING LINE FACILITY") and (ii) in an amount for each such
Advance not to exceed the sum of the Revolving Loan Availability, and the
aggregate outstanding amount of the prior Swing Line Advances, in each case on
such Business Day. No Swing Line Advance shall be used for the purpose of
funding the payment of principal of any other Swing Line Advance. Each Swing
Line Advance shall be in an amount of $500,000 or an integral multiple thereof
and shall be made as a Base Rate Advance. Within the limits of the Swing Line
Facility and within the limits referred to in clause (ii) above, so long as the
Swing Line Bank, in its sole discretion, elects to make Swing Line Advances, the
Borrower may borrow under this Section 2.01(a)(iii), prepay pursuant to Section
2.11 and reborrow under this Section 2.01(a)(iii).
(b) Amount of Revolving Borrowings. Each Revolving Borrowing
shall be in an aggregate amount not less than $2,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of either Base Rate Advances
or Eurodollar Rate Advances. The Borrower may reborrow under Section 2.01(a)(i)
any Advances comprising part of the same Revolving Borrowing that it has
voluntarily prepaid pursuant to Section 2.11 or was required to prepay pursuant
to Section 2.06(e).
(c) Notice of Revolving Borrowing. To request a Revolving
Borrowing, the Borrower shall deliver a Notice of Borrowing to the Agent not
later than 11:00 a.m. New York City time (i) three Business Days prior to the
requested Borrowing Date, in the case of
<PAGE>
33
Eurodollar Rate Advances, and (ii) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Advances. The Agent shall give each
Revolving Lender prompt notice thereof by telecopier. The Notice of Borrowing
shall specify (A) the requested Borrowing Date, (B) the amount of the Revolving
Borrowing and whether it will consist of Base Rate Advances or Eurodollar Rate
Advances, and (C) in the case of a Revolving Borrowing comprised of Eurodollar
Rate Advances, the initial Interest Period for such Eurodollar Rate Advances.
(d) Telephonic Notice of Revolving Borrowing. The Borrower may
give the Agent telephonic notice of any proposed Revolving Borrowing by the time
required under Section 2.01(c) and in such event shall promptly (but in no event
later than the Borrowing Date for the requested Borrowing) deliver a
confirmatory Notice of Borrowing to the Agent. The Agent shall give each
Revolving Lender prompt notice thereof by telecopier. If the telephonic request
differs in any respect from the written Notice of Borrowing subsequently
delivered, the telephonic request shall govern as to the terms of all Advances
made in accordance with such telephonic request. The Agent's determination of
the contents of any telephonic request shall, absent manifest error, be
conclusive and binding on all parties hereto.
(e) Funding of Advances. Upon fulfillment of the applicable
conditions set forth in Article III, (i) each Revolving Lender shall, before
12:00 noon New York City time on the Borrowing Date, make available for the
account of its Applicable Lending Office to the Agent at its address referred to
in Section 8.02, in same day funds, such Revolving Lender's Revolving Pro Rata
Share of a Revolving Borrowing and (ii) each Term Lender shall, before 12:00
noon New York City time on the Closing Date, make available for the account of
its Applicable Lending Office to the Agent at its address referred to in Section
8.02, in same day funds, such Term Lender's Term Pro Rata Share of the Term
Borrowing. After the Agent in each case receives such funds, the Agent will, not
later than 5:00 p.m. New York City time on the Borrowing Date, make such funds
available to the Borrower at the Agent's aforesaid address.
(f) Assumption of Funding. Unless the Agent receives notice
from a Lender prior to any Borrowing Date that such Lender will not make
available to the Agent such Lender's Revolving Pro Rata Share or Term Pro Rata
Share, as the case may be, of the Revolving Borrowing or the Term Borrowing, as
the case may be, to be made on such Borrowing Date, the Agent may assume that
such Lender has made its respective share available to the Agent on such
Borrowing Date in accordance with Section 2.01(e) and the Agent may, in reliance
upon such assumption, make available to the Borrower on such Borrowing Date a
corresponding amount. If and to the extent that such Lender fails to make its
respective share available to the Agent, such Lender 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
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34
date such amount is repaid to the Agent, at (i) in the case of the Borrower, the
interest rate applicable at the time to such Borrowing and (ii) in the case of
such Lender, the Federal Funds Rate until the third Business Day after demand by
the Agent to such Lender for such repayment and thereafter at the rate
applicable at the time to such Revolving Borrowing or Term Borrowing. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Revolving Borrowing or
Term Borrowing for purposes of this Agreement and the Borrower shall thereupon
be excused from making the repayment described in the preceding sentence.
(g) Failure of Lender to Fund. All obligations of the Lenders
hereunder shall be several, but not joint. The failure of any Lender to make the
Advance to be made by it as part of any Revolving Borrowing or Term Borrowing
shall not relieve any other Lender of its obligation, if any, hereunder to make
its Advance as part of such Revolving Borrowing or Term Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make an Advance on
any Borrowing Date.
(h) Swing Line Advances. Each Swing Line Advance shall be made
on notice, given not later than 11:00 A.M. (New York City time) on the date of
the proposed Swing Line Advance, by the Borrower to the Swing Line Bank and the
Agent. Each such notice of a Swing Line Advance (a "NOTICE OF SWING LINE
ADVANCE") shall be by telephone or telecopier, confirmed immediately in writing,
specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later
than the seventh day after the requested date of such Borrowing). If, in its
sole discretion, it elects to make the requested Swing Line Advance, the Swing
Line Bank will make the amount thereof available to the Agent at the Agent's
address referred to in Section 8.02, in same day funds. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
at the Agent's aforesaid address. Upon written demand by the Swing Line Bank
with a copy of such demand to the Agent, each other Revolving Lender shall
purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign
to each such other Revolving Lender, such other Revolving Lender's Pro Rata
Share of such outstanding Swing Line Advance as of the date of such demand, by
making available for the account of its Applicable Lending Office to the Agent
for the account of the Swing Line Bank, by deposit to the Agent's address
referred to in Section 8.02, in same day funds, an amount equal to the portion
of the outstanding principal amount of such Swing Line Advance to be purchased
by such Revolving Lender. The Borrower hereby agrees to each such sale and
assignment. Each Revolving Lender agrees to purchase its Revolving Pro Rata
Share of an outstanding Swing Line Advance on (i) the Business Day on which
demand therefor is made by the Swing Line Bank, provided that notice of such
demand is given not later than 11:00 A.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by the Swing Line Bank
to any other Revolving Lender of a portion of a Swing
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35
Line Advance, the Swing Line Bank represents and warrants to such other Lender
that the Swing Line Bank is the legal and beneficial owner of such interest
being assigned by it, but makes no other representation or warranty and assumes
no responsibility with respect to such Swing Line Advance, the Loan Documents or
any Loan Party. If and to the extent that any Revolving Lender shall not have so
made the amount of such Swing Line Advance available to the Agent, such
Revolving Lender agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Swing Line Bank until the date such amount is paid to the Agent, at the Federal
Funds Rate. If such Revolving Lender shall pay to the Agent such amount for the
account of the Swing Line Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Swing Line Advance made by such
Revolving Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Swing Line Advance made by the Swing Line
Bank shall be reduced by such amount on such Business Day.
(i) Replacement of Swing Line Bank. The Borrower may at any
time, upon at least five Business Days' prior written notice to the Agent and
Revolving Lenders, designate as a replacement Swing Line Bank any Revolving
Lender that has agreed in writing to act as Swing Line Bank. Thereupon, (i) the
obligation, right and authority of the Revolving Lender that was previously
acting as Swing Line Bank to make Swing Line Advances hereunder shall be
terminated, (ii) such Revolving Lender shall remain entitled to enforce all
provisions hereof applicable to all Swing Line Advances theretofore made by such
Revolving Lender, and (iii) the Revolving Lender designated as the replacement
Swing Line Bank shall thenceforth make Swing Line Advances on the terms and
subject to the conditions herein
SECTION 2.02. Letter of Credit Subfacility. (a) Issuance of
the Letters of Credit. Subject to the terms and conditions set forth herein, the
LC Bank agrees to issue one or more Letters of Credit, at the request and for
the account of the Borrower, on any Business Day on or after the Closing Date
and prior to the Termination Date (or if earlier, the date of a Change of
Control), so long as (i) after giving effect to the issuance of any Letter of
Credit so requested, (A) the Outstanding Revolving Credit plus the outstanding
principal amount of all Swing Line Advances does not exceed the then Revolving
Facility Amount, and (B) the LC Exposure does not exceed the then LC
Subcommitment, and (ii) the LC Bank has not received written notice from the
Agent or Requisite Revolving Lenders that an Event of Default or Potential
Default is continuing.
(b) LC Application. The Borrower may request issuance of a
Letter of Credit by delivering an LC Application to the Agent not later than two
Business Days prior to the date the Letter of Credit is to be issued. The Agent
shall promptly deliver a copy of the LC Application to the LC Bank and each
Revolving Lender.
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36
(c) Reimbursement. Any payment made by the LC Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the LC Bank of an Advance pursuant to Section 2.01(a)(i)
in the amount of such draft, which Advance shall (i) constitute a Base Rate
Advance until converted, at the Borrower's election, into a Eurodollar Rate
Advance pursuant to Section 2.10, and (ii) satisfy the Borrower's obligation to
reimburse the LC Bank under this Section 2.02 . With respect to each Advance
made pursuant to this Section 2.02(c), the Borrower shall be deemed to have
certified the statements contained in Section 3.02(b) as of the date the payment
constituting such Advance was made by the LC Bank; provided that in the event
any such statement was not true and correct as of such date, such Advance shall
be repayable on demand; provided further that upon any such repayment on demand,
the failure of any such statement to be true and correct as of such date shall
not constitute an Event of Default under Section 6.01, unless the failure of any
such statement to be true and correct as of such date would have constituted an
Event of Default under Section 6.01 even if such repaid Advance had never been
made.
(d) Reimbursement Obligation Absolute. The obligation of the
Borrower to reimburse the LC Bank for each payment made by the LC Bank under any
Letter of Credit, and to pay interest thereon as provided herein, shall be
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under and without regard to any
circumstances, including (i) any lack of validity or enforceability of any of
the Loan Documents; (ii) any amendment or waiver of or any consent to departure
from all or any terms of any of the Loan Documents; (iii) the existence of any
claim, setoff, defense or other right which the Borrower may have at any time
against any beneficiary or any transferee of any Letter of Credit (or any
Persons for whom any such beneficiary or transferee may be acting), the LC Bank,
the Agent, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
(iv) any breach of contract or dispute among or between the Borrower, the Agent,
the LC Bank, any Lender, or any other Person; (v) any demand, statement,
certificate, draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (vi) payment by the
LC Bank (acting in good faith) under any Letter of Credit against presentation
of any demand, statement, certificate, draft or other document which does not
strictly comply with the terms of any Letter of Credit; (vii) any
non-application or misapplication by any beneficiary or transferee of the
proceeds of any amount paid under any Letter of Credit or any other act or
omission of such beneficiary or such transferee in connection with any Letter of
Credit; (viii) any extension of time for or delay, renewal or compromise of or
other indulgence or modification granted or agreed to by the LC Bank, the Agent
or any Lender, with or without notice to or approval by the Borrower; (ix) any
failure to preserve or protect any Collateral, any failure to perfect or
preserve the perfection of any Lien thereon, or the release of any Collateral;
or (x) any other circumstance or event whatsoever relating to the Borrower or
such Letter of Credit or the reimbursement due therefor, whether or not similar
to any of the foregoing.
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37
(e) Revolving Lender Participation. Each Revolving Lender
severally agrees to participate with the LC Bank in the extension of credit
arising from the issuance of any Letter of Credit in conformity with Section
2.02(a), in an amount equal to such Revolving Lender's Revolving Pro Rata Share
of the amount available for payment under such Letter of Credit. Upon written
demand by the LC Bank, with a copy of such demand to the Agent, each Revolving
Lender shall promptly fund its participation by paying to the LC Bank Dollars in
an amount equal to such Revolving Lender's Revolving Pro Rata Share of the
payment made by the LC Bank under any Letter of Credit, together with all
interest accrued and unpaid thereon for the period from the day on which the
payment to be reimbursed was demanded by the LC Bank until the Business Day on
which such funding from such Revolving Lender is received by the LC Bank at the
rate per annum equal to the Federal Funds Rate until the second Business Day
following such demand, and thereafter the rate per annum then applicable to Base
Rate Advances. Upon funding its participation in accordance with this Section
2.02(e), each Revolving Lender shall be deemed to have made an Advance pursuant
to Section 2.01(a)(i) as of the date the relevant Letter of Credit was drawn,
and the Advance deemed pursuant to Section 2.02(c) to have been made by the LC
Bank upon any such payment shall be reduced, in an amount equal to such
Revolving Lender's participation. Each Revolving Lender's obligation to make
such payment to the LC Bank shall be absolute, unconditional and irrevocable and
shall not be affected by any circumstance whatsoever, including the occurrence
or continuance of any Potential Default or Event of Default, the failure to meet
any condition that otherwise must be met for the funding of any Advance, or the
failure of any other Revolving Lender to make any payment under this Section
2.02(e), and each Revolving Lender further agrees that such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. If
after receipt of such funding from any Revolving Lender the LC Bank receives
payment from the Borrower or any other source on account of the reimbursement
obligation that was so funded, or the interest accrued thereon, the LC Bank
shall promptly remit such payment to the Agent for prompt distribution to the
Revolving Lenders to the extent of their participation therein.
(f) Commercial Practices. The Borrower assumes all risks of
the acts or omissions of any beneficiary or transferee of any Letter of Credit
with respect to the use of any Letter of Credit. The Borrower agrees that the LC
Bank, the Agent, the Lenders and their respective directors, officers or
employees shall not be liable or responsible for (i) the use which may be made
of any Letter of Credit or for any acts or omissions of any beneficiary or
transferee in connection therewith; (ii) any reference which may be made to this
Agreement or to any Letter of Credit in any agreements, instruments or other
documents; (iii) the validity, sufficiency or genuineness of any document other
than a Letter of Credit, or of any endorsement thereon, even if such document or
endorsement should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged or any statement therein prove to be untrue
or inaccurate in any respect whatsoever; (iv) payment by the LC Bank (acting in
good faith) against presentation of documents which do not strictly
<PAGE>
38
comply with the terms of any Letter of Credit; or (v) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except only that the LC Bank shall be liable to the Borrower for acts or events
described in clauses (i) through (v) above, to the extent, but only to the
extent, of any direct (as opposed to indirect, special or consequential) damages
suffered by the Borrower which the Borrower proves were caused by (A) the LC
Bank's willful misconduct or gross negligence in determining whether a draft or
demand presented under any Letter of Credit strictly complies with the terms and
conditions therefor stated in such Letter of Credit or (B) the LC Bank's willful
failure to pay any draft or demand presented under any Letter of Credit that
strictly complies with the terms and conditions thereof. The LC Bank may accept
any document that appears on its face to be in order, without responsibility for
further investigation. The determination whether a draft or demand is properly
presented under any Letter of Credit prior to its expiration or whether a draft
or demand presented under any Letter of Credit is in proper and sufficient form
may be made by the LC Bank in its sole discretion, and such determination shall
be conclusive and binding upon the Borrower to the extent permitted by law. The
Borrower hereby waives any right to object to any payment made under any Letter
of Credit on presentation of any draft or demand that is in the form provided in
the Letter of Credit but varies with respect to punctuation, capitalization,
spelling or similar matters of form.
(g) Replacement of LC Bank. The Borrower may at any time, upon
at least five Business Days' prior written notice to the Agent and Revolving
Lenders, designate as a replacement LC Bank any Revolving Lender that has agreed
in writing to act as LC Bank. Thereupon, (i) the obligation, right and authority
of the Revolving Lender that was previously acting as LC Bank to issue Letters
of Credit hereunder shall be terminated, (ii) such Revolving Lender shall remain
entitled to enforce all provisions hereof applicable to all Letters of Credit
theretofore issued by or requested from such Lender, and (iii) the Revolving
Lender designated as the replacement LC Bank shall thenceforth issue Letters of
Credit on the terms and subject to the conditions herein.
SECTION 2.03. Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(b) The Register maintained by the Agent pursuant to Section
8.07(c) shall include accounts for each Lender, in which accounts (taken
together) shall be recorded (i) the date and amount of each Advance made
hereunder, (ii) the terms of each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (iv)
the amount of any sum received by the Agent from the Borrower hereunder and each
Lender's share thereof.
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39
(c) The entries made as provided in this section shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.04. Fees. (a) Closing Fees. On the Closing Date, the
Borrower will pay to the Agent, for account of the Lenders, the closing fees
described in Schedule I.
(b) Commitment Fees. On the first day of each Quarter,
commencing October 1, 1997 (for the period from the Closing Date through
September 30, 1997) and continuing thereafter until the date the Revolving
Facility Amount is permanently reduced to zero (for the period from the first
day in the respective Quarter through the last day of such Quarter or such date
the Revolving Facility Amount has been reduced to zero, as the case may be),
including on the Termination Date (for the period from the first day in the
immediately preceding Quarter to the Termination Date), the Borrower shall pay
to the Agent, for the account of the Revolving Lenders in accordance with their
Revolving Pro Rata Share, a commitment fee computed by applying the Commitment
Fee Rate to the difference, from day to day in the prior Quarter or partial
Quarter, as the case may be, between (i) the sum of (A) the then Revolving
Facility Amount and (B) the then Purchasers' Aggregate Net Investment, less (ii)
the then Outstanding Revolving Credit. During the period commencing on the
Closing Date until the Pricing Certificate is delivered for the initial Pricing
Period, the Commitment Fee Rate shall be 0.300%.
(c) Letter of Credit Fees. On the first day of each Quarter,
commencing October 1, 1997 (for the period from the Closing Date through
September 30, 1997) and continuing thereafter until the date Revolving Facility
Amount and Unfunded LC Exposure have both been reduced to zero (for the period
from the first day in the respective Quarter through the last day of such
Quarter or such date the Revolving Facility Amount and Unfunded LC Exposure have
both been reduced to zero, as the case may be), including on the Termination
Date (for the period from the first day in the immediately preceding Quarter to
the Termination Date), the Borrower shall pay to the Agent for the account of
the Revolving Lenders in accordance with their Revolving Pro Rata Share a letter
of credit fee computed by applying the LC Fee Rate to the Unfunded LC Exposure
from day to day in the prior Quarter or partial Quarter, as the case may be.
