<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1998
REGISTRATION NO. 333-27651
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN HEALTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<C> <C>
DELAWARE 95-4084878
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1800
ENGLEWOOD, COLORADO 80111
(303) 796-9793
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOSEPH P. SULLIVAN
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1800
ENGLEWOOD, COLORADO 80111
(303) 796-9793
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
PAUL HILTON
DAVIS, GRAHAM & STUBBS, LLP
370 17TH STREET, SUITE 4700
DENVER, COLORADO 80202
(303) 892-9400
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(Cover continued on following page)
================================================================================
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED(1) REGISTERED(2) PER UNIT(3) OFFERING PRICE(2)(4)(5) FEE(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(6)...
- ------------------------------------------------------------------------------------------------------------------
Preferred Stock, $.01
par value............
- ------------------------------------------------------------------------------------------------------------------
Depositary Shares....
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $.01
par value(7)(8)......
- ------------------------------------------------------------------------------------------------------------------
Warrants.............
- ------------------------------------------------------------------------------------------------------------------
Total................ $300,000,000 100% $300,000,000 $90,910(9)
==================================================================================================================
</TABLE>
(1) Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder. Subject to Footnote (4), there are
being registered hereunder an indeterminate principal amount of Debt
Securities, Preferred Stock (and Depositary Shares with respect thereto),
Common Stock and Warrants as may be sold from time to time by the
Registrant. This Registration Statement also covers contracts that may be
issued by the Registrant under which the counterparty may be required to
purchase Debt Securities, Preferred Stock, Depositary Shares, Common Stock
or Warrants. Such contracts would be issued with Debt Securities, Preferred
Stock, Depositary Shares, Common Stock or Warrants. There are also being
registered hereunder an indeterminate principal amount of Debt Securities,
Preferred Stock, Depositary Shares, Common Stock and Warrants as may be
issuable upon conversion of Debt Securities, Preferred Stock or Warrants or
pursuant to antidilution provisions thereof. This Registration Statement
does not cover Common Stock that may be issuable upon exchange of the
Psychiatric Group Stock.
(2) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or currency units or composite currencies, including the European Currency
Unit.
(3) The proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with the issuance by the Registrant of
the securities registered hereunder.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of the Debt Securities, Preferred Stock, Depositary Shares, Common
Stock and Warrants issued under this Registration Statement exceed
$300,000,000 or the equivalent thereof in one or more foreign or composite
currencies.
(5) No separate consideration will be received for (i) Debt Securities, shares
of Common Stock or Preferred Stock or Depositary Shares that are issued upon
conversion of Debt Securities, Preferred Stock or Depositary Shares or (ii)
Debt Securities, shares of Common Stock or Preferred Stock or Depositary
Shares that are issued upon exercise of Warrants registered hereby.
(6) If any such Debt Securities are issued at an original issue discount, then
the offering price shall be in such greater principal amount as shall result
in an aggregate initial offering price of up to $300,000,000.
(7) The aggregate amount of Common Stock registered hereunder is limited to that
which is permissible under Rule 415(a)(4) under the Securities Act of 1933,
as amended.
(8) This Registration Statement also covers Preferred Stock Purchase Rights
under the Registrant's Preferred Stock Purchase Rights Plan, which are
attached to and tradeable only with the shares of Common Stock registered
hereby. No registration fees are required for such shares and such rights as
they will be issued for no additional consideration.
(9) Fee previously paid.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<PAGE> 4
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Underwriting Agreement dated February 24, 1998 between American Health
Properties, Inc. and Legg Mason Wood Walker, Incorporated.
1.2++ Form of Underwriting Agreement for Debt Securities
1.3 Pricing Agreement dated February 24, 1998 between American Health
Properties, Inc. and Legg Mason Wood Walker, Incorporated.
4.1 Restated Certificate of Incorporation, incorporated by reference from
Exhibit 4.1 to the Company's Registration Statement on Form S-3
(No. 33-61895)
4.2 Certificate of Designations of Psychiatric Group Preferred
Stock, incorporated by reference from Exhibit 4.1 to the
Current Report on Form 8-K dated August 14, 1995
4.3 Amended and Restated By-laws, as amended to date,
incorporated by reference from Exhibit 3.2 to the Annual
Report on Form 10-K for the period ended December 31, 1992
(Commission File No. 1-9381)
4.4 Rights Agreement dated as of April 10, 1990, incorporated by
reference from Exhibit 2 to the Company's Registration
Statement on Form 8-A dated April 10, 1990 (Commission File
No. 1-9381)
4.5 Form of Senior Indenture, including form of Senior Debt
Security, incorporated by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-3 dated September
26, 1995 (No. 33-61895)
4.6 Form of Subordinated Indenture, including form of
Subordinated Security, incorporated by reference to Exhibit
4.6 to the Company's Registration Statement on Form S-3
dated September 26, 1995 (No. 33-61895)
4.7 Form of Certificate of Designations of Preferred Stock,
incorporated by reference to Exhibit 4.7 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.8 Form of Deposit Agreement, including form of Depositary
Receipt for Depositary Shares, incorporated by reference to
Exhibit 4.8 to the Company's Registration Statement on Form
S-3 dated September 26, 1995 (No. 33-61895)
4.9 Specimen Stock Certificate with respect to Preferred Stock,
incorporated by reference to Exhibit 4.9 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.10 Specimen Stock Certificate with respect to Common Stock,
incorporated by reference to Exhibit 4.10 to the Company's
Registration Statement on Form S-3 dated September 26, 1995
(No. 33-61895)
4.11 Form of Preferred Stock Warrant Agreement (including form of
Preferred Stock Warrant Certificate), incorporated by
reference to Exhibit 4.11 to the Company's Registration
Statement on Form S-3 dated September 26, 1995 (No.
33-61895)
4.12 Form of Common Stock Warrant Agreement (including form of
Common Stock Warrant Certificate), incorporated by reference
to Exhibit 4.12 to the Company's Registration Statement on
Form S-3 dated September 26, 1995 (No. 33-61895)
4.13 Form of Debt Warrant Agreement (including form of Debt
Warrant Certificate), incorporated by reference to Exhibit
4.13 to the Company's Registration Statement on Form S-3
dated September 26, 1995 (No. 33-61895)
5.1* Opinion of Davis, Graham & Stubbs, LLP
10.1 Amended and Restated Credit Agreement dated as of December 23, 1997
between and among American Health Properties, Inc. and the banks
signatory thereto.
10.2 American Health Properties, Inc. Executive Employment Agreement with
Steven H. Roseman dated as of July 7, 1997.