(d) Facing Fees. On the first day of each Quarter, commencing
October 1, 1997 (for the period from the Closing Date through September 30,
1997) and continuing thereafter until the date the Revolving Facility Amount and
Unfunded LC Exposure have both been reduced to zero (for the period from the
first day in the respective Quarter through the last day of such Quarter or such
date the Revolving Facility Amount and Unfunded LC Exposure have both been
reduced to zero, as the case may be), including on the Termination Date (for the
period from the first day in the immediately preceding Quarter to the
Termination Date), the Borrower shall pay to the Agent for the account of the LC
Bank a
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facing fee computed by applying 0.125% per annum to the Unfunded LC
Exposure from day to day in the prior Quarter or partial Quarter, as the case
may be.
(e) Letter of Credit Administration. The Borrower shall pay
the LC Bank's usual and customary charges for opening, amending or honoring any
Letter of Credit and for any wire transfers.
(f) Fees. The Borrower shall pay the Agent and the Arranger
when due all fees payable under the fee letter dated August 5, 1997 (the "FEE
LETTER") from the Arranger to the Borrower.
SECTION 2.05. Voluntary and Scheduled Facility Reductions. (a)
The Borrower at any time may terminate in whole, and from time to time may
reduce ratably in part, the unused portions of the commitments of the Revolving
Lenders to extend revolving credit hereunder, by giving the Agent at least three
Business Days' prior written notice that, effective as of a Business Day set
forth in the notice, the Revolving Facility Amount shall be reduced by an amount
that (i) does not exceed the Loan Availability as of such Business Day and (ii)
is equal to either (A) the then Revolving Facility Amount or (B) an integral
multiple of $1,000,000. Such notice, once given, shall be irrevocable, and the
Revolving Facility Amount, once reduced, may not be increased under any
circumstances.
(b) The Revolving Facility Amount shall be automatically and
permanently reduced (i) on September 30, 2001 to $800,000,000, (ii) on September
30, 2002 to $500,000,000 and (iii) on the Termination Date as provided in
Section 2.06(a) below.
SECTION 2.06. Principal Payments and Swing Line Payments. The
Borrower shall repay the Advances and reduce the Revolving Facility Amount as
follows:
(a) Final Maturity. (i) On the Termination Date, all
outstanding Revolving Borrowings shall be due and payable and the
Revolving Facility Amount and LC Subcommitment shall be automatically
and permanently reduced to zero.
(ii) The principal amount of the Term Borrowing shall
be repaid quarterly on the last day of each March, June, September, and
December, commencing December 31, 1998, in equal installments in each
year commencing in 1999 and with the payment on December 31, 1998 to be
equal to $7,500,000. The principal amount to be repaid in each of 1999,
2000, 2001 and 2002 shall be equal to $7,500,000; the principal amount
to be repaid in 2003 shall be equal to $337,500,000; and the principal
amount to be repaid in 2004 shall be equal to $375,000,000 with the
aggregate unpaid principal amount of the Term Borrowing to be payable
on September 30, 2004.
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41
(b) Excess Revolving Credit Exposure. If at any time,
by reason of any voluntary or mandatory Revolving Facility Reduction or
for any other reason, the Outstanding Revolving Credit plus the
outstanding principal amount of all Swing Line Advances exceeds the
then Revolving Facility Amount, the Borrower shall immediately, without
notice or demand, repay Revolving Borrowings or, if no Revolving
Borrowings are outstanding, deposit Dollars to the LC Cash Collateral
Account, in an amount equal to such excess.
(c) Excess LC Exposure. If at any time, by reason of
any voluntary or mandatory Revolving Facility Reduction or for any
other reason, the LC Exposure exceeds the then LC Subcommitment, the
Borrower shall immediately deposit Dollars in an amount equal to such
excess to the LC Cash Collateral Account.
(d) Payment on Date of Change of Control. If, within
the period commencing on the date of a Change of Control and ending 30
Business Days after the Borrower gives the Agent written notice of such
Change of Control, the Requisite Lenders shall demand in writing that
the Borrower repay all Advances, then on the 30th day following such
demand (i) all Advances then outstanding shall be due and payable in
full, and (ii) the Revolving Facility Amount and the LC Subcommitment
shall be automatically and permanently reduced to zero; and if any LC
Exposure remains outstanding on such day the Borrower on such day shall
deposit Dollars to the LC Cash Collateral Account as necessary to cause
the amount on deposit therein to be equal to the then LC Exposure.
(e) Revolving Facility Reduction for Receivables Sale
Program. Whenever any Receivables Sale Program is in effect, the
Revolving Facility Amount shall be reduced (but in no event by more
than $200,000,000), from time to time, by an amount equal to the
Purchasers' Aggregate Net Investment at any such time, as certified
from time to time pursuant to Section 5.02(c)(xiv) or 5.02(c)(xv) for
as long, but only for as long, as the Receivables Sale Program is in
effect. If after giving effect to any such reduction the Outstanding
Revolving Credit exceeds the reduced Revolving Facility Amount,
prepayment shall be made pursuant to Section 2.06(b) when such
reduction becomes effective.
(f) Application of LC Cash Collateral. With respect
to Dollars deposited to the LC Cash Collateral Account:
(i) At any time when no Event of Default or
Potential Default has occurred and is continuing, the Agent
may (and shall, if so directed in writing by the Borrower or
the Requisite Revolving Lenders) cause such deposit to be
applied to repay any or all Funded LC Exposure, in any order
of application;
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(ii) Whenever any Event of Default has
occurred and is continuing, the Agent may (and shall if so
directed in writing by the Requisite Revolving Lenders) cause
such deposit to be applied to repay or retire any or all of
the Obligations, whether or not then due, in any order of
application;
(iii) If at any time when no Event of
Default or Potential Default is continuing the Dollars on
deposit in the LC Cash Collateral Account exceed the then LC
Exposure, the Agent shall, if so directed in writing by the
Borrower, cause such deposit to be released to the Borrower to
the extent, but only to the extent, such deposit exceeds the
then LC Exposure; and
(iv) Interest shall accrue and be payable on
deposits to the LC Cash Collateral Account.
(g) Swing Line Payments. The Borrower shall repay to
the Agent for the account of the Swing Line Bank the outstanding
principal amount of each Swing Line Advance, together with all interest
accrued thereon, on the earlier of (i) the maturity date specified in
the applicable Notice of Swing Line Advance (which maturity shall be no
later than the seventh day after the requested date of such Borrowing)
and (ii) the Termination Date.
SECTION 2.07. Interest. The Borrower agrees to pay interest on
the unpaid principal amount of each Advance made by each Lender comprising part
of the same Revolving Borrowing (or, in the case of an Advance made pursuant to
Section 2.02(c), by the LC Bank), each Advance comprising part of the Term
Borrowing and each Swing Line Advance from the date of such Advance until such
principal amount shall be repaid in full, at the following rates per annum:
(a) Base Rate Advances. Whenever such Advance is a
Base Rate Advance, a rate per annum equal on each day to the sum of the
Base Rate as in effect on such day plus the Revolving Borrowing Base
Rate Margin or Term Borrowing Base Rate Margin, as the case may be,
determined for such day (provided that at all times during the period
commencing on the Closing Date until the Pricing Certificate is
delivered for the initial Pricing Period the Revolving Borrowing Base
Rate Margin shall be zero and the Term Borrowing Base Rate Margin shall
be 0.50% and thereafter shall be determined as otherwise provided
herein), with all such interest accrued in any one month payable
monthly on the first day of the next following month and, in the case
of the Revolving Borrowings, when the Revolving Facility Amount has
been reduced to zero and all Advances comprising Revolving Borrowings
are repaid in full, and in the case of the Term Borrowing, when all
Advances comprising the Term Borrowing are repaid in full. Interest
shall be paid in cash for any Swing Line Advance at a rate per annum
equal on each day to the sum of the
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43
Base Rate as in effect on such day plus the Revolving Borrowing Base
Rate Margin with all such interest payable on the date of payment when
such Swing Line Advance is due.
(b) Eurodollar Rate Advances. Whenever such Advance
is a Eurodollar Rate Advance, a rate per annum equal on each day during
the Interest Period for such Eurodollar Rate Advance to the sum of the
Eurodollar Rate for such Interest Period plus the Revolving Borrowing
Eurodollar Rate Margin or Term Borrowing Eurodollar Rate Margin, as the
case may be, determined for such day (provided that at all times during
the period commencing on the Closing Date until the Pricing Certificate
is delivered for the initial Pricing Period the Revolving Borrowing
Eurodollar Rate Margin shall be 1.25% and the Term Borrowing Eurodollar
Rate Margin shall be 1.75% and thereafter shall be determined as
otherwise provided herein) with all interest so accrued payable on the
last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on the day which occurs three
months after the first day of such Interest Period.
(c) Default Interest. For any period of time during
which an Event of Default under Section 6.01(a), (b), (c), (d), (e),
(f), (g), (h), (i), (j), (k), (l), (m) (with respect to the Borrower or
any Material Subsidiary only) or (n) has occurred and is continuing,
(i) the principal amount of all Advances then outstanding shall bear
interest payable upon demand at a rate per annum equal to the sum of
(A) 2.0% per annum and (B) the rate otherwise payable pursuant to
subsection (a) or (b) above, but not to exceed the maximum rate
permitted by applicable law and (ii) the amount of any interest, fee or
other amount payable hereunder which is not paid when due, shall bear
interest from the date such amount shall be due until such amount shall
be paid in full, payable in arrears on the date such amount shall be
paid in full and on demand, at a rate per annum equal at all times to
2% per annum above the Base Rate as in effect from time to time plus
the Revolving Borrowing Base Rate Margin.
SECTION 2.08. Additional Interest on Eurodollar Rate Advances.
The Borrower shall pay each Lender additional interest on the unpaid principal
amount of each Advance of such Lender for each day that such Advance is
outstanding as a Eurodollar Rate Advance, at a rate per annum equal to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Interest
Period for such Eurodollar Rate Advance from (ii) the rate determined by
dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage of such Lender for such day. Such additional interest
shall be determined by such Lender, notified to the Borrower through the Agent
and payable when and as interest is payable on such Eurodollar Rate Advance or,
if later, five Business Days after the Borrower receives notice thereof. If the
Borrower so requests, such Lender shall provide the Borrower through the Agent a
certificate setting forth the calculation and
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44
supporting information for such additional interest, which shall be conclusive
and binding for all purposes, absent manifest error.
SECTION 2.09. Interest Rate Determination and Protection. (a)
Determination of Eurodollar Rate. The Eurodollar Rate for each Interest Period
for Eurodollar Rate Advances comprising part of the same Revolving Borrowing or
Term Borrowing shall be determined by the Agent.
(b) Notice of Eurodollar Rate. The Agent shall give prompt
notice to the Borrower and the respective Lenders of the applicable Eurodollar
Rate for any Interest Period when determined by the Agent.
(c) Failure to Provide Information. If any one of the
Reference Banks does not furnish to the Agent timely information sufficient to
enable the Agent to determine a Eurodollar Rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the remaining
Reference Banks. If fewer than two Reference Banks furnish timely information to
the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances,
the Agent shall determine the Eurodollar Rate based on information furnished by
Citibank. If Citibank is unable to obtain timely information for determining the
Eurodollar Rate for any Eurodollar Rate Advances, the Agent shall forthwith
notify the Borrower and the respective Lenders that the interest rate cannot be
determined for such Eurodollar Rate Advances and the obligation of such Lenders
to make or continue, or to convert Advances into, Eurodollar Rate Advances shall
be suspended until the Agent shall notify the Borrower and such Lenders that the
circumstances causing such suspension no longer exist.
(d) Suspension of Eurodollar Rate Advances. If, with respect
to any Eurodollar Rate Advances, the Requisite Term Lenders or the Requisite
Revolving Lenders, as the case may be, notify the Agent that either (i) the
Eurodollar Rate for any Interest Period for such Eurodollar Rate Advances is at
least two basis points less than the cost to such Lenders of obtaining funds in
Dollars in the London interbank market in the amounts substantially equal to
such Lenders' Eurodollar Rate Advances and for a period equal to such Interest
Period or (ii) funding is not available to such Lenders in such market in
Dollars, then the Agent shall forthwith so notify the Borrower and such Lenders
and thereupon (A) each Eurodollar Rate Advance by such Lenders will
automatically, on the last day of the then existing Interest Period therefor,
convert into a Base Rate Advance, and (B) the obligation of such Lenders to make
or continue, or to convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and such Lenders that the
circumstances causing such suspension no longer exist.
(e) Failure to Specify Duration. If the Borrower fails, prior
to the date the Eurodollar Rate for any Interest Period is determined by the
Agent, to specify the duration of
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any Interest Period for any Eurodollar Rate Advances, the Interest Period shall
be one month.
(f) Agent's Determination Conclusive. Each determination by
the Agent of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.10. Voluntary Conversion of Advances. (a) Notice of
Continuance/Conversion. Subject to the provisions of Sections 2.09 and 2.14, the
Borrower may on any Business Day, by giving the Agent a Notice of
Continuance/Conversion not later than 11:00 a.m. (New York City time) on the
third preceding Business Day, (i) convert Base Rate Advances comprising the same
Revolving Borrowing or the Term Borrowing into Eurodollar Rate Advances, (ii)
convert Eurodollar Rate Advances comprising the same Revolving Borrowing or the
Term Borrowing into Base Rate Advances or (iii) continue Eurodollar Rate
Advances as Eurodollar Rate Advances, but (A) the Borrower may convert a
Eurodollar Rate Advance into a Base Rate Advance only on the last day of an
Interest Period for such Eurodollar Rate Advance, (B) the Borrower may continue
a Eurodollar Rate Advance as a Eurodollar Rate Advance only as of the last day
of an Interest Period for such Eurodollar Rate Advance, and (C) no Advance may
be converted into or continued as a Eurodollar Rate Advance at any time when an
Event of Default or Potential Default has occurred and is continuing.
(b) Telephonic Notice. In lieu of delivering a Notice of
Continuance/Conversion, the Borrower may give the Agent telephonic notice of any
proposed conversion or continuance by the time required under Section 2.10(a)
and in such event shall promptly (but in no event later than the date of the
requested conversion or continuance) deliver a confirmatory Notice of
Continuance/Conversion to the Agent. If the telephonic request differs in any
respect from the written Notice of Continuance/Conversion subsequently
furnished, the telephonic request shall govern as to the terms of such notice.
The Agent's determination of the contents of any telephonic request shall,
absent manifest error, be conclusive and binding on all parties hereto.
(c) Requirements. Each Notice of Continuance/Conversion or
telephonic request shall specify (i) the date of the continuance or conversion,
(ii) the Advances to be converted or continued and (iii) when Advances are
converted into or continued as Eurodollar Rate Advances, the duration of the
Interest Period for such Advances.
(d) Base Rate Advances. Unless a Eurodollar Rate has been
determined for a particular Advance and applies to such Advance on a particular
day in accordance with the provisions hereof, such Advance shall be a Base Rate
Advance and shall accrue interest at the rate then applicable to Base Rate
Advances.
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46
SECTION 2.11. Prepayments. The Borrower from time to time may
prepay, without premium or penalty, the outstanding principal amounts of
Advances, in whole or ratably in part, so long as (i) the Borrower gives one
Business Day's prior written notice to the Agent stating the proposed date and
aggregate principal amount of the prepayment, (ii) each partial prepayment is
made in the case of the Term Borrowing, in an aggregate principal amount of
$15,000,000 or an integral multiple of $1,000,000 in excess thereof, and in the
case of the Revolving Borrowing, in an aggregate principal amount of $2,000,000
or an integral multiple of $1,000,000 in excess thereof, (iii) if any Eurodollar
Rate Advance is paid prior to the last day of the Interest Period for such
Advances, all unpaid interest accrued to the date of prepayment on the principal
amount prepaid and all Breakage Costs incurred as a result of the prepayment are
also paid, and (iv) all unpaid interest accrued to the date of prepayment is
paid concurrently with any prepayment in full. In addition, the Borrower from
time to time may prepay, without premium or penalty, the outstanding proposed
amount of any Swing Line Advance in whole, together with all unpaid interest
thereon to the date of prepayment. Notice of any prepayment under this Section,
once given, shall be irrevocable, and the amount of the prepayment specified in
the notice shall accordingly be due and payable on the prepayment date specified
therein.
SECTION 2.12. Funding Losses. If (i) any Eurodollar Rate
Advance is repaid or converted to a Base Rate Advance on any day other than the
last day of an Interest Period for such Eurodollar Rate Advance (whether as a
result of any optional prepayment, mandatory prepayment, payment upon
acceleration, mandatory conversion or otherwise), (ii) after giving the
respective notice thereof, the Borrower fails to borrow any Eurodollar Rate
Advance in accordance with a Notice of Borrowing, a notice of the Term Borrowing
or a telephonic request delivered to the Agent (whether as a result of the
failure to satisfy any applicable conditions or otherwise), (iii) any Base Rate
Advance is not converted into a Eurodollar Rate Advance or any Eurodollar Rate
Advance is not continued as a Eurodollar Rate Advance in accordance with a
Notice of Continuance/Conversion or telephonic request delivered to the Agent
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), or (iv) the Borrower fails to make any prepayment in accordance with
any notice of prepayment delivered to the Agent, the Borrower shall, upon demand
by any Lender, reimburse such Lender for all costs and losses incurred by such
Lender as a result of such repayment, prepayment or failure ("BREAKAGE COSTS"),
including costs and losses incurred by a Lender as a result of funding
arrangements or contracts entered into by such Lender to fund Eurodollar Rate
Advances. Breakage Costs shall be payable only if demanded within 90 days after
the end of the applicable Interest Period and shall be due 30 days after demand.
Demand shall be made by delivery to the Borrower and the Agent of a certificate
of the Lender making the demand, setting forth in reasonable detail the
calculation of the Breakage Costs for which demand is made. Such certificate
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
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47
SECTION 2.13. Increased Costs. (a) Increase in Cost. If, due
to either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements, in the case of Eurodollar Rate
Advances, included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender or any participant under Section 8.07(e) of agreeing to make
or making, funding or maintaining Eurodollar Rate Advances, then the Borrower
shall from time to time pay to the Agent for the account of such Lender or
participant additional amounts sufficient to compensate such Lender or
participant for such increased cost. Such costs shall be payable only if
demanded within six months after they were incurred and shall be due 30 days
after demand. Demand shall be made by delivery to the Borrower and the Agent of
a certificate of the Lender or participant making the demand, setting forth in
reasonable detail the calculation of the costs for which demand is made. Such
certificate shall, in the absence of manifest error, be conclusive and binding
on the Borrower.
(b) Increase in Capital Requirements. If any Lender determines
that compliance with any law or regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend or funding hereunder and other commitments or
funding of this type, then, upon demand by such Lender, the Borrower shall,
within 30 days after demand from time to time by such Lender, pay to the Agent
for the account of such Lender additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend or funding hereunder. Demand for
such payment may be made at any time but must be made in writing, with a copy to
the Agent. No such compensation may be demanded as to increased capital
maintained by a Lender more than 12 months before compensation was first
demanded by such Lender under this Section 2.13(b). Demand for such compensation
shall be made by delivery to the Borrower and the Agent of a certificate of the
Lender making the demand, setting forth the amount demanded. Such certificate
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
(c) Replacement Lenders and Participants. If, and on each
occasion that, (i) a Lender or a participant under Section 8.07(e) makes a
demand for compensation pursuant to Section 2.08, Section 2.13(a) or Section
2.13(b) with respect to Eurodollar Rate Advances or (ii) a Lender is excused
from funding Eurodollar Rate Advances pursuant to Section 2.14 or (iii) Taxes
are required, pursuant to Section 2.16(a), to be deducted from or with respect
to any amount payable to any Lender or the Agent, the Borrower may in whole
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48
permanently replace such Lender or participant, as the case may be, with an
Eligible Assignee willing to become a Lender hereunder, on the following terms:
(A) If the replacement Lender is a Revolving Lender,
it must be satisfactory to the LC Bank in its reasonable discretion;
(B) The Borrower shall give the Agent and the Lender
or participant being replaced at least five Business Days' prior
written notice of the replacement. The notice must be given within 180
days after the date of the event specified in clause (i), (ii) or (iii)
above, as the case may be, pursuant to which such replacement is made,
and must state the day (which must be a Business Day not more than 10
days after the notice is given) on which the replacement will be
effective.
(C) On the effective date of the replacement, (a) the
replacement Lender shall purchase the Advances owed to such replaced
Lender or participant for a purchase price equal to the principal
amount thereof and all interest accrued thereon as of such effective
date, payable in cash on such effective date, (b) an Assignment and
Acceptance in compliance with this Agreement covering such Advances
shall be delivered to the replacement Lender by the Lender being
replaced or by the participant being replaced and the Lender from which
it holds its participation, and (c) the Borrower shall pay to the Agent
for the account of the replaced Lender or participant all Breakage
Costs resulting from the replacement and all additional interest, fees,
compensation, costs, losses, taxes, expense reimbursements, indemnities
and other Obligations due to the Lender or participant being replaced.
(D) The Borrower will remain liable to each replaced
Lender or participant for all Obligations that survive the repayment of
the Advances.
SECTION 2.14. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Agent that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental Authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances hereunder, then (i) the obligation of such Lender to
make or continue, or to convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and (ii) the Borrower
shall forthwith either (A) prepay in full all Eurodollar Rate Advances of such
Lender then outstanding, together with interest accrued thereon and Breakage
Costs related thereto or (B) convert all Eurodollar Rate Advances of such Lender
then outstanding into Base Rate Advances and pay all interest accrued thereon to
the date of conversion and all Breakage Costs related thereto.
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SECTION 2.15. Payments and Computations. (a) Payments. The
Borrower shall make each payment hereunder and under the Notes not later than
11:00 a.m. (New York City time) on the day payment is due, in Dollars received
by the Agent at its address referred to in Section 8.02 in same day funds. Any
payment due to a Lender shall be paid to the Agent for account of such Lender.
If the Agent receives a payment for account of a Lender not later than 11:00
a.m. (New York City time), the Agent will cause like funds to be distributed to
such Lender for account of its Applicable Lending Office by the close of
business on the same day; if the Agent receives a payment for account of a
Lender after 11:00 a.m. (New York City time), the Agent will cause like funds to
be distributed to such Lender for account of its Applicable Lending Office no
later than the close of business on the next succeeding Business Day.
(b) Charging of Accounts. If and to the extent any payment
owed to the Agent or any Lender is not made within three Business Days after the
date it was due hereunder or under the Note held by such Lender, the Borrower
hereby authorizes the Agent and such Lender to setoff and charge any amount so
due against any deposit account maintained by the Borrower with the Agent or
such Lender, whether or not the deposit therein is then due.
(c) Computations. All computations of interest, additional
interest and fees accruing at a per annum rate shall be made on the basis of the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, additional interest or
commitment fees are payable and a year of 360 days.
(d) Payment on Business Day. Whenever any payment hereunder or
under the Notes is due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall be
included in the computation of interest or fees. If, however, such extension
would cause payment of interest on or principal of Eurodollar Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(e) Presumption of Payment. Unless the Agent receives notice
from the Borrower prior to the date on which any payment is due to the Agent for
the benefit of the Lenders hereunder that the Borrower will 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 Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower does
not make such payment to the Agent in full when due, each Lender shall repay to
the Agent forthwith on demand such amount distributed to such Lender, together
with interest thereon for each day from the date such amount was distributed to
such Lender until the Business Day such Lender repays such amount to the Agent,
at the Federal Funds Rate
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until the third Business Day after such demand and thereafter at the rate
applicable to Base Rate Advances.
SECTION 2.16. Taxes. (a) Net Payments. Any and all payments by
the Borrower hereunder or under the Notes shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes imposed on its net
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its net income, and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively, are "TAXES"). If the Borrower is required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.16) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received if no such deductions had been made, (ii) the Borrower shall make such
deductions, and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) Payment of Other Taxes. In addition, the Borrower agrees
to pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or under the Notes or from the execution, delivery or registration of,
or otherwise similarly with respect to, this Agreement, the Notes or any other
Loan Document ("OTHER TAXES").
(c) Indemnification. The Borrower will indemnify each Lender
and the Agent for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.16) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses, but excluding any liability arising
from the gross negligence or willful misconduct of such Person) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnity shall be due 30 days
after written demand therefor. Any Person entitled to indemnification by the
Borrower pursuant to this Section 2.16(c) shall give the Borrower written notice
of any matter which such Person has determined has given rise to a right of
indemnification hereunder within 120 days after the earlier of (i) the date on
which such Person makes payment of the Taxes or Other Taxes giving rise to such
right or (ii) the date on which such Person receives written demand for payment
of such Taxes or Other Taxes from the applicable Governmental Authority;
provided, however, that the failure by any Person timely
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51
to provide such notice (A) shall not release the Borrower from any of its
obligations under this Section 2.16(c) except to the extent the Borrower is
materially prejudiced by such failure, or such notice was provided more than 240
days after the latest date such notice could have been timely given, and (B)
shall not relieve the Borrower from any other obligation or liability that it
may have to such Person otherwise than under this Section 2.16(c).
(d) Evidence of Payments. Within 30 days after the date of any
payment of Taxes hereunder by the Borrower, the Borrower will furnish to the
Agent, at its address referred to in Section 8.02, the original or a certified
copy of any receipt issued to the Borrower evidencing payment thereof.
(e) Withholding Tax Exemption. If any Lender is a "foreign
person" within the meaning of the Code, such Lender shall deliver to the Agent
(i) (A) if such Lender qualifies for an exemption from, or a reduction of,
United States withholding tax under a tax treaty, a properly completed and
executed Internal Revenue Service Form 1001 (or applicable successor form)
before the payment of any interest in the first calendar year and in each third
succeeding calendar year during which interest may be paid under this Agreement,
(B) if such Lender qualifies for an exemption from United States withholding tax
for interest paid under this Agreement because it is effectively connected with
a United States trade or business of such Lender, two properly completed and
executed copies of Internal Revenue Service Form 4224 (or applicable successor
form) before the payment of any interest is due in the first taxable year of
such Lender, and in each succeeding taxable year of such Lender, during which
interest may be paid under this Agreement, or (C) if such Lender is not a "bank"
as defined in Section 881(c)(3)(A) of the Code, a properly completed and
executed Internal Revenue Service Form W-8 (or applicable successor form) before
the payment of any interest is due in the first taxable year of such Lender, and
in each succeeding taxable year of such Lender, during which interest may be
paid under this Agreement, certifying that such Lender is a foreign corporation,
partnership, estate or trust, together with a certificate of a duly authorized
officer representing that such Lender is not a "bank" for purposes of Section
881(c) of the Code, is not a 10% shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code), and (ii) such other form or forms as may be required or reasonably
requested by the Agent to establish or substantiate exemption from, or reduction
of, United States withholding tax under the Code or other laws of the United
States. Each Lender agrees to notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form 1001,
4224 or W-8 (or applicable successor forms) (or the related certificate
described above), that the Lender reasonably considers to be confidential, the
Lender shall give notice thereof to the
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52
Borrower and shall not be obligated to include in such form or
document such confidential information.
(f) Withholding Taxes. Where any Lender which is a "foreign
person" is entitled to a reduction in the applicable withholding tax, the Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by Section 2.16(e) are not delivered to
the Agent, then the Agent may withhold from any interest payment to any Lender
not providing such forms or other documentation, an amount equivalent to the
applicable withholding tax.
(g) Subsequent Lenders. For purposes of this Section 2.16, the
term "Lender" shall include any assignee pursuant to, and after compliance with
the requirements of, Section 8.07; provided that no Person acquiring any
participation pursuant to Section 8.07(e) shall be deemed a "Lender" for
purposes of this Section 2.16 unless and until the Borrower has been notified of
such participation. If any Lender grants participation in or otherwise transfers
its rights under this Agreement, the participant or transferee shall be bound by
the terms of Sections 2.16(e) and (f) as though it were such Lender.
(h) Refund, Deduction or Credit of Taxes. If any Lender
determines, in its sole good faith discretion, that it has actually and finally
realized, by reason of a refund, deduction or credit of any Taxes paid or
reimbursed by the Borrower pursuant to subsection (a), (b) or (c) above in
respect of payments under the Loan Documents, a current monetary benefit that it
would otherwise not have obtained, and that would result in the total payments
under this Section 2.16 exceeding the amount needed to make such Lender whole,
such Lender shall pay to the Borrower, with reasonable promptness following the
date on which it actually realizes such benefit, an amount equal to the lesser
of the amount of such benefit or the amount of such excess, in each case net of
all reasonable out-of-pocket expenses in securing such refund, deduction or
credit, provided that nothing in this subsection shall require any Lender to
provide its tax returns to the Borrower or to manage its tax affairs in any
particular manner.
(i) Exclusion of Certain Taxes. Notwithstanding any other
provision of this Agreement, the Borrower shall not be required to pay any
amount hereunder to any Lender or the Agent in respect of any Taxes to the
extent that, on the date hereof or any other date such Lender became a party to
(or participant with respect to) this Agreement or (with respect to payments to
an Applicable Lending Office) the date such Lender designated such Applicable
Lending Office with respect to this Agreement or any Notes, the obligation to
withhold or pay such Taxes existed or would exist upon the payment of an amount
by the Borrower under this Agreement or any Note; provided, however, that this
paragraph shall not apply (i) to any Lender or Applicable Lending Office that
became a Lender or Applicable Lending Office as a result of an assignment,
transfer, or designation made at the request of
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53
the Borrower, or (ii) to the extent that the amount otherwise payable by the
Borrower pursuant to this Section 2.16 to any Lender that is an assignee
pursuant to (and in compliance with the requirements of) Section 8.07 does not
exceed the amount that would have been payable under this Section 2.16 to the
assigning Lender in the absence of such assignment.
(j) Additional Cooperation. Any Lender claiming any amount
pursuant this Section 2.16 shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document reasonably
requested by the Borrower or to change the jurisdiction of such Lender's
Applicable Lending Office if such a filing or change would avoid the need for or
reduce the amount payable by the Borrower under this Section 2.16 and would not,
in the good-faith determination of such Lender, otherwise be disadvantageous to
such Lender.
SECTION 2.17. Sharing of Payments. If after the occurrence and
during the continuance of any Event of Default any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any Advances owed to it in excess of its
Pro Rata Share of all such payments, such Lender shall forthwith purchase from
the other Lenders such participations in the Advances made by them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them. If all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of its allocable share of such recovery
together with its allocable share of any interest required to be paid by the
purchasing Lender on the amount so recovered. The Borrower agrees that any
Lender purchasing a participation from another Lender pursuant to this Section
2.17 may, to the fullest extent permitted by law, exercise collection rights
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent on the Closing Date. This
Agreement shall become effective and binding upon the parties hereto only if
each of the following conditions precedent is satisfied, and the obligation of
each Term Lender to fund the Term Borrowing is subject to the satisfaction of
such conditions precedent, in each case by no later than September 16, 1997:
(a) Loan Documents. The Agent must have received,
with sufficient copies for each Lender:
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54
(i) this Agreement duly executed by the
Borrower, the Agent and each of the Lenders;
(ii) a guaranty, in substantially the form
of Exhibit C-1, duly executed by each Subsidiary of the
Borrower that is not, on the Closing Date, an Inactive
Subsidiary;
(iii) a second amended and restated pledge
and security agreement duly executed and delivered in
substantially the form of Exhibit C-2 by the Borrower and in
substantially the form of Exhibit C-3 by each Subsidiary of
the Borrower that owns, as of the Closing Date, any shares of
the stock of or other equity, ownership or profit interest in
any Subsidiary of the Borrower or notes or similar instruments
issued by any such Subsidiary, together with (A) certificates
representing the Pledged Shares and Pledged Debt referred to
in Schedule A to each such Pledge and Security Agreement,
other than shares in respect of Inactive Subsidiaries,
accompanied by undated stock powers executed in blank, and (B)
evidence satisfactory to the Lenders that all other actions
necessary or, in the opinion of the Lenders, desirable to
perfect and protect the security interests created by the
Pledge and Security Agreements have been taken, including
delivery to the Agent of all instruments constituting
Collateral, duly endorsed, and delivery of UCC-1 financing
statements duly executed by each Grantor under a Pledge and
Security Agreement and in form sufficient for filing in all
offices in which the Agent or any Lender may consider filing
to be appropriate; and
(iv) the schedules to this Agreement and the
Loan Documents.
(b) Corporate Documents. The Agent must have
received, with sufficient copies for each Lender:
(i) copies of the articles or certificate of
incorporation and by-laws or other governing documents of each
Loan Party as in effect on the Closing Date, certified as of
the Closing Date by a Secretary or an Assistant Secretary of
such Loan Party;
(ii) copies of resolutions of the Board of
Directors of each Loan Party approving the transactions
contemplated hereby and authorizing the execution, delivery
and performance of each Loan Document to which it is a party,
certified as of the Closing Date by a Secretary or an
Assistant Secretary of such Loan Party;
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55
(iii) a certificate of the Secretary or an
Assistant Secretary of each Loan Party certifying the names
and true signatures of the officers of such Loan Party
authorized to sign each Loan Document to which it is a party
and, in the case of the Borrower, to request an extension of
credit hereunder; and
(iv) a good standing certificate for each
Loan Party, issued as of a recent date by the Secretary of
State of the state in which such Loan Party is incorporated or
formed and each state in which it is qualified to do business.
(c) Governmental Consents. Each Loan Party must have
obtained all consents, approvals and authorizations required from any
Governmental Authority in connection with the execution, delivery and
performance of its obligations under the Loan Documents.
(d) No Injunction. No law or regulation shall
prohibit, and no order, judgment or decree of any Governmental
Authority shall enjoin, prohibit or restrain, and no litigation shall
be pending or threatened which in the reasonable judgment of the Agent
or Requisite Lenders would enjoin, prohibit or restrain (i) the making
of the Advances, (ii) the issuance of any Letter of Credit or (iii) the
consummation of the transactions contemplated by the Loan Documents.
(e) Other Deliveries. The Agent must have received,
with sufficient copies for each Lender:
(i) a copy of the Borrower's financial
statements on Form 10-K for the year ended December 31, 1996,
certified in a manner acceptable to the Agent by KPMG Peat
Marwick and the Borrower, respectively; and on Form 10-Q for
the quarter ended June 30, 1997;
(ii) a certificate dated as of the Closing
Date and signed by the Chairman, Chief Executive Officer or
Authorized Officer of the Borrower, certifying that, as of the
Closing Date, (A) the representations and warranties contained
in Article IV of this Agreement are true and correct on and as
of the Closing Date, as though made on and as of such date,
(B) no Event of Default or Potential Default has occurred and
is continuing, and (C) each of the other conditions precedent
set forth in this Article III has been satisfied;
(iii) all documents evidencing other
necessary corporate action and governmental approvals, if any,
with respect to this Agreement or any other Loan Document;
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56
(iv) the Intercreditor Agreement, executed
by the parties thereto;
(v) such other certificates, agreements,
documents or instruments as the Agent or the Requisite Lenders
may reasonably request in writing; and
(vi) a certificate from the Borrower that
the incurrence of indebtedness hereunder on the Closing Date
is permitted under the terms of the 1994 Subordinated Debt
Indenture, the terms of the 1995 Subordinated Debt Indenture,
the terms of the 1996 Subordinated Debt Indenture, the terms
of the 1997 Subordinated Debt Indenture and upon the
effectiveness thereof, under the terms of the 1997 B
Subordinated Debt Indenture, including, in each case,
covenants relating to the incurrence of indebtedness.
(f) Legal Opinions. The Agent must have received,
with sufficient copies for each Lender:
(i) an opinion of LeBoeuf, Lamb, Greene &
MacRae, L.L.P., counsel for the Borrower and the Guarantors,
substantially in the form of Exhibit D-1 hereto and as to such
other matters as any Lender through the Agent may reasonably
request; and
(ii) an opinion of special local counsel for
each of the Guarantors substantially in the form of Exhibit
D-2 hereto and as to such other matters as any Lender through
the Agent may reasonably request.
(g) Payout and Release Agreement. The Agent must have
received (with sufficient copies for each lender under the Existing
Facility) a payout and release agreement, in substantially the form of
Exhibit E-3, duly executed by the Borrower and its Subsidiaries and the
other parties identified therein.
(h) Payment of Existing Facility. The first Revolving
Borrowing must have been requested by the Borrower, in an amount
sufficient to pay in full the "Amount Outstanding" set forth in the
payout and release agreement delivered pursuant to Section 3.01(g), the
Agent must have received irrevocable instructions from the Borrower to
apply proceeds from such Revolving Borrowing to pay such Amount
Outstanding in full, and the Agent must have received an LC Application
for all Letters of Credit outstanding under the Existing Facility duly
executed by the Borrower and accepted by the LC Bank, confirming that
all such Letters of Credit shall be deemed applied for, issued and
outstanding under this Agreement and that all
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57
participation obligations arising in respect thereof under the
Existing Facility are discharged.