12.1* Statement regarding computations of ratio of earnings to
fixed charges
23.1 Consent of Arthur Andersen LLP, independent public
accountants
23.2* Consent of Davis, Graham & Stubbs, LLP (included in Exhibit
5.1)
99.1 American Health Properties, Inc. Financial Highlights: Fourth Quarter
and Year Ended December 31, 1997.
</TABLE>
II-2
<PAGE> 5
24.1* Powers of Attorney
25.1+ Statement of Eligibility on Form T-1 with respect to the
Securities
- ---------------
* Previously filed
+ To be filed prior to effectiveness, on a Current Report on Form 8-K, or in
accordance with Rule 5b-3 under the Trust Indenture Act of 1939, as amended.
++ To be filed by post-effective amendment or in a Current Report on Form 8-K
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in Denver,
Colorado on the 26th day of February, 1998.
AMERICAN HEALTH PROPERTIES, INC.
By: /s/ Joseph P. Sullivan*
-----------------------------------
Joseph P. Sullivan
Chairman of the Board of Directors,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the foregoing persons in the capacities and on the
dates indicated.
<TABLE>
<C> <S> <C>
/s/ Joseph P. Sullivan* Chairman of the Board of February 26, 1998
- --------------------------------------------- Directors, President and Chief
Joseph P. Sullivan Executive Officer
/s/ Michael J. McGee Senior Vice President, Chief February 26, 1998
- --------------------------------------------- Financial Officer (Principal
Michael J. McGee Financial and Accounting Officer)
and Assistant Secretary
/s/ Royce Diener* Director February 26, 1998
- ---------------------------------------------
Royce Diener
/s/ James L. Fishel* Director February 26, 1998
- ---------------------------------------------
James L. Fishel
Director
- ---------------------------------------------
Charles M. Haar
Director
- ---------------------------------------------
James D. Harper, Jr.
/s/ Sheldon S. King* Director February 26, 1998
- ---------------------------------------------
Sheldon S. King
Director
- ---------------------------------------------
John P. Mamana, M.D.
/s/ Louis T. Rosso* Director February 26, 1998
- ---------------------------------------------
Louis T. Rosso
*By: /s/ MICHAEL J. MCGEE
-----------------------------------------
Michael J. McGee
Attorney-in-fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DOCUMENT NUMBER
------- -------- ------
<C> <S> <C>
1.1 Underwriting Agreement dated February 24, 1998 between American Health
Properties, Inc. and Legg Mason Wood Walker, Incorporated
1.3 Pricing Agreement dated February 24, 1998 between American Health
Properties, Inc. and Legg Mason Wood Walker, Incorporated
10.1 Amended and Restated Credit Agreement dated as of December 23, 1997
between and among American Health Properties, Inc. and the banks
signatory thereto.
10.2 American Health Properties, Inc. Executive Employment Agreement with
Steven H. Roseman dated as of July 7, 1997.
23.1 Consent of Arthur Andersen LLP, independent public
accountants
99.1 American Health Properties, Inc. Financial Highlights: Fourth Quarter
and Year Ended December 31, 1997.
</TABLE>
See Exhibits for Description
<PAGE> 1
AMERICAN HEALTH PROPERTIES, INC.
COMMON STOCK
---------------
UNDERWRITING AGREEMENT
February 24, 1998
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
P.O. Box 1476
Baltimore, Maryland 21203
Ladies and Gentlemen:
From time to time American Health Properties, Inc., a Delaware
corporation (the "Company"), proposes to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with
such additions and deletions as the parties thereto may determine, and, subject
to the terms and conditions stated herein and therein, to issue and sell to the
firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain shares (the "Shares") of its Common
Stock, par value $.01 per share (the "Common Stock"). The Shares are herein
called the "Securities" and, with respect to a particular Pricing Agreement,
the Shares subject thereto are herein called the "Designated Securities". The
Shares of Common Stock are referred to as the "Firm Shares" with respect to
such Pricing Agreement. Additionally, if specified in such Pricing Agreement,
the Company may grant the Underwriters the right to purchase at their election
an additional number of Shares of Common Stock, specified as provided in such
Pricing Agreement and as provided in Section 3 hereof (the "Optional Shares").
The Firm Shares and the Optional Shares, if any, which the Underwriters elect
to purchase pursuant to Section 3 hereof are herein collectively referred to as
the "Designated Shares" or the "Designated Securities".
The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Securities may be made
from time to time to the Underwriters of such Securities, for whom the firms
designated as representatives of the Underwriters of such Securities in the
Pricing Agreement relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a single firm
acting as sole representative of the Underwriters and to an Underwriter or
Underwriters who act without any firm being designated as its or their
representatives. This Underwriting Agreement shall not be construed as an
obligation of the Company to sell any of the Securities or as an obligation of
any of the Underwriters to purchase the Securities. The obligation of the
Company to issue and sell any of the Securities and the obligation of any of
the Underwriters to purchase any of the Securities shall be evidenced by the
Pricing Agreement with respect to the Designated Securities specified therein.