(i) Payment of Fees. All fees due to the Agent, the
Lenders and the Arranger under this Agreement (including the fees set
forth on Schedule I hereto) and the Fee Letter must have been paid.
SECTION 3.02. Conditions Precedent to Each Extension of
Credit. The obligation of each Revolving Lender to make an Advance on the
occasion of any Revolving Borrowing, the obligation of the LC Bank to issue any
Letter of Credit and the right of the Borrower to request a Swing Line Advance
to is subject to the conditions precedent that on the date the Revolving
Borrowing or Swing Line Advance is to be made or Letter of Credit is to be
issued:
(a) Notice. The Borrower shall have delivered a fully
completed Notice of Borrowing, Notice of Swing Line Advance or LC
Application, as the case may be, dated such date.
(b) Certification. Each of the following statements
shall be true, and, in the case of a Revolving Borrowing or issuance of
a Letter of Credit, the Agent shall have received for the account of
each Revolving Lender a certificate dated such date and signed by an
Authorized Officer, certifying that:
(i) the representations and warranties
contained in Article IV of this Agreement and in Article III
of the Pledge and Security Agreements are correct on and as of
such date, before and after giving effect to the extension of
credit to be made hereunder on such date and the application
of the proceeds therefrom, as though made on and as of such
date;
(ii) no event has occurred and is
continuing, or would result from such extension of credit or
from the application of the proceeds therefrom, which
constitutes an Event of Default or a Potential Default; and
(iii) the incurrence of indebtedness by the
Borrower in the amount of such Revolving Borrowing, the
respective Swing Line Advance or for the LC Exposure resulting
from the issuance of such Letter of Credit is permitted under
the terms of each of the Subordinated Debt Indentures
(including, in each case, covenants relating to the incurrence
of indebtedness).
The delivery of a Notice of Borrowing, Swing Line Notice of
Borrowing or LC Application and the acceptance by the Borrower of the proceeds
of such Borrowing or of a Letter of
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58
Credit shall constitute a representation and warranty by the Borrower that, on
the date such Advance is made or Letter of Credit is issued, the foregoing
statements are true.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) Organization. Each Loan Party is a corporation or
partnership duly organized, validly existing and in good standing
(except where the failure of one or more Loan Parties, other than the
Borrower and its Material Subsidiaries, to be in good standing after
the Closing Date could not reasonably be expected to result in a
Material Adverse Change) under the laws of the jurisdiction in which it
is organized and is duly qualified to do business in each jurisdiction
where the character of its properties or the nature of its activities
makes such qualification necessary.
(b) Power and Authority. Each Loan Party has the
corporate or partnership power (i) to carry on its business as now
being conducted and as proposed to be conducted by it, (ii) to execute,
deliver and perform each Loan Document to which it is a party, and
(iii) to take all action necessary to consummate the transactions
contemplated under each Loan Document to which it is a party.
(c) Due Authorization. The execution, delivery and
performance by each Loan Party of each Loan Document to which it is or
will be a party have been duly authorized by all necessary action of
its board of directors (or, in case of a partnership, of its governing
authority) and do not contravene (i) its certificate or articles of
incorporation (or, in case of a partnership, governing agreements) or
(ii) any law or any indenture, lease or written agreement binding on or
affecting it and do not result in or require the creation of any Lien
(other than pursuant to the Collateral Documents) upon any of its
property or assets.
(d) Subsidiaries and Ownership of Capital Stock. Set
forth in Schedule 4.01(d), as such schedule may be amended pursuant to
Section 5.02(c)(xiii), is a complete list, as of the latest of (i) the
date hereof, (ii) the Closing Date, (iii) the date of delivery to the
Agent of the then most recently required amended Schedule 4.01(d)
pursuant to Section 5.02(c)(xiii), and (iv) in the event an amended
Schedule 4.01(d) is not timely delivered to the Agent pursuant to
Section 5.02(c)(xiii), the date of the last day on which such amended
schedule could have been timely delivered, of all direct and indirect
Subsidiaries of the Borrower. Such schedules also set forth the
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59
number of issued and authorized shares of each class of capital stock
of and other equity, ownership or profit interests in such Subsidiary
and the identity of the holders of all such shares. Except as set
forth in such schedules, no capital stock of or other equity,
ownership or profit interest in any such Subsidiary is subject to
issuance or sale under any warrant, option or purchase right,
conversion or exchange right, call, commitment or claim of any right,
title or interest therein or thereto. The outstanding capital stock of
each such Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and is not "margin stock," as that term is defined
in Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
(e) Health Care Facilities. Set forth in Schedule
4.01(e), as such schedule may be amended pursuant to Section
5.02(c)(xiv), is a complete list, as of the latest of (i) the date
hereof, (ii) the Closing Date, (iii) the date of delivery to the Agent
of the then most recently required amended Schedule 4.01(e) pursuant to
Section 5.02(c)(xiv) and (iv) in the event an amended Schedule 4.01(e)
is not timely delivered to the Agent pursuant to Section 5.02(c)(xiv),
the date of the last day on which such amended schedule could have been
timely delivered, of each Health Care Facility owned, leased, managed
or operated by the Borrower or any Subsidiary of the Borrower which is
a skilled nursing facility, hospital, assisted living facility or
retirement facility, and Schedule 4.01(e), as it may be so amended,
specifically sets forth, with respect to each such Health Care
Facility, whether such Health Care Facility is a leased facility or an
owned facility.
(f) Governmental Approval. No authorization or
approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and
performance by each of the Loan Parties of any Loan Document to which
it is or will be a party, except for those listed on Schedule 4.01(f),
each of which has been duly obtained or made and is in full force and
effect.
(g) Binding and Enforceable. This Agreement is, and
each other Loan Document to which any Loan Party will be a party is or
when delivered will be, legal, valid and binding obligations of the
Loan Parties enforceable against the Loan Parties in accordance with
their respective terms, subject to laws generally affecting the
enforcement of creditors' rights.
(h) Financial Information. The consolidated balance
sheet of the Borrower and its Subsidiaries as at December 31, 1996 and
their related income and cash flow statements for the period then
ended, each other financial statement of the Borrower and its
Subsidiaries delivered to the Lenders on or prior to the Closing Date,
and each financial statement delivered to the Lenders pursuant to
Section 5.02(c), as and when delivered to the Lenders fairly presents
the consolidated
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60
financial condition of the Borrower and its Subsidiaries as at the
date thereof and the consolidated results of their operations for the
period then ended, all in accordance with GAAP consistently applied.
(i) Material Adverse Change. Since December 31, 1996,
there has been no Material Adverse Change.
(j) Compliance. Except as permitted pursuant to
Section 5.02(k) and Section 5.03(m), each Loan Party is in compliance
in all material respects with all material applicable laws, rules,
regulations and orders.
(k) Litigation. There is no pending or overtly
threatened action or proceeding affecting any Loan Party before any
court, governmental agency or arbitrator, which would, if adversely
determined, result in a Material Adverse Change or which relates to or
could reasonably be expected to affect the legality, validity or
enforceability of any Loan Document.
(l) No Conflict. The execution, delivery and
performance by each Loan Party of each of the Loan Documents to which
it is a party do not and will not (i) conflict with, result in a breach
of, or constitute (with or without notice or the lapse of time or both)
a default under, any instrument, lease, indenture, agreement or other
contractual obligation issued by any Loan Party or enforceable against
it or any of its property or assets, except under immaterial agreements
for supplies or services which are readily replaceable without any
adverse effect on such Loan Party or its business or (ii) require any
approval of its stockholders.
(m) No Default. No event has occurred and is
continuing which constitutes an Event of Default or a Potential
Default.
(n) Payment of Taxes. Each Loan Party has filed all
federal income tax returns and all other tax returns required to be
filed by it and has paid all taxes and assessments payable by it which
have become due except to the extent being contested in accordance with
the provisions of Section 5.02(h).
(o) Margin Regulations. No proceeds of any Advance or
Letter of Credit will be used for any purpose that requires any Lender
to deliver or obtain any certification under, or to comply with any
margin requirement or other provision of, Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, except for the
purchase of equity securities of CCA.
(p) Conduct of Business. The Borrower is a holding
company engaged primarily in the business of (i) holding stock of and
claims against its
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61
Subsidiaries; (ii) managing and developing corporate opportunities
related to the business of its Subsidiaries; (iii) administering and
coordinating the overall operating business of its Subsidiaries and
other investments permitted hereunder; (iv) obtaining of financing for
the business of its Subsidiaries; and (v) holding interests in and
title to assets and property necessary or appropriate to conduct such
business in the ordinary course. The Subsidiaries of the Borrower
(other than any such Subsidiaries engaged in the insurance business as
permitted under Section 5.03(c)(xiii)) are engaged in the business of a
Healthcare Company, including making Investments in Subsidiaries or
Persons that are Healthcare Companies.
(q) Health Care Permits. (i) Except as permitted
pursuant to Section 5.02(k) and Section 5.03(m), (A) each Loan Party
now has, and has no reason to believe it will not be able to maintain
in effect, all Health Care Permits necessary for the lawful conduct of
its business or operations wherever now conducted and as planned to be
conducted, including the ownership and operation of its Health Care
Facilities, pursuant to all applicable laws and all requirements of
Governmental Authorities having jurisdiction over such Loan Party or
over any part of its operations; (B) all such Health Care Permits are
in full force and effect and have not been amended or otherwise
modified (except for modifications which do not constitute and cannot
reasonably be expected to result in a Material Adverse Change),
rescinded, revoked or assigned; (C) no Loan Party is in default in any
material respect under, or in violation in any material respect of, any
such Health Care Permit (and to the best knowledge of the Borrower, no
event has occurred, and no condition exists, which, with the giving of
notice or passage of time or both, would constitute a default
thereunder or violation thereof) that has caused or could reasonably be
expected to cause the loss of any such Health Care Permit; (D) neither
the Borrower nor any other Loan Party has received any notice of any
violation of applicable laws which has caused or could reasonably be
expected to cause any such Health Care Permit to be modified (except
for modifications not amounting to a Material Adverse Change),
rescinded or revoked; (E) to the best knowledge of the Borrower, no
condition exists or event has occurred which could reasonably be
expected to result in the suspension, revocation, impairment,
forfeiture or non-renewal of such Health Care Permit; and (F) the
continuation, validity and effectiveness of all such Health Care
Permits will not in any way be adversely affected by the transactions
contemplated by this Agreement, except that the exercise by the Agent
of its rights and remedies in respect of the Collateral is subject to
the licensing power of health care regulatory authorities.
(ii) Except as permitted pursuant to Section 5.02(k)
and Section 5.03(m), all Health Care Facilities owned, leased, managed
or operated by any Loan Party are entitled to participate in, and
receive payment under, the appropriate Medicare, Medicaid and related
reimbursement programs and in any similar state or
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62
local government-sponsored program, to the extent that such Loan Party
has decided to participate in any such state or local program, and to
receive reimbursement from private and commercial payers and health
maintenance organizations to the extent applicable thereto.
(r) Environmental Matters. Except as set forth in
Schedule 4.01(r), as it may from time to time be amended by the
Borrower, (i) no Material Environmental Claim is pending or, to the
knowledge of the Borrower, overtly threatened against the Borrower or
any of its Subsidiaries, or any property or assets currently owned or
leased thereby, and (ii) to the knowledge of the Borrower, no Material
Environmental Claim is pending or overtly threatened against any
property or assets previously owned or leased by the Borrower or any of
its Subsidiaries. Except as set forth in Schedule 4.01(r), and except
in respect of matters that, in the aggregate, are not and cannot
reasonably be expected to result in a Material Environmental Claim or a
Material Adverse Change, the operations of the Borrower and its
Subsidiaries comply and have complied in all material respects with all
applicable Environmental Laws.
(s) ERISA Compliance. (i) Each Plan is in compliance
in all material respects with the applicable provisions of ERISA, the
Code and other applicable Federal or state law.
(ii) Each Pension Plan which is intended to be
tax-qualified under Section 401(a) of the Code has been determined by
the IRS to qualify under Section 401 of the Code, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the best knowledge of the
Borrower nothing has occurred which would cause the loss of such
qualification or tax-exempt status.
(iii) Except as set forth in Schedule 4.01(s), (A)
none of the Pension Plans which is subject to Title IV of ERISA has any
material Unfunded Pension Liability as to which the Borrower or any
ERISA Affiliate is or may be liable; (B) neither the Borrower nor any
ERISA Affiliate has nor reasonably expects to incur any material
liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such material liability)
under Section 4201 or 4243 of ERISA with respect to any Multiemployer
Plan; (C) no ERISA Event has occurred or, to the best knowledge of the
Borrower, is reasonably expected to occur; and (D) neither the Borrower
nor any ERISA Affiliate has maintained any Welfare Plan which provides,
or requires the Borrower or any ERISA Affiliate to provide, medical or
other welfare benefits to any participant after the termination of such
participant's employment with the Borrower or such ERISA Affiliate
(except to
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63
the extent required by the provisions of Part 6 of Title I, Subtitle B
of ERISA or Sections 162(k) and 4980B of the Code).
(iv) Each Welfare Plan which is a "group health
plan," as defined in Section 607(1) of ERISA, has been operated in
compliance with provisions of Part 6 of Title I of ERISA and Sections
162(k) and 4980B of the Code at all times.
(v) Neither the Borrower nor any ERISA Affiliate has
engaged, directly or indirectly, in a prohibited transaction (as
defined in Section 4975 of the Code or Section 406 of ERISA) for which
no statutory or administrative exemption is applicable in connection
with any Plan the consequences of which, in the aggregate, constitute
or can reasonably be expected to result in a Material Adverse Change.
(t) Title to Assets. Each Loan Party has title, as of
the date of each of its financial statements delivered hereunder, to
all of its material assets reflected therein, except assets leased to
it under a Capital Lease, free and clear of all Liens except Permitted
Liens.
(u) Collateral Documents. On and after the Closing
Date and, with respect to perfection upon the filing of the financing
statements delivered pursuant to Section 3.01(a), the provisions of
each Collateral Document are effective to create in favor of the Agent,
for the benefit of the Lenders, legal, valid and perfected security
interests in all right, title and interest in the Collateral described
therein, enforceable against each Loan Party that owns an interest in
such Collateral, subject to laws generally affecting the enforcement of
creditors' rights. All shares of each Subsidiary of the Borrower (other
than Inactive Subsidiaries) and all notes or similar instruments issued
by any Subsidiary of the Borrower to the Borrower or any other such
Subsidiary have been pledged to the Agent under the Pledge and Security
Agreements.
(v) Senior Indebtedness. This Agreement is a "Bank
Credit Agreement" within the meaning of the 1992 Convertible
Subordinated Debt Indenture and the 1993 Convertible Subordinated Debt
Indenture and a "Credit Agreement" within the meaning of the 1994
Subordinated Debt Indenture, 1995 Subordinated Debt Indenture, 1996
Subordinated Debt Indenture, the 1997 Subordinated Debt Indenture, the
1997 B Subordinated Debt Indenture and, upon its effectiveness, the
Proposed Subordinated Debt Indenture. The Obligations when incurred
will be "Senior Indebtedness" within the meaning of the Subordinated
Debt Indentures.
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64
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Financial Covenants. So long as any Obligation
remains unpaid, any Letter of Credit remains outstanding or any Lender is
obligated to extend credit hereunder, unless the Requisite Lenders otherwise
consent in writing the Borrower will:
(a) Maximum Debt/EBITDAR Ratio. Maintain a
Debt/EBITDAR Ratio, determined as of the last day of each Quarter, at
an amount not greater than that set forth for such Quarter below:
Quarter(s) Ended Debt/EBITDAR Ratio
---------------- ------------------
September 30, 1997 5.75
December 31, 1997 5.75
March 31, 1998 5.75
June 30, 1998 5.75
September 30, 1998 5.75
December 31, 1998 5.75
March 31, 1999 5.25
June 30, 1999 5.25
September 30, 1999 5.25
December 31, 1999 5.25
In 2000 and thereafter 4.75
(b) Minimum Fixed Charge Coverage Ratio. Maintain a
Fixed Charge Coverage Ratio, determined as of the last day of each
Quarter, at an amount not less than that set forth for such Quarter
below:
Fixed Charge
Quarter(s) Ended Coverage Ratio
---------------- --------------
September 30, 1997 1.15
December 31, 1997 1.15
March 31, 1998 1.15
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65
June 30, 1998 1.15
September 30, 1998 1.15
December 31, 1998 1.15
March 31, 1999 1.15
June 30, 1999 1.15
September 30, 1999 1.20
December 31, 1999 1.20
March 31, 2000 1.25
June 30, 2000 1.25
September 30, 2000 1.30
December 31, 2000 1.30
March 31, 2001 1.35
June 30, 2001 1.35
September 30, 2001 1.40
December 31, 2001 1.40
March 31, 2002 1.15
June 30, 2002 1.15
September 30, 2002 1.15
December 31, 2002 1.15
March 31, 2003 1.15
June 30, 2003 1.15
September 30, 2003 1.15
December 31, 2003 1.15
March 31, 2004 and each 1.50
Quarter thereafter
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66
(c) Minimum Net Worth. Maintain Adjusted
Stockholders' Equity, determined as of the last day of each Quarter, at
an amount not less than the then Minimum Net Worth.
SECTION 5.02. Affirmative Covenants So long as any Obligation
remains unpaid, any Letter of Credit remains outstanding or any Lender is
obligated to extend credit hereunder, unless the Requisite Lenders otherwise
consent in writing the Borrower will, and will cause its Subsidiaries to:
(a) Compliance with Laws. Comply in all material
respects with all applicable laws, rules, regulations and orders.
(b) Inspection of Property and Books and Records.
Except in the case of Inactive Subsidiaries, (i) maintain proper books
of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving its assets and business,
and (ii) permit representatives of the Agent or any Lender to visit and
inspect any of its properties, to examine its corporate, financial and
operating records and make copies thereof or abstracts therefrom, and
to discuss its affairs, finances and accounts with its officers,
employees and independent public accountants, all at the expense of the
Borrower, in the case of visits or inspections by the Agent and, if an
Event of Default is then continuing, by any Lender, and at such
reasonable times during normal business hours and as often as may be
reasonably requested, upon reasonable advance notice to the Borrower,
except that when an Event of Default exists the Agent or any Lender may
take any such action at any time during business hours and on same-day
notice.
(c) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event
within 55 days after the end of each of the first three
Quarters in each fiscal year, the consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such
Quarter and their consolidated income and cash flow statements
for such Quarter, and, in each case, for the fiscal year to
date, certified by an Authorized Officer;
(ii) as soon as available and in any event
within 100 days after the end of each fiscal year of the
Borrower, a copy of the annual report
on Form 10-K for such year for the Borrower and its
Subsidiaries, containing
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67
financial statements for such year certified in a manner
acceptable to the Requisite Lenders by KPMG Peat Marwick or
other independent public accountants acceptable to the
Requisite Lenders;
(iii) as soon as possible and in any event
within 10 Business Days after becoming aware of any (A) Change
of Control or (B) Event of Default or Potential Default
continuing on the date of such statement, a statement of an
Authorized Officer or the office of the General Counsel of the
Borrower setting forth details of such Change of Control or
Event of Default or Potential Default, as the case may be, and
the action which the Borrower has taken and proposes to take
with respect thereto;
(iv) promptly after the filing thereof,
copies of all reports and all registration statements for the
sale of newly issued stock filed with the Securities and
Exchange Commission or any national securities exchange;
(v) notice when, but in no event later than
ten days after, it becomes aware of any Material Environmental
Claim or the presence of any Hazardous Material in, on or
under any of its property that is likely to prohibit or
restrict materially the occupancy, transferability or use of
such property under any Environmental Laws;
(vi) notice upon, but in no event later than
ten days after, the occurrence of any ERISA Event affecting
the Borrower or any ERISA Affiliate, together with (A) a copy
of any notice with respect to such ERISA Event that may be
required to be filed with the PBGC and (B) any notice
delivered by the PBGC to the Borrower or any ERISA Affiliate
with respect to such ERISA Event;
(vii) concurrently with the delivery of the
financial statements referred to in clause (i) and (ii) above,
a compliance certificate of an Authorized Officer in
substantially the form of Exhibit E-1 (A) stating that, to the
best of such officer's knowledge, the Borrower, during such
period, has observed or performed all covenants and agreements
and satisfied all conditions required under this Agreement to
be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Event of Default or
Potential Default except as specified in such certificate, (B)
showing in detail the calculations supporting such statement
in respect of Section 5.01, and (C) setting forth, and showing
in detail the calculations
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68
supporting, the Pricing Ratio determined as of the most recent
Pricing Test Date in the period covered by such certificate;
(viii) within 55 days after the end of each
Quarter, a Pricing Certificate setting forth the Pricing Ratio
as calculated as of the last day of such Quarter;
(ix) prior to the consummation of any
acquisition of a Health Care Company or Health Care Facility
for aggregate consideration of $50,000,000 or more, a term
sheet describing such acquisition and calculations indicating
pro forma compliance with the respective financial covenants
herein and compliance with any other applicable covenants; and
promptly, and in any case within 10 Business Days of any such
request, any additional information relating to such
acquisition reasonably requested by the Agent or the Requisite
Lenders;
(x) within 10 Business Days of the
consummation of any acquisition of a Health Care Company or
Health Care Facility for aggregate consideration less than
$50,000,000, a term sheet describing such acquisition and
calculations indicating pro forma compliance with the
respective financial covenants herein and compliance with any
other applicable covenants; and promptly, and in any case,
within 10 Business Days of any such request, any additional
information relating to such acquisition reasonably requested
by the Agent or the Requisite Lenders;
(xi) as soon as possible, and in any event
within five Business Days (A) after becoming aware thereof,
notice of the occurrence of any event that is or would (with
the passage of time, notice or both) be a default under or a
violation of any Health Care Permit necessary for the lawful
conduct of the business or operations of any Loan Party,
including the ownership and operation of its Health Care
Facilities, and that is or can reasonably be expected to
result in a Material Adverse Change; (B) after receipt
thereof, any notice of any violation of applicable laws that
causes or could reasonably be expected to cause any such
Health Care Permit to be modified (except for modifications
which do not constitute and cannot reasonably be expected to
result in a Material Adverse Change), rescinded or revoked;
and (C) after becoming aware thereof, notice of the occurrence
of any event that constitutes or can reasonably be expected to
result in a Material Adverse Change;
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69
(xii) concurrently with the delivery of the
financial statements referred to in clause (i) and (ii) above,
Schedule 4.01(d), as amended to reflect the formation,
acquisition or disposition of any Subsidiary of the Borrower
during the Quarter then ended;
(xiii) concurrently with the delivery of the
financial statements referred to in clause (i) and (ii) above,
Schedule 4.01(e), as amended to reflect the acquisition or
disposition of any Health Care Facility which is a skilled
nursing facility, hospital, assisted living facility or
retirement facility during the Quarter then ended;
(xiv) at least 10 Business Days prior to
entering into any Receivables Sale Program, a written
description of the material terms and provider of such
program, the method of determining the Purchasers' Aggregate
Net Investment and the Receivables Program Charges of such
program, the maximum amount of the Purchasers' Aggregate Net
Investment under such program, and the amount and due date of
any Facility Reduction or repayment required under Section
2.06(e) in respect of such program;
(xv) no later than the effective date of any
change in the Purchasers' Aggregate Net Investment under any
Receivables Sale Program, written notice of the amount and
effective date of such change and the amount of any Facility
Reduction and prepayment required under Section 2.06(e) after
giving effect to such change; and
(xvi) such other information respecting the
condition or operations, financial or otherwise, of the
Borrower or any of its Subsidiaries as the Agent (on behalf of
itself or any Lender) from time to time may reasonably
request.
(d) Preservation of Corporate Existence, Etc. Subject
to Section 5.03(i) and except in the case of Inactive Subsidiaries, (i)
preserve and maintain in full force and effect its corporate or
partnership existence and good standing under the laws of its State or
jurisdiction of incorporation or organization and all rights,
privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business (provided that the
failure at any one time to maintain Health Care Permits with respect to
any seven Health Care Facilities owned or leased by any one or more
Subsidiaries of the Borrower shall not constitute a failure to comply
with this Section 5.02(d)(i)), (ii) use its reasonable efforts, in the
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70
ordinary course and consistent with past practice, to preserve its
business organization and preserve the goodwill and business of the
customers, suppliers and others doing business with it, and (iii)
preserve or renew all of its registered trademarks, trade names and
services marks, the non-preservation of which constitutes or could
reasonably be expected to result in a Material Adverse Change.
(e) New Subsidiaries. Promptly, and in any event
within 10 Business Days, of (i) the formation or acquisition of a new
Subsidiary of the Borrower (other than an Inactive Subsidiary), (ii)
the date a Subsidiary ceases to be an Inactive Subsidiary, or (iii) the
date on which any Subsidiary of the Borrower that has not executed and
delivered a Pledge and Security Agreement acquires any stock of or
other equity, ownership or profit interest in, or debt or liability of
or other claim against, any other Subsidiary, (A) notify the Agent of
such event; (B) amend Schedule A of the relevant Pledge and Security
Agreement as appropriate in light of such event; (C) cause such
Subsidiary to execute and deliver a Pledge and Security Agreement in
substantially the form of Exhibit C-3 and all financing statements and
other documents required thereunder or appropriate to perfect the
security interest created thereby; (D) deliver to the Agent all stock
certificates and other instruments added to the Collateral thereby,
accompanied by an undated stock power or transfer document executed in
blank; and (E) cause such Subsidiary to deliver an executed counterpart
of the Guaranty and deliver to the Agent a Guarantor Confirmation
setting forth the Guarantor Liability Limit as to such Subsidiary,
provided, that upon any Subsidiary of the Borrower or the Borrower
receiving any note or similar instrument issued by the Borrower or any
of its Subsidiaries, the Borrower shall cause such note or similar
instrument, indorsed to the Agent, to be delivered to the Agent by the
respective payee pursuant to the respective Pledge and Security
Agreement and take such other action in connection therewith as
reasonably requested by the Agent.
(f) Maintenance of Property. Maintain and preserve
all its property which is necessary for use in its business in good
working order and condition, except ordinary wear and tear and except
as permitted under Section 5.03(b), and use the standard of care
typical in the industry in the operation of the Health Care Facilities.
(g) Insurance. Maintain insurance with financially
sound and reputable insurers with respect to its properties and
business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar
circumstances by such other Persons, including workers' compensation
insurance, public liability and property and casualty insurance, except
that (i) the Borrower shall
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71
be permitted to maintain self insurance with respect to health care
benefits provided to employees and with respect to workers'
compensation insurance so long as the Borrower also maintains, with
financially sound and reputable insurers, stop loss insurance of the
type and in amounts customarily maintained by Persons engaged in the
same or similar business as are customarily carried under similar
circumstances by such other Persons and (ii) insurance need not be
maintained by or for the benefit of Inactive Subsidiaries. Upon request
of the Agent, the Borrower shall furnish the Agent, with copies for
each Lender, at reasonable intervals (but not more than once per
calendar year), a certificate of an Authorized Officer (and, if
requested by the Agent, any insurance broker of the Borrower) setting
forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section 5.02(g) (and
which, in the case of a certificate of a broker, was placed through
such broker).
(h) Payment of Obligations. Pay and discharge all of
its obligations and liabilities, including:
(i) as they become due and payable, all
claims for tax liabilities, assessments and governmental
charges or levies against it or upon its properties or assets;
(ii) as they become due and payable, all
lawful claims which, if unpaid, would, with the passage of
time or notice or both, by law become a Lien upon its
property;
(iii) before expiration of any period of
grace expressly provided, all claims for payments due under
any lease of a Health Care Facility or any equipment therein;
and
(iv) before expiration of any period of
grace expressly provided, all claims for Debts as and when due
and payable (subject to any subordination provisions contained
in any instrument evidencing, or indenture or agreement
governing, such Debt);
except that it may contest in good faith any claims and may permit the
claims so contested to remain unpaid during any period, including
appeals, when it is in good faith contesting the same, so long as (A)
adequate reserves have been established to the extent required by GAAP
or other adequate provision for the payment thereof has been made, (B)
enforcement of the contested claim is effectively stayed for the entire
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72
duration of such contest, and (C) any claim determined to be due,
together with any interest or penalties thereon, is paid promptly, and
in any event within three Business Days, after resolution of such
contest.
(i) Environmental Laws. Conduct its operations and
keep and maintain its property in compliance in all material respects
with all applicable Environmental Laws and Environmental Permits; and
prepare at the Borrower's sole cost and expense and deliver to the
Agent and the Lenders such updates as the Agent or the Requisite
Lenders may reasonably request relating to any Material Environmental
Claim.
(j) Use of Proceeds. Use the proceeds of the Advances
first to pay all obligations under the Existing Facility and from time
to time to retire all Funded LC Exposure and other Obligations then due
hereunder and thereafter for working capital or acquisitions (provided
that any acquisitions are approved by the board of directors or
equivalent governing body of the target of such acquisition at the time
of the initial offer by the Borrower or one or more of its
Subsidiaries) and other general corporate purposes of the Borrower and
its Subsidiaries not in contravention of any law or this Agreement.
(k) Health Care Permits and Approvals. Take all
action necessary (i) to maintain in full force and effect all Health
Care Permits necessary for the lawful conduct of its business or
operations wherever now conducted and as planned to be conducted,
including the ownership and operation of its Health Care Facilities,
pursuant to all applicable laws and all requirements of Governmental
Authorities having jurisdiction over it or any part of its operations;
and (ii) ensure that all Health Care Facilities owned or leased by it
are entitled to participate in, and receive payment under, the
appropriate Medicare, Medicaid and related reimbursement programs, and
any similar state or local government-sponsored program to the extent
that it has decided to participate in any such state or local program,
and to receive reimbursement from private and commercial payers and
health maintenance organizations to the extent applicable thereto;
provided that the failure at any one time to maintain Health Care
Permits with respect to any seven Health Care Facilities owned or
leased by any one or more Subsidiaries of the Borrower shall not
constitute a failure to comply with this Section 5.02(k).
(l) Further Assurances. (i) Promptly and in no event
later than five Business Days after becoming aware thereof, notify the
Lenders if any written information, exhibits and reports furnished to
the Lenders contain any untrue
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73
statement of a material fact or omit to state any material fact or any
fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and correct any defect or
error that may be discovered therein or in the execution,
acknowledgement or recordation of any Loan Document.
(ii) Promptly upon request by the Agent or the
Requisite Lenders, execute, deliver, acknowledge, file, re-file,
register and re-register any and all such further acts, security
agreements, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances, Federal Reserve Forms
U-1 or G-3 or similar forms and other instruments as the Agent or the
Requisite Lenders may reasonably require from time to time in order (A)
to carry out more effectively the purposes of this Agreement or any
other Loan Document, (B) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests
described in or intended to be covered by any Collateral Document, (C)
to comply with Section 5.03(k), (D) to establish and maintain the
validity, effectiveness, perfection and priority of any Collateral
Document or any Liens intended to be created thereby, or (E) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Agent and the Lenders the rights granted or now or hereafter
intended to be granted to the Lenders under any Loan Document or under
any other instrument executed in connection therewith.
(m) Delivery of Promissory Note. If requested by any
Lender, execute and deliver a promissory note, in substantially the
form of Exhibit A-1, payable to the order of such Revolving Lender in
an original principal amount equal to such Lender's Revolving Pro Rata
Share of the Revolving Facility Amount on the Closing Date, duly
executed by the Borrower, and a promissory note, in substantially the
form of Exhibit A-2 payable to the order of each Term Lender in an
original principal amount equal to such Lender's Term Pro Rata Share of
the Term Borrowing, duly executed by the Borrower;
(n) Hedging Contracts. At the request of the Agent,
the Borrower shall maintain interest rate Hedging Contracts, but in no
event shall the Borrower be required under this Section 5.02(n) to
maintain interest rate Hedging Contracts if, on any date of
determination, the sum of the principal amount of (i) the Borrower's
fixed rate Funded Debt (exclusive of all such Funded Debt covered by
floating rate Hedging Contracts) and (ii) the Borrower's floating rate
Funded Debt (covered by fixed interest rate Hedging Contracts) is
greater than 50% of the aggregate principal amount of the Borrower's
Funded Debt.
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SECTION 5.03. Negative Covenants. So long as any Obligation
remains unpaid, any Letter of Credit remains outstanding or any Lender is
obligated to extend credit hereunder, without the written consent of the
Requisite Lenders the Borrower will not, and will not cause or permit any
Subsidiary of the Borrower to:
(a) Liens. Directly or indirectly make, create,
incur, assume or suffer to exist any Lien upon or with respect to any
part of its property or assets, whether now owned or hereafter
acquired, or become or remain bound by any agreement to do so, except:
(i) any Lien (other than a Lien on the
Collateral) (A) existing on the Closing Date and described in
Schedule 5.03(d), securing Debt permitted under Section
5.03(d)(ii), or (B) granted to secure any extension, renewal,
refinancing or replacement of any such Debt if (a) the
principal amount secured thereby is not increased and (b) the
property subject to the Lien so granted is limited to the
property that was subject to the original Lien and any
accessions, fixtures, improvements or equipment added thereto
in the ordinary course of business;
(ii) any Lien created under any Loan
Document;
(iii) any Lien for taxes, fees, assessments
or other governmental charges which are not delinquent and
remain payable without penalty or which are being contested as
permitted under Section 5.02(h);
(iv) any carriers', warehousemen's,
mechanics', landlords', materialmen's, repairmen's or other
similar Lien arising in the ordinary course of business which
is not delinquent or remains payable without penalty or which
is being contested as permitted under Section 5.02(h);
(v) any Lien (other than a Lien imposed by
Environmental Laws or by ERISA) on the property of the
Borrower or any of its Subsidiaries imposed by law, or pledges
or deposits required by law pursuant to worker's compensation,
unemployment insurance and other social security legislation;
(vi) any easement, right-of-way, restriction
and other similar encumbrance with respect to real property
incurred in the ordinary course of business if, in the
aggregate, such items are not substantial in amount and do
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75
not constitute and cannot reasonably be expected to result in
a Material Adverse Change;
(vii) any Lien arising out of any judgment
or award against it, if (A) such Lien is being contested as
permitted under Section 5.02(h), (B) there is no material
likelihood of the sale, forfeiture or loss of any part of its
properties, and (C) such Lien does not materially interfere
with the use of any material part of its properties;
(viii) any Lien on property of a Person
which becomes a Subsidiary after the date of this Agreement if
such Lien existed at the time such Person became a Subsidiary
of the Borrower and was not created in anticipation thereof;
(ix) any Lien upon property of a Subsidiary
of the Borrower securing Debt of such Subsidiary permitted
under Section 5.03(d)(iv), if with respect to such Lien each
of the conditions set forth in Section 5.03(d)(iv) is
satisfied;
(x) the interest of the purchasers, and
their transferees, under any Receivables Sale Program in the
accounts receivable of the Borrower's Subsidiaries and
proceeds thereof and records related thereto; provided that
the Facility Reduction required under Section 2.06(e) is in
effect;
(xi) any Lien upon property of any
Subsidiary of the Borrower securing Debt permitted under
Section 5.03(d)(iii)(A);
(xii) any Lien upon property of a Subsidiary
of the Borrower securing Debt of such Subsidiary permitted
under Section 5.03(d)(vii) or 5.03(d)(viii);
(xiii) any Liens upon (a) stock of
Subsidiaries and certain related assets granted by the
Borrower or one or more Subsidiaries of the Borrower and (b)
real property interests and certain related assets granted by
one or more Subsidiaries of the Borrower, in each case in
connection with the Synthetic Lease Facility; and
(xiv) any Lien granted upon the Collateral
of the Borrower or a Subsidiary of the Borrower in connection
with Hedging Contracts;
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76
or become or remain bound by any agreement restricting its
ability to grant, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, except (A)
restrictions set forth in the Loan Documents, (B) restrictions
set forth in the Subordinated Debt Indentures, (C)
restrictions on the enforcement of junior Liens on property
secured by a Lien permitted under clauses (i) or (ix) of this
Section 5.03(a), if such restrictions are enforceable solely
by the holder of the Lien so permitted, (D) restrictions on
the creation of a Lien on the lessee's interest under a lease,
if such restrictions are enforceable solely by the lessor (or
any lender to such lessor providing financing secured by
assignment of such lease) under such lease, and (E)
restrictions on the creation of a Lien on the accounts
receivable subject to a Receivables Sale Program, and the
proceeds thereof and records related thereto, if such
restrictions are enforceable solely by the purchasers under
such Receivables Sale Program and their transferees.