Each Pricing Agreement shall specify the aggregate number of the Firm Shares,
the maximum number of Optional Shares, if any, the initial public offering
price of such Designated Securities, the purchase price to the Underwriters of
such Designated Securities, the names of the Underwriters of such Designated
Securities, the names of the Representatives of such Underwriters and the
number of such Designated Securities to be purchased by each Underwriter and
shall set
<PAGE> 2
forth the date, time and manner of delivery of such Designated Securities and
payment therefor. The Pricing Agreement shall also specify (to the extent not
set forth in the registration statement and prospectus with respect thereto)
the terms of such Designated Securities. A Pricing Agreement shall be in the
form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under this Agreement and each
Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-27651) in respect of the Securities (and certain other
securities) has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and
any post-effective amendment thereto, each in the form heretofore
delivered or to be delivered to the Representatives and,
excluding exhibits to such registration statement, but including
all documents incorporated by reference in the prospectus
contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in
such form; no other document with respect to such registration
statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the
Commission (other than prospectuses filed pursuant to Rule 424(b)
of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), or a
post-effective amendment under Section 462(d) of the Act, each in
the form heretofore delivered to the Representatives); and no
stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424(b) under the Act and relating
to the Securities, is hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement,
including all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration
statement at the time such part of the registration statement
became effective but excluding Form T-1, each as amended at the
time such part of the registration statement became effective,
are hereinafter collectively called the "Registration Statement";
the prospectus and any prospectus supplement relating to the
Securities, in the form in which it has most recently been filed,
or transmitted for filing, with the Commission on or prior to the
date of this Agreement, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents
filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and incorporated by
reference in such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Sections 13(a) or 15(d)
of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the applicable Designated
Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof, including any documents incorporated by reference
therein as of the date of such filing);
-2-
<PAGE> 3
(b) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to
such Securities;
(c) The Registration Statement and the Prospectus
conform, and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter of Designated Securities
through the Representatives expressly for use in the Prospectus
as amended or supplemented relating to such Securities;
(d) Neither the Company nor any of its subsidiaries
has sustained since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; neither the Company nor any of
its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business, otherwise
than as set forth in the Prospectus; and, since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material
change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and
marketable title to all real property and good and marketable
title to all personal property owned by them, respectively, in
each case free and clear of all liens, encumbrances and defects
or any conditional sale agreement or other title retention
agreement except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not
interfere with the use made and
- 3 -
<PAGE> 4
proposed to be made of such property by the Company and its
subsidiaries; the mortgages which the Company holds on the
properties situated in Katonah, Westchester County, New York,
Saratoga Springs, Saratoga County, New York, and Houston, Texas,
are valid and binding and each constitutes a valid first mortgage
lien for the benefit of the Company on such property and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(f) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and
authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, or is subject
to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; the Company and each
of its subsidiaries are in possession of and operating in all
material respects in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business,
all of which are valid and in full force and effect; and each
subsidiary of the Company has been duly organized or incorporated
and is validly existing as a partnership or corporation in good
standing under the laws of its jurisdiction of organization or
incorporation;
(g) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(h) The Shares included in the Designated
Securities have been duly and validly authorized, and, when the
Firm Shares and Optional Shares, if any, are issued and delivered
pursuant to this Agreement and the Pricing Agreement with respect
to such Designated Securities and, in the case of any Optional
Shares, pursuant to an Over-Allotment Option (as defined in
Section 3 hereof) with respect to such Optional Shares, such
Designated Securities will be duly and validly issued and fully
paid and non- assessable; the Securities conform to the
description thereof contained in the Registration Statement and
the Designated Securities will conform to the description thereof
contained in the Prospectus as amended or supplemented with
respect to such Designated Securities;
(i) The issue and sale of the Securities and the
compliance by the Company with all of the provisions of the
Securities, this Agreement and any Pricing Agreement, and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by
this Agreement or any Pricing Agreement, except such as have
been, or will have been prior to
- 4 -
<PAGE> 5
each Time of Delivery, obtained under the Act and the Trust
Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
(j) The statements set forth in the Prospectus
under the captions "Description of Common Stock and Psychiatric
Group Preferred Stock", insofar as they purport to constitute a
summary of the terms of the Securities, and under the captions
"Certain Federal Income Tax Considerations", "Plan of
Distribution" and "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are correct in all material respects;
(k) Neither the Company nor any of its subsidiaries
is in violation of its organizational documents or charter or in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which
it or any of its properties may be bound, except for such
defaults that would not have a material adverse effect on the
business, operations, properties, prospects, profits or condition
(financial or other) of the Company and its subsidiaries, taken
as a whole;
(l) Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject
that would reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the consolidated
financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
neither the Company nor any of its subsidiaries is in violation
of any law, statute, ordinance, rule, regulation, order or decree
of any court, governmental body or regulatory authority or
administrative agency having jurisdiction over the Company or
such subsidiary (including, without limitation, any such law,
statute, ordinance, rule, regulation, order or decree with
respect to environmental protection or the release, handling,
treatment, storage or disposal of hazardous substances or toxic
waste) which violation would be reasonably likely to materially
and adversely affect the business, operations, properties,
prospects, profits or condition (financial or other) of the
Company and its subsidiaries, taken as a whole;
(m) The Company is not and, after giving effect to
the offering and sale of the Securities, will not be an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act");
(n) Arthur Andersen LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder;
(o) The Company qualified as a "real estate
investment trust" (a "REIT") under Sections 856 through 860 of
the Internal Revenue Code of 1986, as amended (the "Code") for
its taxable year ended December 31, 1996, and for each of its
prior taxable years ended on or after December 31, 1987 that are
open to assessment by the Internal Revenue Service (the
"Service"). The Company is organized and carries on its business
so as to qualify as a REIT under the Code, and no transaction or
other event has occurred which would cause the Company not to
continue to qualify as a REIT for its current taxable year or for
future taxable years; and
- 5 -
<PAGE> 6
(p) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes.
3. Upon the execution of the Pricing Agreement applicable
to any Designated Securities and authorization by the Representatives of the
release of such Designated Securities, or of the Firm Shares, as the case may
be, the several Underwriters propose to offer such Designated Securities or
Firm Shares for sale upon the terms and conditions set forth in the Prospectus
as amended or supplemented.
The Company may specify in the Pricing Agreement
applicable to any Designated Securities that the Company thereby grants to the
Underwriters the right (an "Over-Allotment Option") to purchase at their
election up to the number of Optional Shares set forth in such Pricing
Agreement, on the terms set forth therein, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised by written notice from the Representatives to
the Company, given within a period specified in the Pricing Agreement, setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by the
Representatives but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof), or, unless the Representatives and the Company
otherwise agree in writing, earlier than or later than the respective number of
business days after the date of such notice set forth in such Pricing
Agreement.
The number of Optional Shares to be added to the number
of Firm Shares to be purchased by each Underwriter as set forth in Schedule I
to the Pricing Agreement applicable to such Designated Securities shall be, in
each case, the number of Optional Shares which the Company has been advised by
the Representatives have been attributed to such Underwriter; provided that, if
the Company has not been so advised, the number of Optional Shares to be so
added shall be, in each case, that proportion of Optional Shares which the
number of Firm Shares to be purchased by such Underwriter under such Pricing
Agreement bears to the aggregate number of Firm Shares (rounded as the
Representatives may determine to the nearest 100 shares). The total number of
Designated Securities to be purchased by all the Underwriters pursuant to such
Pricing Agreement shall be the aggregate number of Firm Shares set forth in
Schedule I to such Pricing Agreement plus the aggregate number of Optional
Shares which the Underwriters elect to purchase.
4. Certificates for the Firm Shares and the Optional
Shares to be purchased by each Underwriter pursuant to the Pricing Agreement
relating thereto, in the form specified in such Pricing Agreement, and in such
authorized denominations and registered in such names as the Representatives
may request upon at least forty-eight hours' prior notice to the Company, shall
be delivered by or on behalf of the Company to the Representatives for the
account of such Underwriter, against payment by such Underwriter or on its
behalf of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company, or by wire transfer of funds, in
the funds specified in such Pricing Agreement, (i) with respect to the Firm
Shares, all in the manner and at the place and time and date specified in such
Pricing Agreement or at such other place and time and date as the
Representatives and the Company may agree upon in writing, such time and date
being herein called the "First Time of Delivery" and (ii) with respect to the
Optional Shares, if any, in the manner and at the time and date specified by
the Representatives in the written notice given by the Representatives of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as the Representatives and the Company may agree upon in writing, such
time and date, if not the First Time of Delivery, herein
- 6 -
<PAGE> 7
called the "Second Time of Delivery". Each such time and date for delivery is
herein called a "Time of Delivery".