(b) Disposition of Assets. Engage in any Asset Sale
or otherwise directly or indirectly sell, assign, lease, convey,
transfer or otherwise dispose of all or any portion of its assets,
business or property, or agree to do any of the foregoing, except:
(i) the disposition of inventory or used,
worn-out or surplus property or equipment or Permitted Cash
Investments in the ordinary course of business;
(ii) the sale of equipment for credit
against the purchase price of similar replacement equipment or
if the proceeds of the sale are reasonably promptly applied to
the purchase price of similar replacement equipment;
(iii) the disposition of accounts receivable
of the Borrower's Subsidiaries pursuant to a Receivables Sale
Program; provided that (A) the Facility Reduction required
under Section 2.06(e) is in effect, (B) the aggregate net
investment of the purchaser is counted as if it were Funded
Debt, in computing the Debt/EBITDAR Ratio and (C) the discount
or yield of the sale and program and administrative costs and
other related fees and expenses, is counted as if it were
Interest Expense in computing the Fixed Charge Coverage Ratio;
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77
(iv) the sale of Schedule 1.01(b) Assets
which is made for fair market value, so long as (A) at least
50% of the total consideration for such Asset Sale consists of
cash received at the closing thereof, (B) the Agent
concurrently acquires, on the terms set forth in the Pledge
and Security Agreements, a legal, valid and perfected security
interest in any and all non-cash consideration received in
such Asset Sale, (C) at the time of or after giving effect to
such Asset Sale, no Event of Default or Potential Default
exists, and (D) if such Asset Sale is a Retained Interest
Sale, then, after giving effect to such transaction and all
related transactions, either (a) the Retained Interest
Criteria shall be met with respect to such transactions at the
time of consummation thereof, or (b) the Partial Disposition
Limit shall not be exceeded;
(v) any other Asset Sale which is made for
fair market value, so long as (A) the sum of the aggregate
consideration received pursuant to such Asset Sale plus the
aggregate consideration received pursuant to all such other
Asset Sales in any calendar year is less than $50,000,000, (B)
the Agent concurrently acquires, on the terms set forth in the
Pledge and Security Agreements, a legal, valid and perfected
security interest in any and all non-cash consideration
received in such Asset Sale, (C) at the time of or after
giving effect to such Asset Sale, no Event of Default or
Potential Default exists, and (D) if such Asset Sale is a
Retained Interest Sale, then, after giving effect to such
transaction and all related transactions, either (a) the
Retained Interest Criteria shall be met with respect to such
transactions at the time of consummation thereof, or (b) the
Partial Disposition Limit shall not be exceeded;
(c) Investments. Directly or indirectly make,
acquire, carry or maintain any Investment, or become or remain bound by
any agreement to make, acquire, carry or maintain any Investment,
except:
(i) Investments in Permitted Cash
Investments;
(ii) Investments in accounts or notes
receivable or other claims arising from the sale or lease of
goods or services in the ordinary course of business;
(iii) Investments by the Borrower in a
wholly-owned Subsidiary of the Borrower, for purposes related
to the business and operations
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78
conducted by such Subsidiary in the ordinary course and not to
acquire any new business, Health Care Facility or Health Care
Company;
(iv) loans and advances, in an aggregate
amount not greater than $25,000,000 in any calendar year, to
employees of the Borrower or of any Subsidiary of the
Borrower;
(v) Investments held on the Closing Date and
described in Schedule 5.03(c);
(vi) loans made as part of a permitted
Retained Interest Sale under Section 5.03(d)(2)(D) by a
Subsidiary of the Borrower to the Borrower, any wholly-owned
Subsidiary of the Borrower or any Subsidiary of the Borrower;
(vii) Investments in the construction or
improvement of a Health Care Facility and other Investments in
assets added to property, plant or equipment, but (A) only if
the Hard Costs associated with such Investments are counted as
Capital Expenditures and (B) excluding a purchase or other
acquisition of a Health Care Facility;
(viii) Investments in promissory notes and
other non-cash consideration received in connection with any
Asset Sale permitted under Section 5.03(b)(v);
(ix) Investments in Persons that are not
wholly-owned Subsidiaries of the Borrower (including, without
limitation, joint ventures) at the time of any such
Investment; provided that (A) the aggregate amount of such
Investments in any calendar year shall not exceed (a) the sum
of (a) $50,000,000 plus (b) the positive number, if any, equal
to $30,000,000 minus the amount so invested in the prior
calendar year; (B) any such Investment shall be made by the
Borrower through a wholly-owned Subsidiary of the Borrower
that (a) is engaged only in activities related to the Person
in which such Investment is made and (b) complies with the
provisions of Section 5.02(e) (except that any such Investment
which is a loan may be made directly by the Borrower so long
as the Borrower complies with Section 5.03(k) and Section
5.02(l)), and neither the Borrower nor any of its Subsidiaries
nor any of their properties shall be or become bound by or
subject to any contractual obligation that is or would be
violated or put in default by reason of such
<PAGE>
79
compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance;
and (C) at the time of or after giving effect to any such
Investment, no Event of Default or Potential Default exists or
would result;
(x) Investments by existing, newly-formed or
acquired wholly-owned Subsidiaries of the Borrower in one or
more Health Care Companies or Health Care Facilities; provided
that (A) the aggregate consideration for all such Investments
during the term of this Agreement does not exceed an amount
equal to the sum of (1) 50% of the Net Cash Proceeds of Sale
of (a) Schedule 1.01(b) Assets and (b) assets sold pursuant to
Section 5.03(b)(v) and (2) $95,000,000; provided, further,
notwithstanding the foregoing limitation, the Borrower or any
wholly-owned subsidiary thereof may make additional
Investments under this Section 5.07(c)(x) so long as the
aggregate consideration for all such Investments does not
exceed (a) $300,000,000 in any calendar year, or (b)
$500,000,000 during the term of this Agreement; (B) at the
time of or after giving effect to any such Investment, no
Event of Default or Potential Default exists or results; and
(C) each entity that becomes a Subsidiary of the Borrower in
connection with or as a result of any such Investment shall
comply with the provisions of Section 5.02(e), and neither the
Borrower nor any of its Subsidiaries nor any of their
properties shall be or become bound by or subject to any
contractual obligation that is or would be violated or put in
default by reason of such compliance or by reason of the
enforcement of the claims and Liens of the Agent and Lenders
arising from such compliance;
(xi) The acquisition of CCA by the Borrower
or any of its Subsidiaries, provided that (A) the purchase
price for the shares of CCA does not exceed $4.50 per share,
(B) at the time of or after giving effect to such acquisition,
no Event of Default or Potential Default shall exist or
result, and (C) the Borrower shall comply with the provisions
of Section 5.02(e), and neither the Borrower nor any of its
Subsidiaries nor any of their properties shall be or become
bound by or subject to any contractual obligation that is or
would be violated or put in default by reason of such
compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance;
provided further that the acquisition of CCA shall not be
deemed an Investment for purposes of Section 5.03(c)(x);
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80
(xii) Investments carried or maintained in
Affiliates arising out of Retained Interest Sales, including
any such Investment carried or maintained in a Person that
becomes a '34 Act Company;
(xiii) The acquisitions described in
Schedule 5.03(c)(xiii); provided that (A) the aggregate cash
portion of the consideration for any such acquisition shall
not exceed the cash purchase price specified therefor in
Schedule 5.03(c)(xiii); (B) at the time of or after giving
effect to any such acquisition, no Event of Default or
Potential Default shall exist or result; and (C) the Borrower
shall comply with the provisions of Section 5.02(e), and
neither the Borrower nor any of its Subsidiaries nor any of
their properties shall be or become bound by or subject to any
contractual obligation that is or would be violated or put in
default by reason of such compliance or by reason of the
enforcement of the claims and Liens of the Agent and Lenders
arising from such compliance;
(xiv) The acquisition of RoTech by the
Borrower or any of its Subsidiaries, provided that (A) the
aggregate of (1) Debt of RoTech existing at the time of such
acquisition and assumed by the Borrower or one or more of its
Subsidiaries in connection therewith and (2) cash expenditures
by the Borrower and its Subsidiaries in connection with such
acquisition does not exceed $375,000,000, exclusive of
reasonable transaction costs, (B) at the time of or after
giving effect to such acquisition, no Event of Default or
Potential Default shall exist or result, and (C) the Borrower
shall comply with the provisions of Section 5.02(e), and
neither the Borrower nor any of its Subsidiaries nor any of
their properties shall be or become bound by or subject to any
contractual obligation that is or would be violated or put in
default by reason of such compliance or by reason of the
enforcement of the claims and Liens of the Agent and Lenders
arising from such compliance;
(xv) Loans and Investments by any Subsidiary
of the Borrower to Lyric provided, that such Subsidiary at all
times owns membership interests of not less than 20% of Lyric,
provided, further, that the sum of all such Investments and
the aggregate outstanding principal amount of all such loans
does not exceed 10% of the annual pro forma revenues of Lyric,
provided, further, that such loans are pledged to the Agent
pursuant to the Pledge and Security Agreement of such
Subsidiary; and
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81
(xvi) The acquisition of Lithotripsy by the Borrower
or any of its Subsidiaries, provided that the aggregate cash
expenditures by the Borrower and its Subsidiaries in
connection with such acquisition does not exceed $145,000,000,
(B) at the time of or after giving effect to such acquisition,
no Event of Default or Potential Default shall exist or
result, and (C) the Borrower shall comply with the provisions
of Section 5.02(e), and neither the Borrower nor any of its
Subsidiaries nor any of their properties shall be or become
bound by or subject to any contractual obligation that is or
would be violated or put in default by reason of such
compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance.
(d) Limitation on Indebtedness. Directly or
indirectly create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain directly or indirectly liable with respect
to, any Debt, except:
(i) the Obligations;
(ii) Debt existing on the Closing Date and
described in Schedule 5.03(d) and any extension, renewal or
refinancing of such Debt so long as (A) either (i) the
principal amount of such Debt is not increased or (ii) any
increase in the principal amount of such Debt is permitted
pursuant to another clause of this Section 5.03(d) and (B) if
Subordinated Debt, such extension, renewal or refinancing of
such Subordinated Debt are on terms no less favorable than the
Debt refinanced (including, without limitation, the
subordination of such Debt and the respective repayment dates
for such Debt);
(iii) any intercompany loan made (A) by the
Borrower or any wholly-owned Subsidiary thereof to any Person
that is a Subsidiary of the Borrower at the time such loan is
made; provided that any such loan made by the Borrower or any
wholly-owned Subsidiary thereof to any Person that is a
wholly-owned Subsidiary of the Borrower at the time such loan
is made shall be repayable on demand; provided further that,
in the case of any loan to a non-wholly-owned Subsidiary of
the Borrower, (a) the Investment in such loan is permitted
under Section 5.03(c) and (b) such loan shall be subject to
the limitations on Investments provided for therein; or (B) to
the Borrower or any wholly-owned Subsidiary thereof by any
Subsidiary of the Borrower;
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82
(iv) Debt (A) owed by a Health Care Company
acquired in an acquisition permitted under Section 5.03(c)(x)
or Section 5.03(c)(xiii), if such Debt was outstanding prior
to the acquisition, (B) owed by a Subsidiary of the Borrower,
if the Subsidiary makes an acquisition permitted under Section
5.03(c)(x) or Section 5.03(c)(xiii) and incurs or assumes such
Debt for the purpose of paying the purchase price or other
consideration for the acquisition, or (C) incurred or used by
any Subsidiary of the Borrower to purchase or otherwise
acquire any equipment for its business, but such Debt shall be
permitted only if and so long as the following conditions are
met:
(1) such Debt (I) may be secured only by
assets of the Subsidiary that incurred it, (II) may be
incurred and owed only by a single Subsidiary that, if it owes
Debt of the type described at (A) and (B) in this clause (iv),
has no significant assets except those acquired in such
acquisition, and equipment, fixtures and improvements thereon,
replacements thereof, inventory therefor, and assets generated
by operation thereof, (III) must not be subject to terms that
are violated, or pursuant to which such Debt is put into
default, by reason of any breach, default or event of default
under any indenture or agreement governing any other Debt or
lease binding on the Borrower or any of its other
Subsidiaries, (IV) must permit the Borrower and such
Subsidiary to comply with Section 5.02(e), and (V) must not be
violated or put into default or require any prepayment or
repurchase of such Debt by reason of any change in control
over the Borrower or such Subsidiary except, if required by
the holder of such Debt despite best efforts by the Borrower
to the contrary, a right to consent to a change of ownership
of such Subsidiary if such consent may not unreasonably be
withheld; and
(2) the aggregate principal amount of all
such Debt incurred at any time after the Closing Date and
outstanding at any one time in a particular year must not
exceed:
Year Maximum Amount
1997 $ 75,000,000
1998 $175,000,000
1999 and thereafter $200,000,000;
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83
(v) Subordinated Debt incurred under the
Proposed Subordinated Debt Indenture that, together with
Subordinated Debt incurred under the 1997 B Subordinated Debt
Indenture, equal an aggregate principal amount not in excess
of $800,000,000, and any extension, renewal or refinancing of
such Debt so long as (A) either (I) the principal amount of
such Debt is not increased or (II) any increase in the
principal amount of such Debt is permitted pursuant to another
clause of this Section 5.03(d) and (B) the terms and
conditions of the Proposed Subordinated Debt Indenture are no
less favorable to the Lenders than the 1997 Subordinated Debt
Indenture and (C) the Debt incurred under the Proposed
Subordinated Debt Indenture matures not earlier than 30 days
after the scheduled maturity date of the Term Loan;
(vi) Debt assumed by the Borrower in
connection with the acquisition of CCA; and
(vii) Debt assumed by the Borrower or any of
its Subsidiaries in connection with the acquisition of RoTech.
(e) Transactions with Affiliates. Enter or agree to
enter into any transaction with any Affiliate of the Borrower or of any
Subsidiary of the Borrower except (i) under the Loan Documents or (ii)
in the ordinary course of business and pursuant to the reasonable
requirements of the business of the Borrower or such Subsidiary and
upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of
the Borrower or such Subsidiary.
(f) Accommodation Obligations. Create, incur, assume
or suffer to exist any Accommodation Obligations except:
(i) endorsements of checks for collection or
deposit in the ordinary course of business;
(ii) Accommodation Obligations of the
Borrower and its Subsidiaries existing as of the Closing Date
and described in Schedule 5.03(f);
(iii) the Obligations;
(iv) a guaranty by the Borrower of Debt of a
Subsidiary permitted under Section 5.03(d)(iv);
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84
(v) a guaranty by the Borrower of the
obligations of a Subsidiary under a lease agreement permitted
under Section 5.03(g);
(vi) a guaranty of the performance of the
representations and warranties, indemnities and servicing
commitments of a Subsidiary (A) to the purchasers under a
Receivables Sale Program and their transferees, (B) contained
in any purchase or sale agreement entered into in connection
with any Investment or Asset Sale permitted under this
Agreement, and (C) contained in any management agreement
entered into in the ordinary course of such Subsidiary's
business;
(vii) Accommodation Obligations incurred by
the Borrower or any of its Subsidiaries in connection with the
Synthetic Lease Facility.
(viii) a guaranty by the Borrower of
equipment leases of Subsidiaries of the Borrower otherwise
permitted hereunder; and
(ix) any other Accommodation Obligation to
the extent that, after giving effect thereto, such
Accommodation Obligation does not result in an Event of
Default or Potential Default under Section 5.01(a) or 5.03(d)
(with the maximum amount of the contingent obligation of the
Borrower or Subsidiary, as the case may be, under such
Accommodation Obligation being deemed Debt for purposes of
compliance with this covenant).
(g) Leases of Health Care Facilities. Enter into or
become obligated as lessee under any lease (exclusive of leases entered
into in connection with the Synthetic Lease Facility) of a Health Care
Facility, whether or not it is a Capital Lease, unless (i) the lease is
free from provisions pursuant to which the lease is violated or put
into default by reason of any breach, default or event of default under
any indenture or agreement governing any Debt of, or other lease
binding on, the Borrower or any of its other Subsidiaries, except
another lease entered into by the same lessor or by one of its
Affiliates, (ii) the lease permits the Borrower and such Subsidiary to
comply with Section 5.02(e) and does not include any provision that is
or would be violated or put in default by reason of such compliance or
by reason of the enforcement of the claims and Liens of the Agent and
Lenders arising from such compliance, and (iii) the lease is free from
provisions pursuant to which the lease is or would be violated or put
into default, or any prepayment would be required, by reason of any
change in control of the Borrower or such Subsidiary except, if
required by the lessor despite best efforts by the Borrower to the
contrary, a right to consent to a change of ownership of such
Subsidiary if such consent may not unreasonably be withheld; provided
that at any one time the Borrower or any of its Subsidiaries may be
obligated as a lessee under one or more leases of Health Care
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85
Facilities not otherwise permitted under this Section 5.03(g) so long
as the aggregate annual rent payment obligations under all such leases
is less than $20,000,000, exclusive of leases in which CCA is the
lessee and which CCA entered into or became obligated under prior to
the acquisition of CCA by the Borrower.
(h) Restricted Junior Payments. Directly or
indirectly (i) declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock
or any other equity, ownership or profit interests; (ii) purchase,
redeem or otherwise acquire for value any shares of any class of
capital stock of, or other equity, ownership or profit interests in,
the Borrower or any of its Subsidiaries or any warrants, rights or
options to acquire any such shares or interests, now or hereafter
outstanding; (iii) enter into any agreement restricting the ability of
any Subsidiary of the Borrower to declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations
or securities to its stockholders; (iv) agree to or permit any
amendment or modification of, or change in, any of the terms of the
Subordinated Debt Indentures; or (v) pay, prepay, redeem, or purchase
or otherwise acquire any Subordinated Debt, or make any deposit to
provide for the payment of any Subordinated Debt when due, or exchange
any Subordinated Debt, or give any notice in respect thereof; except
that:
(A) the Borrower may declare and pay cash
dividends on its common stock, so long as (a) no Event of
Default or Potential Default is continuing at the time any
such dividend is declared or paid or would result from the
payment and (b) the aggregate amount of all such cash
dividends paid in any one calendar year does not exceed the
lesser of (x) $0.05 per share and (y) $10,000,000 in the
aggregate;
(B) The Borrower from time to time may
purchase outstanding shares of the Borrower's common stock or
purchase options, or enter into other transactions, to
purchase such stock, so long as (1) the aggregate amount
expended for all such purchases, options and other
transactions at any time after the Closing Date does not
exceed $50,000,000 (the "PURCHASE LIMIT") and (2) any such
purchase, option or other transaction is made in compliance
with all applicable laws and no Potential Default or Event of
Default exists at the time of, or would result from, any such
purchase, option or other transaction (and, for this purpose,
the amounts counted toward the Purchase Limit shall not be
reduced by or on account of any subsequent resale of the
Borrower's Common Stock);
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86
(C) the Borrower may declare and make any
dividend payments or other distributions payable solely by the
Borrower in common stock of the Borrower;
(D) so long as no Event of Default exists or
would result, any Subsidiary may (a) make any lawful
distribution to the holders of shares of its stock or other
equity, ownership or profit interests and (b) purchase,
acquire or retire any such shares or interests that are not
held by the Borrower or a wholly-owned Subsidiary of the
Borrower, if the Investment in such shares or interests is
permitted at the time under Section 5.03(c)(x);
(E) the Borrower may pay when due the
interest on the Subordinated Debt if such interest is
permitted to be paid at the time under the subordination
provisions of the governing Subordinated Debt Indenture;
(F) the Borrower may give notice of a
redemption with respect to any issue of Convertible
Subordinated Debt, if and only if (a) the purpose of such
notice is to force the holders of such Convertible
Subordinated Debt to convert their Convertible Subordinated
Debt into common stock of the Borrower and (b) at the time of
the giving of such notice no Event of Default or Potential
Default has occurred and is continuing; provided, however,
that the Borrower may make any redemption payment by reason of
tenders actually made pursuant to such notice only if either
(x) the conversion of such Convertible Subordinated Debt to
common stock is underwritten by a third party acceptable to
the Agent or (y) any redemption payment required to be made
pursuant to such notice would not cause Adjusted Stockholders'
Equity to be less than Minimum Net Worth and in each case no
Event of Default or Potential Default is continuing at the
time of, or would exist after giving effect to, any such
redemption payment;
(G) so long as not prohibited under the 1993
Convertible Subordinated Debt Indenture, the Borrower may pay
on January 1, 2001 any principal amount then due and payable
under the 1993 Convertible Subordinated Debt Indenture;
(H) The Borrower may pay dividends on the
Preferred Stock, if paid when due and not prohibited at the
time under the certificate of designation governing the
Preferred Stock; and
(I) so long as no Event of Default or
Potential Default is continuing at the time of or would exist
after giving effect to, any redemption payment and it is not
prohibited under the terms of the respective Convertible
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87
Subordinated Debt, the Borrower may redeem Convertible
Subordinated Debt, provided that all amounts used in
connection with such redemption are solely from the proceeds
of an equity offering of the Borrower.
(i) Mergers, Etc. Merge or consolidate with or into
or enter into any agreement to merge or consolidate with or into any
Person except that:
(i) a wholly-owned Subsidiary of the
Borrower may engage in a merger or consolidation with any one
or more other wholly-owned Subsidiaries of the Borrower if the
surviving corporation is a wholly-owned Subsidiary of the
Borrower (A) that has executed the Guaranty and (B) all the
stock of which is held by the Agent in pledge pursuant to the
Collateral Documents;
(ii) a non-wholly-owned Subsidiary of the
Borrower may engage in a merger or consolidation with any one
or more other non-wholly- owned Subsidiaries of the Borrower;
provided that the surviving corporation is a Subsidiary of the
Borrower, (A) that has executed the Guaranty and (B) the stock
of which, to the extent owned by the Borrower or any
Subsidiary thereof, is held by the Agent in pledge pursuant to
the Collateral Documents; and provided further that, after
giving effect to any such merger or consolidation, (a) the
Borrower shall, directly or indirectly, own an equity interest
in the surviving corporation substantially equivalent in
aggregate value to its prior equity interests in the
non-wholly-owned Subsidiaries party to such merger or
consolidation, and (b) the surviving corporation shall satisfy
the Retained Interest Criteria as if such merger or
consolidation had been a Retained Interest Sale;
(iii) a wholly-owned Subsidiary of the
Borrower may engage in a merger or consolidation in connection
with an acquisition permitted under Section 5.03(c)(x), but
only if the surviving corporation is a wholly-owned Subsidiary
of the Borrower (A) that has executed the Guaranty and (B) all
the stock of which is held by the Agent in pledge pursuant to
the Collateral Documents; and
(iv) a Subsidiary of the Borrower may engage
in a merger or consolidation if the purpose and effect thereof
is solely to consummate a transaction permitted under Section
5.03(b)(iv), Section 5.03(b)(v) or Section 5.03(b)(vi).
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88
(j) Conduct of Business. Engage in any business other
than the businesses of the Borrower and its Subsidiaries described in
Section 4.01(p) and any business or activity substantially similar
thereto.
(k) Unpledged Assets. In the case of the Borrower,
own or hold any assets, Investments or property upon which the Agent
does not hold a valid, perfected and sole Lien as security for the
Obligations, except (i) Investments permitted under clauses (i) and
(iv) of Section 5.03(c), (ii) other assets and property having an
aggregate value not greater than $40,000,000, and (iii) shares of
Inactive Subsidiaries.
(l) Compliance with ERISA. Directly or indirectly (or
permit any ERISA Affiliate directly or indirectly to) (i) terminate any
Plan subject to Title IV of ERISA so as to result in liability to the
Borrower or any ERISA Affiliate in excess of $2,000,000; (ii) permit
any ERISA Event to exist; (iii) make a complete or partial withdrawal
(within the meaning of ERISA Section 4201) from any Multiemployer Plan
so as to result in liability to the Borrower or any ERISA Affiliate in
excess of $2,000,000; or (iv) permit the total Unfunded Pension
Liabilities (using the actuarial assumptions utilized by the PBGC) for
all Pension Plans (other than Pension Plans which have no Unfunded
Pension Liabilities) to exceed $2,000,000.
(m) Health Care Permits and Approvals. Engage in any
activity that (i) is or could reasonably be expected to result in a
material default under or violation of any Health Care Permit necessary
for the lawful conduct of its business or operations or (ii) causes or
could reasonably be expected to cause the loss by any Health Care
Company or Health Care Facility owned, leased, managed or operated by
it of the right to participate in, and receive payment under, the
appropriate Medicare, Medicaid and related reimbursement programs, and
any similar state or local government-sponsored program to the extent
that it has decided to participate in any such state or local program,
or to receive reimbursement from private and commercial payers and
health maintenance organizations to the extent applicable thereto;
provided that the failure at any one time to maintain Health Care
Permits with respect to any seven Health Care Facilities owned or
leased by one or more Subsidiaries of the Borrower shall not constitute
a failure to comply with this Section 5.03(m).
(n) Retained Interest Criteria. Cause, permit or
suffer any of the Retained Interest Criteria not to be met and
maintained continuously after the consummation of any transaction
permitted under Section 5.03(b)(v)(D) or Section 5.03(b)(vi)(D), for as
long as the Retained Interest surviving such transaction, or any
portion thereof or non-cash proceeds therefrom, is held by the Borrower
or any of its subsidiaries.
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(o) Payment Restrictions Affecting Subsidiaries.
Cause, permit or suffer any Subsidiary to become or remain subject to
any contractual obligation that in any manner limits or restricts its
right to pay dividends or make distributions, whether in cash or in
property, to its stockholders or to make loans or sell assets to the
Borrower or any of its Subsidiaries or to enter into any other lawful
transaction with the Borrower or any of its Subsidiaries, except
limitations and restrictions set forth in the Subordinated Debt
Indentures or the Loan Documents.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing:
(a) Non-Payment of Principal. The Borrower fails to
pay when due any principal of any Advance; or
(b) Non-Payment of Interest or Fees. The Borrower
fails to pay when due any interest payable under Section 2.07, any
additional interest payable under Section 2.08, any fee payable under
Section 2.04 or any other amount payable hereunder or under any Loan
Document and such failure continues for five Business Days or such
other period of grace provided for herein; or
(c) Representations and Warranties. Any
representation or warranty made by any Loan Party under or in
connection with any Loan Document proves to have been incorrect in any
material respect when made and either (i) such representation or
warranty cannot be remedied and the Agent has given notice thereof or
(ii) such representation or warranty continues to be incorrect in any
material respect for fifteen days after either (A) such incorrectness
is acknowledged in writing by the Borrower or (B) written notice
thereof is given to the Borrower by the Agent or any Lender; or
(d) Financial, Lien and Debt Covenants. The Borrower
fails to perform or observe any term, covenant or agreement set forth
in Section 5.01, Section 5.03(a) or Section 5.03(d); or
(e) Reporting Covenants. The Borrower fails to
perform or observe any term, covenant or agreement set forth in Section
5.02(c) and such failure continues for fifteen days after either (i) it
is acknowledged in writing by the
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Borrower or (ii) written notice thereof is given to the Borrower by the
Agent or any Lender; or
(f) Negative Covenants. The Borrower fails to perform
or observe any term, covenant or agreement set forth in Section 5.03
(other than Sections 5.03(a) or 5.03(d)) and such failure continues for
ten days after either (i) it is acknowledged in writing by the Borrower
or (ii) written notice thereof is given to the Borrower by the Agent or
any Lender; or
(g) Covenants. The Borrower or any Loan Party fails
to perform or observe any term, covenant or agreement contained in this
Agreement or any other Loan Document (other than those specifically
referred to in subsections (a), (b), (c), (d) and (e) of this Section
6.01) and such failure continues for 30 days (or with respect to the
covenants set forth in Sections 5.02(f) and 5.02(l) such failure
continues for 60 days) after either (i) it is acknowledged in writing
by the Borrower or (ii) written notice thereof is given to the Borrower
by the Agent or any Lender; or
(h) Debt. The Borrower or any of its Subsidiaries (i)
fails to pay, when due and payable (whether at the scheduled maturity
or upon any required prepayment, acceleration, demand or otherwise),
any principal of or premium or interest on any Debt (except the Notes,
but including any Accommodation Obligations in respect of any such
Debt) outstanding in a principal amount of at least $10,000,000, and
such failure continues for longer than the period of grace, if any,
specified for such failure in the indenture or agreement governing such
Debt, or (ii) commits or permits a breach or default under any
financial test or covenant which, under the terms of the indenture or
agreement governing any Debt (except the Notes, but including any
Accommodation Obligations in respect of any such Debt) outstanding in a
principal amount of at least $10,000,000, requires the maintenance of a
specified net worth or working capital or any other quantifiable
measure of financial condition or financial performance, and such
breach or default continues for longer than the period of grace, if
any, specified for such failure in such indenture or agreement; or any
such Debt of at least $10,000,000 is declared to be due and payable or
is required to be prepaid prior to the stated maturity thereof; or
(i) Leases. (i) Except as otherwise permitted
pursuant to Section 5.02(h), the Borrower or any of its Subsidiaries
(A) fails to make any payment within the period required under any
Material Lease, and such failure continues for longer than the period
of grace, if any, specified for such failure in such Material Lease, or
(B) fails to perform or observe any other term, covenant or agreement
that (a) is contained in any Material Lease and (b) requires the
payment of money or can be performed or observed by the payment of
money, and such failure continues for longer than the period of grace,
if any, specified for such failure in such Material
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Lease; or (ii) any Material Lease is terminated as a result of any
failure by the Borrower or any of its Subsidiaries to perform or
observe any term, covenant or agreement contained therein; or
(j) Bankruptcy. The Borrower or any Material
Subsidiary is generally not paying its debts as they become due or
admits in writing its inability to pay its debts generally or makes a
general assignment for the benefit of creditors; or any proceeding is
instituted by or against any Loan Party or any Subsidiary of a Loan
Party seeking an order for relief under the United States Bankruptcy
Code or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts or
the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property under any
law relating to bankruptcy, insolvency, liquidation or reorganization
or relief of debtors and either (i) any such relief in any such
proceeding is sought or consented to by it or an order for any such
relief is entered against it, or (ii) any such proceeding instituted
against it remains undismissed and unstayed for a period of 60 days; or
any Loan Party or any Material Subsidiary takes any corporate action to
authorize any of the actions set forth above in this Section 6.01(i);
or
(k) Judgments. Any judgment or order for the payment
of money is rendered against any of the Loan Parties or any of their
Subsidiaries in an amount in excess of $30,000,000 for any single
judgment or order or in excess of $50,000,000 for all such judgments or
orders and either (i) enforcement proceedings are commenced by any
creditor upon such judgment or order and not stayed, or (ii) there is
any period of 60 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, is
not in effect; or
(l) Guaranty. Any provision of the Guaranty after
delivery thereof for any reason ceases to be valid and binding on each
Loan Party that is party thereto, or any Loan Party shall repudiate or
purport to revoke the Guaranty; or
(m) Collateral Documents. The Collateral Documents,
after delivery thereof pursuant to Section 3.01, for any reason (other
than pursuant to the terms thereof) cease to create a valid and
perfected first priority security interest in any material portion of
the Collateral purported to be covered thereby; or
(n) ERISA. (i) The Borrower or any ERISA Affiliate
fails to satisfy its contribution requirements under Section 412(c)(11)
of the Code, whether or not it has sought a waiver under Section 412(d)
of the Code; or (ii) in the case of an ERISA Event involving the
withdrawal from a Pension Plan of a "substantial employer" (as defined
in Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing
employer's proportionate share of that Pension Plan's Unfunded Pension
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Liabilities is more than $2,000,000; or (iii) in the case of an ERISA
Event involving the complete or partial withdrawal from a Multiemployer
Plan, the withdrawing employer incurs a withdrawal liability in an
aggregate amount exceeding $2,000,000; or (iv) a Plan that is intended
to be qualified under Section 401(a) of the Code loses its
qualification, and with respect to such loss of qualification, the
Borrower or any ERISA Affiliate can reasonably be expected to be
required to pay (for additional taxes, payments to or on behalf of Plan
participants, or otherwise) an aggregate amount exceeding $2,000,000;
or (v) any combination of events listed in clauses (ii) through (iv)
occurs that involves a net increase in aggregate Unfunded Pension
Liabilities and unfunded liabilities in excess of $5,000,000;
then, and in any such event, the Agent (C) shall at the request, or may with the
consent, of the Requisite Lenders, by notice to the Borrower, declare the
obligation of each Revolving Lender to make Advances and the obligation of the
LC Bank to issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate and the Revolving Facility Amount and LC Subcommitment shall
be automatically and permanently reduced to zero, and (D) shall at the request,
or may with the consent, of the Requisite Lenders, by notice to the Borrower,
declare the Advances and all fixed and contingent obligations of the Borrower to
reimburse the LC Bank for any payment that has been or may be made under any
Letter of Credit, together with all interest thereon and all other amounts
payable under this Agreement, to be immediately due and payable, and thereupon
the Advances and all such fixed and contingent reimbursement obligations,
interest and other amounts shall become and be immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that upon the
ocurrence of any Event of Default provided for in subsection 6.01(j), (x) the
obligation of each Revolving Lender (including the Swing Line Bank) to make
Advances and the obligation of the LC Bank to issue Letters of Credit shall
automatically be terminated and the Revolving Facility Amount and LC
Subcommitment shall be automatically and permanently reduced to zero, and (y)
the Advances and all such fixed and contingent obligations, interest and other
amounts shall automatically become and be immediately due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 6.02. Rights Not Exclusive. The rights provided for in
this Agreement and the other Loan Documents are cumulative and are not exclusive
of any other rights, powers or privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement.
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ARTICLE VII
THE AGENT AND THE ARRANGER
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender hereby authorizes the Agent
to execute the Intercreditor Agreement on behalf of each such Lender. As to any
matters not expressly provided for by this Agreement (including enforcement or
collection of the Notes) and subject to the terms and conditions of the
Intercreditor Agreement, 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 Requisite Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable law. The
Agent shall not be liable to any Lender if, in accordance with the terms of this
Agreement, it takes or omits to take any action pursuant to the instructions of
the Requisite Lenders. The Agent agrees to give to each Lender prompt notice of
each notice given to it by the Borrower pursuant to the terms of this Agreement.
The Agent agrees to perform and discharge the duties and powers delegated to it
under this Agreement and the other Loan Documents in accordance with the terms
hereof and thereof.
SECTION 7.02. Agent Not Liable. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or any of them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent (i) may
treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
including the agreement of the assignee or transferee to be bound hereby as it
would have been if it had been an original Lender party hereto, in form
satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for 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; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of
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this Agreement or any other Loan Document or any other instrument or document
furnished pursuant to any Loan Document or for the creation, validity,
enforceability, sufficiency, value, perfection or priority of any Lien purported
to be granted to the Agent, whether pursuant to any of the Collateral Documents
or otherwise; and (vi) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier) believed by it in good faith to be genuine
and signed or sent by the proper party or parties.
SECTION 7.03. Rights as Lender. With respect to its commitment
and the Advances and Notes held by it and all other rights, claims and interests
accorded it as Lender, Citibank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall include Citibank in its
individual capacity. Citibank 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, any of its Subsidiaries and any Person who may
do business with or own securities of the Borrower or any such Subsidiary, all
as if Citibank were not the Agent and without any duty to account therefor to
the Lenders. Any Lender and its respective 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, any of its Subsidiaries and any Person who
may do business with or own securities of the Borrower or any such Subsidiary,
all as if such Lender were not a Lender hereunder and without any duty to
account therefor to the other Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.01(h) and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower) ratably according to
their Pro Rata Shares from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or the other Loan Documents or any action taken or omitted by the
Agent under this Agreement or the other Loan Documents; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to
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reimburse the Agent promptly upon demand for its Pro Rata Share of any
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, modification, amendment, protection or enforcement (whether through
negotiations, by legal proceedings, in bankruptcy or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or the
other Loan Documents, to the extent that the Agent is not reimbursed for such
expenses by the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Requisite Lenders. Upon any
such resignation or removal, the Requisite Lenders shall, subject to the written
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed, have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Requisite Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Requisite Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State and having total assets of at least $20,000,000,000.
Upon 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 and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
SECTION 7.07. Release of Collateral. The Agent is hereby
irrevocably authorized to release any Lien granted to or held by the Agent upon
(i) any and all Collateral when the Revolving Facility Amount has been
permanently reduced to zero, all Letters of Credit issued hereunder have expired
or been discharged, all outstanding Advances and LC Exposure have been repaid,
and all other Obligations that are then due and payable and of which the Agent
then has written notice demanding payment prior to release of Collateral have
been paid, (ii) any Collateral constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted under
Section 5.03(b), or (iii) any Collateral consisting of an instrument evidencing
Debt or other debt instrument, if the indebtedness evidenced thereby has been
paid in full. Upon request by the Agent or the Borrower at any time, each Lender
shall confirm in writing the Agent's authority to release Collateral, or
particular types or items of Collateral, as set forth in this Section 7.07.
Subject to Section 8.01(g), the Agent shall not be obligated to release any
Collateral unless it receives such written confirmation from the Requisite
Lenders.