5. The Company agrees with each of the Underwriters of any
Designated Securities:
(a) To prepare the Prospectus as amended or
supplemented in relation to the applicable Designated Securities
in a form approved by the Representatives and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the second business day
following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if
applicable, such earlier time as may be required by Rule 424(b);
to make no further amendment or any supplement to the
Registration Statement or Prospectus as amended or supplemented
after the date of the Pricing Agreement relating to such
Securities and prior to the Time of Delivery for such Securities
that shall be disapproved by the Representatives for such
Securities promptly after reasonable notice thereof; to advise
the Representatives promptly of any such amendment or supplement
after such Time of Delivery and furnish the Representatives with
copies thereof; to file promptly all reports and any definitive
proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of
such Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the
Commission, of the issuance by the Commission of any stop order
or of any order preventing or suspending the use of any
prospectus relating to the Securities, of the suspension of the
qualification of such Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating to
the Securities or suspending any such qualification, to promptly
use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action
as the Representatives may reasonably request to qualify such
Securities for offering and sale under the securities laws of
such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of such Securities,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the
Prospectus as amended or supplemented in such quantities as the
Representatives may from time to time reasonably request, and, if
the delivery of a prospectus is required at any time in
connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to
comply with the Act, the Exchange Act or the Trust Indenture Act,
to notify the Representatives and upon their request to file such
- 7 -
<PAGE> 8
document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus that will
correct such statement or omission or effect such compliance;
(d) To make generally available to its
securityholders as soon as practicable, but in any event not
later than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the Act),
an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158); and
(e) To use its best efforts to list the Designated
Securities on any stock exchange or automated quotation system to
the extent and in the manner set forth in the Prospectus as
amended or supplemented with respect to such Designated
Securities.
6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants
in connection with the registration of the Securities under the Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, any
Blue Sky and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and Legal Investment Surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) any filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of any transfer agent in connection with the Securities; (viii) any
fees and expenses in connection with listing the Securities; and (ix) all other
costs and expenses incident to the performance of its obligations hereunder
that are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters of any Designated
Securities under the Pricing Agreement relating to such Designated Securities
shall be subject, in the discretion of the Representatives, to the condition
that all representations and warranties and other statements of the Company
made, or incorporated by reference, in the Pricing Agreement relating to such
Designated Securities are, at and as of each Time of Delivery for such
Designated Securities, true and correct, the condition that the Company shall
have performed all of its obligations hereunder theretofore to be performed,
and the following additional conditions:
(a) The Prospectus as amended or supplemented in
relation to the applicable Designated Securities shall have been
filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section 5(a)
hereof; no stop order suspending the effectiveness of the
- 8 -
<PAGE> 9
Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the Representatives' reasonable satisfaction;
(b) Counsel for the Underwriters shall have
furnished to the Representatives such opinion or opinions, dated
the Time of Delivery for such Designated Securities, with respect
to the matters covered in paragraphs (i), (ii) (insofar as it
relates to the Designated Securities),(vi), (viii), and (xv) of
subsection (c) below as well as such other related matters as the
Representatives may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Davis, Graham & Stubbs LLP, counsel for the
Company, shall have furnished to the Representatives their
written opinion, dated the Time of Delivery for such Designated
Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to
own its properties and conduct its business as
described in the Prospectus as amended or supplemented;
(ii) The Company has an authorized
capitalization as set forth in the Prospectus as
amended or supplemented and all of the issued shares of
capital stock of the Company (including the Designated
Securities being delivered at such Time of Delivery)
have been duly and validly authorized and issued and
are fully paid and non-assessable;
(iii) The Company has been duly qualified as
a foreign corporation for the transaction of business
and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such
qualification, except where the failure to qualify and
be in good standing would not have a material adverse
effect on the condition, financial or otherwise, or in
the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise or the
consummation of the transactions contemplated by this
Agreement and the Pricing Agreement related to the
Designated Securities (a "Material Adverse Effect")
(such counsel being entitled to rely in respect of the
position in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel
shall state that they believe that both you and they
are justified in relying upon such opinions and
certificates);
(iv) Each Material Subsidiary (as defined
below) of the Company has been duly organized or
incorporated and is validly existing as a partnership
or corporation, as the case may be, in good standing
under the laws of its jurisdiction of organization or
incorporation; and except as set forth in the
Prospectus as amended or supplemented, and except for
other non- material exceptions, all of the issued
shares of capital stock of each such Material
Subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and are
owned directly or indirectly by the Company, and all
partnership interests of each such subsidiary are owned
directly or indirectly by the Company, in each case
free and clear of any perfected security interest and,
to the knowledge of such counsel, any other liens,
encumbrances, equities or claims (such counsel being
entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel
shall state that they believe that both you and they
are justified in relying upon such opinions and
certificates). The term "Material
- 9 -
<PAGE> 10
Subsidiary" shall mean any subsidiary of the Company
that holds ten percent (10%) or more of the Company's
assets on a consolidated basis;
(v) To such counsel's knowledge and other
than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject that
would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and, to
such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities
or threatened by others;
(vi) This Agreement and the Pricing
Agreement with respect to the Designated Securities
have been duly authorized, executed and delivered by
the Company;
(vii) [RESERVED.]
(viii) [RESERVED.]
(ix) The issue and sale of the Designated
Securities and the compliance by the Company with all
of the provisions of the Designated Securities, this
Agreement and the Pricing Agreement with respect to the
Designated Securities and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known
to such counsel to which the Company is a party or by
which the Company is bound or to which any of the
property or assets of the Company is subject, except
for such conflicts, breaches, violations or defaults
that would not have a Material Adverse Effect, nor will
such actions result in any violation of the provisions
of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or
any of its properties;
(x) No consent, approval, authorization,
order, registration or qualification of or with any
such court or governmental agency or body is required
for the issue and sale of the Designated Securities or
the consummation by the Company of the transactions
contemplated by this Agreement or such Pricing
Agreement, except such as have been obtained under the
Act and such consents, approvals, authorizations,
orders, registrations or qualifications as may be
required under state securities or Blue Sky laws in
connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(xi) Neither the Company nor any of its
subsidiaries is in violation of its charter and by-laws
or other organizational documents;
(xii) The statements set forth in the
Prospectus as supplemented or amended under the
captions "Description of Common Stock and Psychiatric
Group Preferred Stock" and "Certain Federal Income Tax
Considerations" insofar as they purport to constitute a
summary of the terms of the Securities, or insofar as
they purport to describe the provisions of the laws and
documents referred to therein, are correct in all
material respects;
(xiii) The Company is not an "investment
company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment
Company Act of 1940, as amended;
- 10 -
<PAGE> 11
(xiv) The documents incorporated by
reference in the Prospectus as amended or supplemented
(other than the financial statements and related
schedules and other financial and statistical data
included or incorporated by reference therein, as to
which such counsel need express no opinion), when they
became effective or were filed with the Commission, as
the case may be, complied as to form in all material
respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and nothing
has come to such counsel's attention that would lead it
to believe that any of such documents, when they became
effective or were so filed, as the case may be,
contained, in the case of a registration statement
which became effective under the Act, an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or, in the case of other documents which
were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made when such
documents were so filed, not misleading; and
(xv) The Registration Statement and the
Prospectus as amended or supplemented and any further
amendments and supplements thereto made by the Company
prior to such Time of Delivery for the Designated
Securities (other than the financial statements and
related schedules and other financial or statistical
data included or incorporated by reference therein, as
to which such counsel need express no opinion) comply
as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder; although they do not assume any
responsibility for the accuracy, completeness or
fairness of the statements contained in the
Registration Statement or the Prospectus, except for
those referred to in the opinion in subsection (xii) of
this Section 7(c), nothing has come to such counsel's
attention that would lead it to believe that, as of its
effective date, the Registration Statement or any
further amendment thereto made by the Company prior to
such Time of Delivery (other than the financial
statements and related schedules and other financial or
statistical data included or incorporated by reference
therein, as to which such counsel need express no
opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading or that, as of its date, the
Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the
financial statements and related schedules and other
financial or statistical data included or incorporated
by reference therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus as amended
or supplemented or any further amendment or supplement
thereto made by the Company prior to such Time of
Delivery (other than the financial statements and
related schedules and other financial or statistical
data included or incorporated by reference therein, as
to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; and they do not know of
any amendment to the Registration Statement required to
be filed or any contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement or required to be incorporated
by reference into the Prospectus as amended or
supplemented or required
- 11 -
<PAGE> 12
to be described in the Registration Statement or the
Prospectus as amended or supplemented, in each case in
accordance with the Act or the Exchange Act, that are
not filed or incorporated by reference or described as
required;
(d) Davis, Graham & Stubbs LLP, counsel to the
Company, shall have furnished to you their written opinion dated
such Time of Delivery, substantially in the form of Annex II
hereto, with respect to certain tax matters;
(e) On the date of the Pricing Agreement for such
Designated Securities at a time prior to the execution of the
Pricing Agreement with respect to such Designated Securities and
at each Time of Delivery for such Designated Securities, the
independent accountants of the Company who have certified the
financial statements of the Company and its subsidiaries included
or incorporated by reference in the Registration Statement shall
have furnished to the Representatives a letter, dated the
effective date of the Registration Statement or the date of the
most recent report filed with the Commission containing financial
statements and incorporated by reference in the Registration
Statement, if the date of such report is later than such
effective date, and a letter dated such Time of Delivery,
respectively, to the effect set forth in Annex III hereto, and
with respect to such letter dated such Time of Delivery, as to
such other matters as the Representatives may reasonably request
and in form and substance satisfactory to the Representatives;
(f) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus as amended or supplemented prior to
the date of the Pricing Agreement relating to the Designated
Securities any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented prior
to the date of the Pricing Agreement relating to the Designated
Securities, and (ii) since the respective dates as of which
information is given in the Prospectus as amended or supplemented
prior to the date of the Pricing Agreement relating to the
Designated Securities there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus as amended or
supplemented prior to the date of the Pricing Agreement relating
to the Designated Securities, the effect of which, in any such
case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering
or the delivery of the Designated Securities on the terms and in
the manner contemplated in the Prospectus as first amended or
supplemented relating to the Designated Securities;
(g) On or after the date of the Pricing Agreement
relating to the Designated Securities (i) no downgrading shall
have occurred in the rating accorded the Company's debt
securities or preferred stock (excluding the Company's
Psychiatric Group Preferred Stock) by any "nationally recognized
statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii)
no such organization shall have publicly announced that it has
under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities
or preferred stock (excluding the Company's Psychiatric Group
Preferred Stock);
- 12 -
<PAGE> 13
(h) On or after the date of the Pricing Agreement
relating to the Designated Securities there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such
event specified in this Clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Designated
Securities on the terms and in the manner contemplated in the
Prospectus as first amended or supplemented relating to the
Designated Securities;
(i) The Company shall have furnished or caused to
be furnished to the Representatives at each Time of Delivery for
the Designated Securities a certificate or certificates of
officers of the Company satisfactory to the Representatives as to
the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance
by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (f) of this Section and as to
such other matters as the Representatives may reasonably request;
(j) The Company shall have furnished to you an
officers' certificate, in form and substance satisfactory to you,
to the effect that the Company and its subsidiaries have good and
marketable title to all real property owned by them, in each case
free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company
and its subsidiaries; the mortgages which the Company holds on
the properties situated in Katonah, Westchester County, New York,
Saratoga Springs, Saratoga County, New York, and Houston, Texas,
are valid and binding and each constitutes a valid first mortgage
lien for the benefit of the Company on such property; and any
real property and buildings held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
and
(k) The Company shall have furnished or caused to
be furnished to the Representatives at each Time of Delivery for
the Designated Securities evidence satisfactory to the
Representatives (i) that all required consents specified in
Section 5(f) have been obtained and (ii) that, to the extent
necessary before such Time of Delivery, procedures for the
listing of the Designated Securities as provided in Section 5(g)
have been duly undertaken.
8. (a) The Company will indemnify and hold
harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities,
or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending
any such
- 13 -
<PAGE> 14
action or claim as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented
and any other prospectus relating to the Securities, or any such
amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by
any Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold
harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities,
or any such amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company
by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement
of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under such subsection, notify the indemnifying party in writing
of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability that
it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise
or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such
- 14 -
<PAGE> 15
action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters of the Designated
Securities on the other from the offering of the Designated
Securities to which such loss, claim, damage or liability (or
action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the
Underwriters of the Designated Securities on the other in
connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and
such Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by such
Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company on the one hand or such Underwriters on the other
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of
the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the applicable
Designated Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The obligations
of the Underwriters of Designated Securities in this subsection
(d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Securities and not
joint.
(e) The obligations of the Company under this
Section 8 shall be in addition to any liability that the Company
may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any
liability that the
- 15 -
<PAGE> 16
respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company
within the meaning of the Act.
9. (a) If any Underwriter shall default in its
obligation to purchase the Firm Shares or Optional Shares that it
has agreed to purchase under the Pricing Agreement relating to
such Designated Securities, the Representatives may in their
discretion arrange for themselves or another party or other
parties to purchase such Designated Securities on the terms
contained herein. If within thirty-six hours after such default
by any Underwriter the Representatives do not arrange for the
purchase of such Designated Securities, then the Company shall be
entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the
Representatives to purchase such Designated Securities on such
terms. In the event that, within the respective prescribed
period, the Representatives notify the Company that they have so
arranged for the purchase of such Designated Securities, or the
Company notifies the Representatives that it has so arranged for
the purchase of such Designated Securities, the Representatives
or the Company shall have the right to postpone the Time of
Delivery for such Designated Securities for a period of not more
than seven days, in order to effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus
as amended or supplemented, or in any other documents or
arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the
Prospectus that in the opinion of the Representatives may thereby
be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to
the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for
the purchase of the Firm Shares or Optional Shares of a
defaulting Underwriter or Underwriters by the Representatives and
the Company as provided in subsection (a) above, the aggregate
principal amount of such Designated Securities that remains
unpurchased does not exceed one-eleventh of the aggregate
principal amount of the Designated Securities, then the Company
shall have the right to require each non-defaulting Underwriter
to purchase the number of Designated Securities that such
Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata
share (based on the principal amount of Designated Securities
that such Underwriter agreed to purchase under such Pricing
Agreement) of the Designated Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for
the purchase of the Firm Shares or Optional Shares of a
defaulting Underwriter or Underwriters by the Representatives and
the Company as provided in subsection (a) above, the aggregate
number of Designated Securities that remains unpurchased exceeds
one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the
Company shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase
Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Firm
Shares or the Over-Allotment Option relating to such Optional
Shares, as the case may be, shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the
Company, except for the expenses to be borne by the Company and
the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from
liability for its default.
- 16 -
<PAGE> 17
10. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Securities.
11. If any Pricing Agreement or Over-Allotment Option shall
be terminated pursuant to Section 9 hereof, the Company shall not then be under
any liability to any Underwriter with respect to the Firm Shares or Optional
Shares covered by such Pricing Agreement or Over-Allotment Option except as
provided in Sections 6 and 8 hereof; but, if for any other reason Designated
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through the Representatives for all
out-of-pocket expenses approved in writing by the Representatives, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of such Designated
Securities, but the Company shall then be under no further liability to any
Underwriter with respect to such Designated Securities except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the
Underwriters of Designated Securities shall act on behalf of each of such
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by such Representatives jointly or by such of the Representatives, if
any, as may be designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Representatives as set
forth in the Pricing Agreement; and if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement: Attention: Secretary; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be
binding upon, and inure solely to the benefit of, the Underwriters, the Company
and, to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement or any such Pricing Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement.
As used herein, "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be
executed by any one or more of the parties hereto and thereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
- 17 -
<PAGE> 18
If the foregoing is in accordance with your understanding, please
sign and return to us six counterparts hereof.
Very truly yours,
American Health Properties, Inc.
By: /s/ Michael J. McGee
---------------------------------------
Name: Michael J. McGee
Title: Senior Vice President and
Chief Financial Officer
Accepted as of the date hereof:
Legg Mason Wood Walker, Incorporated
By: /s/ Edwin J. Bradley, Jr.
----------------------------------------------
Name: Edwin J. Bradley, Jr.
Title: Vice President
- 18 -
<PAGE> 19
ANNEX I
PRICING AGREEMENT
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
P.O. Box 1476
Baltimore, Maryland 21203
February , 1998
Ladies and Gentlemen:
American Health Properties, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated February 24, 1998 (the "Underwriting
Agreement"), between the Company on the one hand and you on the other hand, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provision had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty that refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities that are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto.
<PAGE> 20
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
Very truly yours,
American Health Properties, Inc.
By:
------------------------------------
Name: Michael J. McGee
Title: Senior Vice President
and Chief Financial Officer
Accepted as of the date hereof:
Legg Mason Wood Walker, Incorporated
By:
---------------------------------
Name:
Title:
I-2
<PAGE> 21
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
STOCK TO BE
UNDERWRITER PURCHASED
------------- -------------------
<S> <C>
-------------------
Total
- -------------------- ===================
</TABLE>
I-3
<PAGE> 22
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
Common Stock, $.01 par value
AGGREGATE NUMBER OF DESIGNATED SECURITIES:
Shares
(These are all Firm Shares and there are no Optional Shares in this
transaction.)
PRICE TO PUBLIC:
$ per Share
PURCHASE PRICE BY UNDERWRITERS:
$ per Share
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC or its designated custodian.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Immediately available funds
TIME OF DELIVERY:
10:00 a.m. (New York City time), on February , 1998
TRANSFER AGENT:
ChaseMellon Shareholder Services, L.L.C.
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
The Closing will take place at Hunton & Williams, Richmond, Virginia.
The Designated Securities will be delivered to DTC or its designated custodian.
I-4
<PAGE> 23
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives, as referred to in Section 12 of the
Underwriting Agreement:
Legg Mason Wood Walker, Incorporated
Address for Notices, etc.:
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
Baltimore, Maryland 21203
I-5
<PAGE> 24
ANNEX II
FORM OF DAVIS, GRAHAM & STUBBS TAX OPINION
<PAGE> 25
ANNEX III
Pursuant to Section 7(e) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public
accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the applicable published rules
and regulations thereunder;
(ii) In their opinion, the financial statements and
any supplementary financial information and schedules audited
(and, if applicable, financial forecasts and/or pro forma
financial information) examined by them and included or
incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and
regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American
Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of
the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been
separately furnished to the representative or representatives of
the Underwriters (the "Representatives") such term to include an
Underwriter or Underwriters who act without any firm being
designated as its or their representatives;
(iii) They have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus
and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in
their reports thereon copies of which have been separately
furnished to the Representatives; and on the basis of specified
procedures including inquiries of officials of the Company who
have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (v)(A)(i) below comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention
that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(iv) They have compared the information in the
Prospectus under selected captions with the disclosure
requirements of Regulation S-K and on the basis of limited
procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(v) On the basis of limited procedures, not
constituting an examination in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below, a
reading of the latest available interim financial statements of
the Company and its subsidiaries, inspection of the minute books
of the Company and its subsidiaries since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the
Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
III-1
<PAGE> 26
(A) (i) the unaudited condensed
consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows
included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the
Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of
the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should
be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly
Reports on Form 10- Q incorporated by reference in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any unaudited pro forma consolidated
condensed financial statements included or incorporated
by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments
have not been properly applied to the historical
amounts in the compilation of those statements;
(C) as of a specified date not more than
five days prior to the date of such letter, there have
been any changes in the consolidated capital stock
(other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs
of performance shares and upon conversions of
convertible securities, in each case which were
outstanding on the date of the latest balance sheet
included or incorporated by reference in the
Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or
any decreases in consolidated net assets or
stockholders' equity or other items specified by the
Representatives, or any increases in any items
specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included or incorporated by reference in the
Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have
occurred or may occur or which are described in such
letter; and
(D) for the period from the date of the
latest financial statements included or incorporated by
reference in the Prospectus to the specified date
referred to in Clause (C) there were any decreases in
consolidated net revenues or the total or per share
amounts of consolidated net income or other items
specified by the Representatives, or any increases in
any items specified by the Representatives, in each
case as compared with the comparable period of the
preceding year and with any other period of
corresponding length specified by the Representatives,
except in each case for increases or decreases which
the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(vi) In addition to the audit referred to in their
report(s) included or incorporated by reference in the Prospectus
and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraphs (iii) and (v)
above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages
and
III-2
<PAGE> 27
financial information specified by the Representatives which are
derived from the general accounting records of the Company and
its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, the Registration Statement specified
by the Representatives or in documents incorporated by reference
in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex II to the Prospectus shall be deemed
to refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at each Time of Delivery for
such Designated Securities.
III-3
<PAGE> 1
EXHIBIT 1.3
PRICING AGREEMENT
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
P.O. Box 1476
Baltimore, Maryland 21203
February 24, 1998
Ladies and Gentlemen:
American Health Properties, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated February 24, 1998 (the "Underwriting
Agreement"), between the Company on the one hand and you on the other hand, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provision had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty that refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities that are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto.
<PAGE> 2
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
Very truly yours,
American Health Properties, Inc.
By: /s/ Michael J. McGee
------------------------------------
Name: Michael J. McGee
Title: Senior Vice President
and Chief Financial Officer
Accepted as of the date hereof:
Legg Mason Wood Walker, Incorporated
By: /s/ Edwin J. Bradley, Jr.
---------------------------------
Name: Edwin J. Bradley, Jr.
Title: Vice President
2
<PAGE> 3
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
STOCK TO BE
UNDERWRITER PURCHASED
- ----------- -------------------
<S> <C>
Legg Mason Wood Walker, Incorporated 353,201
-------------------
Total 353,201
===================
</TABLE>
3
<PAGE> 4
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
Common Stock, $.01 par value
AGGREGATE NUMBER OF DESIGNATED SECURITIES:
353,201 Shares
(These are all Firm Shares and there are no Optional Shares in this
transaction.)
PRICE TO PUBLIC:
$28.3125 per Share
PURCHASE PRICE BY UNDERWRITERS:
$27.0384375 per Share
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC or its designated custodian.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Immediately available funds
TIME OF DELIVERY:
10:00 a.m. (New York City time), on February 27, 1998
TRANSFER AGENT:
ChaseMellon Shareholder Services, L.L.C.
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
The Closing will take place at Hunton & Williams, Richmond, Virginia.
The Designated Securities will be delivered to DTC or its designated custodian.
4
<PAGE> 5
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives, as referred to in Section 12 of the
Underwriting Agreement:
Legg Mason Wood Walker, Incorporated
Address for Notices, etc.:
Legg Mason Wood Walker, Incorporated
111 South Calvert Street
Baltimore, Maryland 21203
5
<PAGE> 1
EXHIBIT 10.1
===============================================
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF DECEMBER 23, 1997
AMONG
AMERICAN HEALTH PROPERTIES, INC.,
THE FINANCIAL INSTITUTIONS LISTED HEREIN,
BANQUE PARIBAS, AS CO-AGENT,
FIRST UNION NATIONAL BANK, AS CO-AGENT,
NATIONSBANK OF TEXAS, N.A., AS CO-AGENT,
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION
AS ARRANGER, AGENT AND FACING BANK
=================================================
<PAGE> 2
CONTENTS
<TABLE>
<S> <C> <C>
1. Definitions and Accounting Matters.............................................................. 1
1.1. Certain Defined Terms................................................................ 1
1.2. Accounting Terms and Determinations.................................................. 21
1.3. Other Referential Provisions......................................................... 22
1.4. Types of Revolving Credit Loans...................................................... 22
2. Revolving Credit Loans; Bid Rate Loans.......................................................... 22
2.1. Revolving Credit Loans............................................................... 23
2.2. Conversion or Continuation of Revolving Credit Loans................................. 23
2.3. Revolving Credit Loan Borrowings..................................................... 23
2.4. Bid Rate Loans....................................................................... 24
2.5. Bid Rate Loans Borrowings............................................................ 24
2.6. Interest............................................................................. 27
2.7. Reductions of Commitments Irrevocable................................................ 28
2.8. Lending Offices...................................................................... 28
2.9. Several Obligations; Remedies Independent............................................ 28
2.10. Notes................................................................................ 28
2.11. Scheduled Repayments................................................................. 29
2.12. Optional Prepayments................................................................. 29
2.13. Mandatory Prepayments and Reductions of Commitments.................................. 29
2.14. Voluntary Reductions of Commitments.................................................. 31
2.15. Amount Limitations................................................................... 31
2.16. Use of Proceeds...................................................................... 32
3. Letters of Credit............................................................................... 32
3.1. Letters of Credit.................................................................... 32
3.2. Issuance of the Letters of Credit.................................................... 32
3.3. Reimbursement of Drawings............................................................ 33
3.4. Interest on Outstanding Reimbursement Obligations.................................... 34
3.5. Reimbursement Obligations Absolute................................................... 34
3.6. Indemnification Regarding Letters of Credit.......................................... 35
3.7. Limitation of Liability of the Facing Bank........................................... 36
4. Other Credit Commitment Provisions.............................................................. 36
4.1. Fees................................................................................. 36
4.2. Extension of Maturity Date........................................................... 38
4.3. Payments............................................................................. 38
4.4. Pro Rata Treatment................................................................... 39
4.5. Computations......................................................................... 39
4.6. Minimum Amounts...................................................................... 39
4.7. Certain Notices...................................................................... 40
4.8. Non-receipt of Funds by the Agent.................................................... 41
4.9. Participations of Letter of Credit Lenders........................................... 41
4.10. Sharing of Payments. Etc............................................................. 42
5. Additional Costs; Yield Protection; Capital Adequacy; Taxes..................................... 43
5.1. Additional Costs..................................................................... 43
5.2. Limitation on Types of Revolving Credit Loans........................................ 45
5.3. Illegality........................................................................... 46
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
5.4. Treatment of Affected Loans.......................................................... 46
5.5. Compensation......................................................................... 47
5.6. Taxes................................................................................ 48
6. Conditions Precedent............................................................................ 49
6.1. Initial Extensions of Credit......................................................... 49
6.2. Initial and Subsequent Extensions of Credit.......................................... 52
7. Representations and Warranties.................................................................. 52
7.1. Existence............................................................................ 53
7.2. Authorization; No Conflict........................................................... 53
7.3. Enforceability....................................................................... 53
7.4. Approvals............................................................................ 53
7.5. Financial Condition.................................................................. 54
7.6. Litigation........................................................................... 54
7.7. Federal Reserve Regulations.......................................................... 54
7.8. ERISA................................................................................ 54
7.9. Taxes................................................................................ 55
7.10. Investment Company Act............................................................... 56
7.11. Public Utility Holding Company Act................................................... 56
7.12. Material Agreements.................................................................. 56
7.13. Environmental and Safety Matters..................................................... 57
7.14. Subsidiaries......................................................................... 58
7.15. Compliance with Law.................................................................. 58
7.16. Title to Properties.................................................................. 59
7.17. Financial Condition.................................................................. 59
7.18. Full Disclosure...................................................................... 60
7.19. Insurance............................................................................ 60
7.20. Necessary Authorizations and Permits................................................. 60
7.21. Not Prohibited Transactions.......................................................... 60
7.22. No Default........................................................................... 60
7.23. Customers of the Company and its Subsidiaries........................................ 61
8. Affirmative Covenants........................................................................... 61
8.1. Financial Statements and Other Information........................................... 61
8.2. Litigation........................................................................... 65
8.3. Existence. Etc....................................................................... 65
8.4. REIT Status.......................................................................... 65
8.5. Insurance............................................................................ 65
8.6. Obligations and Taxes................................................................ 66
8.7. Maintaining Records; Access to Properties and Inspections............................ 67
8.8. Compliance with Laws................................................................. 67
8.9. Compliance with ERISA................................................................ 67
8.10. Environmental and Safety Matters..................................................... 67
8.11. Subsidiary Guaranty.................................................................. 68
8.12. Phase I Reports...................................................................... 68
8.13. Further Assurances................................................................... 68
8.14. Maintenance of Properties............................................................ 68
8.15. Maintenance of Ratings............................................................... 69
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
9. Negative Covenants.............................................................................. 69
9.1. Prohibition of Fundamental Changes................................................... 69
9.2. Limitation on Liens.................................................................. 69
9.3. Indebtedness of the Company.......................................................... 70
9.4. Subsidiary Indebtedness.............................................................. 71
9.5. Investments.......................................................................... 72
9.6. Restricted Payments.................................................................. 74
9.7. Guarantees........................................................................... 75
9.8. Sales and Lease-Backs................................................................ 75
9.9. Sale of Assets....................................................................... 76
9.10. Transactions with Affiliates......................................................... 76
9.11. Execution and Modifications of Certain Documents..................................... 77
9.12. Issuance of Securities............................................................... 77
9.13. Restrictive Agreements............................................................... 77
9.14. Prepayment of Indebtedness........................................................... 77
9.15. Subsidiaries......................................................................... 78
10. Financial Covenants............................................................................. 78
10.1. Maintenance of Tangible Net Worth.................................................... 78
10.2. Interest Coverage Ratio.............................................................. 78
10.3. Leverage Ratio....................................................................... 78
11. Events of Default............................................................................... 79
11.1. Payments under Credit Documents...................................................... 79
11.2. Other Indebtedness................................................................... 79
11.3. Representations and Warranties....................................................... 79
11.4. Other Obligations.................................................................... 79
11.5. Ability to Pay Debts................................................................. 80
11.6. Voluntary Proceedings................................................................ 80
11.7. Involuntary Proceedings.............................................................. 80
11.8. Judgments............................................................................ 80
11.9. ERISA Event.......................................................................... 81
11.10. Termination of Credit Documents...................................................... 81
12. The Agent....................................................................................... 82
12.1. Appointment, Powers and Immunities................................................... 82
12.2. Reliance by the Agent................................................................ 83
12.3. Defaults............................................................................. 84
12.4. Rights as a Lender................................................................... 84
12.5. Indemnification...................................................................... 85
12.6. Non-Reliance on the Agent or Other Lenders........................................... 85
12.7. Liability of Agent................................................................... 86
12.8. Resignation or Removal of the Agent.................................................. 86
12.9. Consents under Credit Documents...................................................... 86
12.10. Collateral Sub-Agents................................................................ 86
12.11. Liability of the Agent............................................................... 87
12.12. Transfer of Agency Function.......................................................... 87
12.13. The Co-Agents........................................................................ 87
13. Miscellaneous................................................................................... 87
13.1. Waiver............................................................................... 87
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
13.2. Notices.............................................................................. 88
13.3. Expenses, Etc........................................................................ 89
13.4. Amendments. Etc...................................................................... 90
13.5. Successors and Assigns............................................................... 91
13.6. Assignments and Participations....................................................... 91
13.7. Replacement of Lenders............................................................... 93
13.8. Confidentiality of Information....................................................... 94
13.9. Survival............................................................................. 95
13.10. Table of Contents; Descriptive Headings.............................................. 95
13.11. Counterparts......................................................................... 96
13.12. Governing Law........................................................................ 96
13.13. Consent to Jurisdiction.............................................................. 96
13.14. Waiver of Jury Trial................................................................. 96
13.15. Acknowledgments...................................................................... 97
</TABLE>
EXHIBITS
Exhibit A Form of Subsidiary Guaranty
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Bid Rate Note
Exhibit D Form of Letter of Credit Request
Exhibit E-1 Form of Notice of Borrowing
Exhibit E-2 Form of Notice of Conversion
Exhibit E-3 Form of Notice of Continuation
Exhibit F-1 Form of Bid Rate Quote Request
Exhibit F-2 Form of Bid Rate Quote
Exhibit F-3 Form of Bid Rate Quote Acceptance
Exhibit G Form of Opinion of Counsel
Exhibit H Form of Compliance Certificate
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Continuing Agreement
SCHEDULES
Schedule 7.4 Authorizations, Approvals and Consents
Schedule 7.6 Litigation
Schedule 7.8 ERISA Plans
Schedule 7.12 Indebtedness, Material Contracts, Labor Matters
Schedule 7.13 Environmental Matters
Schedule 7.14 Subsidiaries
Schedule 7.16 Existing Liens
Schedule 9.5 Existing Investments
Schedule 9.6 PG Sites
Schedule 9.7 