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SECTION 7.08. Release of Guarantor upon Sale of Stock. If (i)
either (A) all of the outstanding shares of capital stock and other equity,
ownership and profit interests in any Guarantor are sold to a Person not an
Affiliate of the Borrower in a transaction which is permitted under Section
5.03(b)(iv), Section 5.03(b)(v) or Section 5.03(b)(vi) and which is not a
Retained Interest Sale or (B) the Guarantor Liability Limit of any Guarantor is
reduced to zero as part of a Retained Interest Sale and by reason of a voluntary
reduction of the Revolving Facility Amount that is elected by the Borrower at
the time and in the manner set forth in the definition of "Guarantor Liability
Limit," and if (ii) the conditions set forth in Section 5.03(b)(iv), Section
5.03(b)(v) or Section 5.03(b)(vi), as the case may be, are met in respect of
such transaction, then upon request by the Agent or the Borrower each Lender
shall confirm in writing that the liability of such Guarantor under the Guaranty
is released and discharged effective when such transaction is consummated and
such requirements are met, as set forth in Section 2.13 of the Guaranty. Such
confirmation from the Requisite Lenders (a) shall establish conclusively that
the liability of such Guarantor under the Guaranty is released and discharged as
set forth in Section 2.13 of the Guaranty and (b) may be relied on, without
further inquiry, by the purchaser in such transaction and each of its
transferees.
SECTION 7.09. The Arranger, etc. The Arranger, Documentation
Agent, Managing Agents and Co-Agents (as identified on the signature pages
hereto) shall have no duties or responsibilities in such capacities under this
Agreement and the other Loan Documents and shall incur no liability hereunder or
thereunder in such capacities.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall be effective unless it is in writing and signed by the
Requisite Lenders (and any such waiver or consent shall in any case be effective
only in the specific instance and for the specific purpose for which given),
except that (a) no amendment, waiver or consent shall, unless in writing and
signed by the Lender to be bound or affected thereby, do any of the following:
(i) change the obligation of such Lender to extend
credit hereunder or subject such Lender to any additional obligations;
(ii) reduce the principal of or interest on any
Advance or any fees or other amounts payable to such Lender hereunder
or under any other Loan Document;
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(iii) postpone any date fixed for any payment
(including any mandatory prepayment) of principal of or interest on any
Advances or LC Exposure held by such Lender or any fees or other
amounts payable to such Lender under any Loan Document;
(iv) waive, reduce or postpone any Revolving Facility
Reduction required hereunder;
(v) amend the definition of "Revolving Facility
Amount," "Pro Rata Share," "Requisite Lenders," "Term Pro Rata Share,"
"Requisite Term Lenders," "Revolving Pro Rata Share," or "Requisite
Revolving Lenders";
(vi) waive any Event of Default that is continuing
under Section 6.01(a) or 6.01(b) in respect of a payment due to such
Lender;
(vii) release any substantial portion of the
Collateral other than in accordance with the terms of this Agreement;
(viii) release or limit the liability of any
Guarantor under the Guaranty other than in accordance with the terms of
the Guaranty;
(ix) amend Section 2.13, Section 2.17 or Section
6.01(a); or
(x) amend this Section 8.01;
(b) no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Agent under this Agreement or any Loan Document, (c) no
amendment, waiver or consent shall, unless in writing and signed by the LC Bank
in addition to the Lenders required above to take such action, affect the rights
or duties of the LC Bank under this Agreement and (d) any amendment that (i)
increases the amount of the commitment of any Revolving Lender to extend
revolving credit hereunder, (ii) reduces the interest rate payable on any
Revolving Borrowings, (iii) extends the Maturity Date or (iv) waives, reduces or
postpones any Revolving Facility Reduction will not require the consent of any
Term Lender.
SECTION 8.02. Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied, or delivered, if to the Borrower, at Integrated Health
Services, Inc., 10065 Red Run Boulevard, Owings Mills, Maryland 21117,
Attention: General Counsel and Attention: Eleanor C. Harding, Executive Vice
President, with a copy to: LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55
Street, New York, New York 10019, Attention: John R. Fallon, Jr.; if to any
Lender, at its Domestic Lending Office specified opposite its name on Schedule I
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hereto; and if to the Agent, at Citibank, N.A., 399 Park Avenue, New York, New
York 10043, Attention: Margaret A. Brown, Managing Director, with a copy to:
Shearman & Sterling, 555 California Street, 20th Floor, San Francisco,
California 94104, Attention: Steven E. Sherman; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and communications shall, when mailed or
telecopied, be effective when deposited in the mails or telecopied,
respectively, except that notices and communications to the Agent pursuant to
Article II or VII shall not be effective until received by the Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender, the LC Bank or the Agent to exercise, and no delay in exercising,
any right under any Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. The Borrower agrees to pay
on demand all reasonable costs and expenses incurred by the Agent in connection
with the preparation, negotiation, execution, delivery, modification and
amendment of the Loan Documents and the other documents to be delivered under
the Loan Documents, including the reasonable fees and out-of-pocket expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under the Loan Documents. The
Borrower further agrees to pay on demand all reasonable costs and expenses,
including reasonable fees and expenses of attorneys (including allocable costs
of in-house counsel), accountants, advisors and other experts, incurred by the
Agent or the Lenders in respect of any Event of Default or while any Event of
Default is continuing or in connection with the protection, resolution or
enforcement (whether through negotiations, by legal proceedings, in bankruptcy
or otherwise) of the Obligations or the Collateral or any right, remedy, power,
interest or claim of the Agent or any Lender under any Loan Document.
SECTION 8.05. Right of Set-off. Whenever any Event of Default
is continuing, each Lender may at any time or from time to time, with the
consent of the Requisite Lenders but without any prior notice to the Borrower or
any other Person, set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other debt at any
time owing by such Lender to or for the credit or the account of the Borrower,
whether or not then due, and whether or not then fully secured, against any and
all Advances, LC Exposure and other Obligations then owing to such Lender,
whether or not then due. After any such set-off and application is made, the
Lender that made it shall promptly notify the Borrower thereof, but the failure
to do so shall not affect the validity of the set-off and application and shall
not expose such Lender to any
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liability. The Lenders' right of setoff under this Section 8.05 is cumulative
with and additional to all other rights and remedies (including other rights of
set-off) of the Lenders.
SECTION 8.06. Indemnity. (a) General Indemnity. The Borrower
shall pay, defend, indemnify, and hold the Arranger, each Lender, the Agent,
their respective Affiliates and each of their respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "INDEMNIFIED PERSON")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including reasonable fees and expenses of counsel and allocated costs of
internal counsel incurred in defending any such action or incurred in enforcing
this Section 8.06(a)) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement and performance of this Agreement and any other
Loan Document or the transactions contemplated herein, and with respect to any
investigation, litigation or proceeding related to this Agreement or the
Advances or the Letters of Credit or the use of the proceeds thereof, whether or
not any Indemnified Person is a party thereto (all the foregoing, collectively,
the "INDEMNIFIED LIABILITIES"), except that the Borrower shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person.
(b) Environmental Indemnity. The Borrower shall pay, defend,
indemnify, and hold harmless each Indemnified Person from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements (including reasonable fees and
expenses of counsel and the allocated cost of internal counsel), which may be
incurred by or asserted against any Indemnified Person in connection with or
arising out of any pending or threatened investigation or Environmental Claim
arising out of or related to any acts or omissions or any property of the
Borrower or any of its Subsidiaries. In no event shall any site visit,
observation, or testing by the Agent or any Lender be a representation that
Hazardous Materials are or are not present in, on, or under the site, or that
there has been or shall be compliance with any Environmental Law. Neither the
Borrower nor any other party is entitled to rely on any site visit, observation,
or testing by the Agent or any Lender. Neither the Agent nor any Lender owes any
duty of care to protect the Borrower or any other Person against, or to inform
the Borrower or any other Person of, any adverse condition affecting any site or
property.
SECTION 8.07. Assignments and Participations. (a) Permitted
Assignment. Each Lender may assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement, but (i) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning Lender's rights and obligations under this Agreement, unless otherwise
consented to by the Agent; (ii) the amount of the commitment, if any, and
outstanding Advances of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall not be less than $5,000,000 or the total
<PAGE>
100
amount of the remaining commitment, if any, and outstanding Advances of such
Lender, except that an assignment to an existing Lender or an Affiliate of a
Lender or a Related Fund may be in an amount less than $5,000,000, (iii) each
such assignment shall be to an Eligible Assignee and (iv) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee payable
to the Agent of $2,500. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(A) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (B) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(b) Effect of Assignment. By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto
that (i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto or as to the
Collateral or the validity, enforceability, perfection or priority of any Lien
upon the Collateral; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01(h) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be
<PAGE>
101
performed by it as a Lender; and (viii) such assignee confirms and agrees that
it shall have no greater indemnification rights pursuant to Section 2.16(c) than
its Lender assignor.
(c) Maintenance of Agreements. The Agent, acting for this
purpose (but only for this purpose) as the agent of the Borrower (and in such
capacity neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
any of them under or in connection with this Section 8.07(c), except for its or
their own gross negligence or willful misconduct), shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the commitments and Pro Rata Shares of, and
principal amount of the Advances owing to, each Lender from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders
shall treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Procedure. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee Lender representing
that it is an Eligible Assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit E-2 hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such Eligible Assignee in an
aggregate amount equal to the interest in the surrendered Note or Notes assigned
to it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained an interest in the surrendered Note or Notes, a new Note or Notes
to the order of the assigning Lender in an aggregate amount equal to the
interest so retained. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A-1 and A-2,
respectively.
(e) Participations. Each Lender may sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement, but (i) such Lender's obligations under this
Agreement (including its commitment to the Borrower hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Note or Notes for all purposes of this Agreement, and
(iv) the Borrower, the Agent and the other Lenders shall continue to deal
<PAGE>
102
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(f) Additional Information. Any Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Section 8.07, disclose to the assignee or participant or proposed
assignee or participant or to any Person who evaluates, approves, structures or
administers the loans on behalf of a Lender, any information relating to the
Borrower furnished to such Lender by or on behalf of the Borrower, but only if
such Person, the assignee or participant or proposed assignee or participant is
obligated to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender.
(g) Permitted Assignments. Any Lender may assign any of its
rights and obligations under this Agreement to any of its Affiliates without
notice to or consent of the Borrower or the Agent, and such Lender or any of its
Affiliates may assign any of its rights (including, without limitation, rights
to payment of principal and/or interest under the Notes) under this Agreement to
any Federal Reserve Bank without notice to or consent of the Borrower or the
Agent.
SECTION 8.08. Binding Effect. This Agreement shall become
effective when it has been executed by the parties hereto and the conditions set
forth in Section 3.01 have been satisfied and thereafter shall be binding upon
and inure to the benefit of the Borrower, the Agent and each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of each of the Lenders and the Agent. When (and only when) this
Agreement becomes effective, the commitments of the financial institutions that
are party to the Existing Facility to extend credit under the Existing Facility
shall be terminated, but all claims against the Borrower or any of its
Subsidiaries under or in respect of the Existing Facility, and all Liens
securing any such claim, shall remain in full force and effect until paid and
released as set forth in the payout and release agreement delivered pursuant to
Section 3.01(g).
SECTION 8.09. Governing Law; Consent to Jurisdiction; Venue.
This Agreement and the other Loan Documents shall be governed by, and construed
in accordance with, the laws of the State of New York. Any legal action or
proceeding with respect to any Loan Document may be brought in the courts of the
State of New York or of the United States for the Southern District of New York,
and by execution and delivery of this Agreement, each of the Borrower, the Agent
and the Lenders consents, for itself and in respect of its property, to the
jurisdiction of those courts. Each of the Borrower, the Agent and the Lenders
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of any Loan
<PAGE>
103
Document. The Borrower, the Agent and the Lenders each waive personal service of
any summons, complaint or other process, which may be made by any other means
permitted by New York law.
SECTION 8.10. Waiver of Jury Trial. THE BORROWER, THE LENDERS
AND THE AGENT 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 OR ANY
OTHER LOAN DOCUMENT 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 BASED ON CONTRACT, TORT, STATUTORY
LIABILITY OR OTHERWISE. THE BORROWER, THE LENDERS AND THE AGENT AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY THE COURT WITHOUT A JURY. THIS
WAIVER SHALL APPLY TO EACH FUTURE AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION
OF ANY LOAN DOCUMENT AND TO EACH FUTURE LOAN DOCUMENT.
SECTION 8.11. Limitation of Liability. No claim may be made by
the Borrower, any Subsidiary of the Borrower, any Lender, the Agent or any other
Person against the Agent or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
indirect or consequential damages or, to the fullest extent permitted by law,
for any punitive damages in respect of any claim or cause of action (whether
based on contract, tort, statutory liability, or any other ground) based on,
arising out of or related to any Loan Document or the transactions contemplated
hereby or any act, omission or event occurring in connection therewith, and the
Borrower (for itself and on behalf of each of its Subsidiaries), the Agent and
each Lender hereby waive, release and agree never to sue upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether or
not it is now known or suspected to exist in its favor.
SECTION 8.12. Entire Agreement. This Agreement, together with
the other Loan Documents, embodies the entire Agreement and understanding among
the Borrower, the Lenders and the Agent and supersedes all prior or
contemporaneous agreements and understandings of such persons, verbal or
written, relating to the subject matter hereof and thereof except for the Fee
Letter and any prior arrangements made with respect to the payment by the
Borrower of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of the Agent or any Lender.
SECTION 8.13. Survival. The Borrower's liability for any and
all additional interest, fees, taxes, compensation, costs, losses, expense
reimbursements, indemnification and other similar Obligations arising under any
Loan Document shall survive the expiration or termination of the commitments of
the Lenders to extend credit hereunder, the repayment
<PAGE>
104
and retirement of all Advances and LC Exposure at any time outstanding hereunder
and the assignment by a Lender of all or the remaining portion of its rights and
obligations under this Agreement.
SECTION 8.14. Execution in 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 one and the same
agreement.
SECTION 8.15. Acknowledgements. The Borrower hereby
acknowledges that (i) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (ii)
neither the Agent nor any Lender has any fiduciary relationship with or
fiduciary duty to the Borrower arising out of or in connection with this
Agreement or any of the Loan Documents, and the relationship between the Agent
and the Lender, on the one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor and (iii)
no joint venture is created hereby or by the other Loan Documents or otherwise
by virtue of the transaction contemplated hereby among the Lenders or among the
Borrower and the Lenders or among the Borrower and the Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
INTEGRATED HEALTH SERVICES, INC.
By: /s/
-------------------------------------
Name:
Title:
CITIBANK, N.A.,
as Administrative Agent, Swing Line Bank
and Lender
By: /s/
-------------------------------------
Name:
Title:
CITICORP SECURITIES, INC.,
as Arranger
By: /s/
-------------------------------------
Name:
Title:
TORONTO DOMINION (NEW YORK), INC.,
as Documentation Agent and Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-2
BANK OF AMERICA N.T.&S.A.
as a Lender and Managing Agent
By: /s/
-------------------------------------
Name:
Title:
CREDIT LYONNAIS,
NEW YORK BRANCH,
as a Lender and Managing Agent
By: /s/
-------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as a Lender and Managing Agent
By: /s/
-------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as a Lender and Managing Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-3
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Managing Agent
By: /s/
-------------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
DEUTSCHE BANK, AG,
NEW YORK AND/OR CAYMAN
ISLANDS BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
FLEET NATIONAL BANK,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-4
ALLIED IRISH BANKS, PLC
as a Lender
By: /s/
-------------------------------------
Name:
Title:
AMSOUTH BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
CREDITANSTALT BANKVEREIN,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-5
CRESTAR BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-6
PROVIDENT BANK OF MARYLAND,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SUMMIT BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANC ONE, TEXAS, N.A.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-7
BANKERS TRUST COMPANY
as a Lender
By: /s/
-------------------------------------
Name:
Title:
CIBC WOOD GUNDY SECURITIES CORP.
as a Lender
By: /s/
-------------------------------------
Name:
Title:
DAI-ICHI KANGYO BANK, LIMITED, NEW
YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
DRESDNER BANK, AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-8
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
BARNETT BANK, N.A.
as a Lender
By: /s/
-------------------------------------
Name:
Title:
INDUSTRIAL BANK OF JAPAN, LIMITED
as a Lender
By: /s/
-------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-9
THE TOYO TRUST AND BANKING
CO., LTD.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SOCIETE GENERALE,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-10
ALLSTATE INSURANCE COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
PRIME INCOME TRUST,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
DEEPROCK & COMPANY
By: EATON VANCE MANAGEMENT, as
Investment Manager,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-11
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
DEBT STRATEGIES FUND, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-12
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.,
as a Lender,
By: /s/
-------------------------------------
Name:
Title:
METROPOLITAN LIFE INSURANCE
COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a unit of The Chase
Manhattan Bank),
as a Lender
By: /s/
-------------------------------------
Name:
Title:
KZH HOLDING CORPORATION III,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-13
PARIBAS CAPTIAL FUNDING LLC,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
PILGRIM AMERICA INVESTMENTS, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
PPM AMERICA, INC., as attorney in fact, on
behalf of Jackson National Life Insurance
Company
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SHENKMAN CAPTIAL MANAGEMENT,
INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-14
KZH-SOLEIL CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
TCW ASSET MANAGEMENT COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
STOCKSPLUS L.P. SUBFUND B (Acct 400)
By Pacific Investment Management Company, as
Investment Advisor, acting through Investors
Fiduciary Trust Company in the Nominee Name
of IFTCO.
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-15
PIMCO TOTAL RETURN FUND (Acct 700)
By Pacific Investment Management Company, as
Investment Advisor, acting through Investors
Fiduciary Trust Company in the Nominee Name
of IFTCO.
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-16
KZH-CRESCENT CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
ING SENIOR SECURED HIGH INCOME
FUND, L.P.
By: ING Capital Advisors, Inc.,
as Investment Advisor
By: /s/
-------------------------------------
Name:
Title:
ING HIGH INCOME PRINCIPAL
PRESERVATION OFFERING, L.P.
By: ING Capital Advisors, Inc.,
as Investment Advisor0
By: /s/
-------------------------------------
Name:
Title:
KZH-ING-1 CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
S-17
MERRILL LYNCH PRIME RATE PORTFOLIO,
as a Lender,
by: MERRILL LYNCH ASSET
MANAGEMENT L.P., as Investment
Advisor
By: /s/
-------------------------------------
Name:
Title:
CIBC, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
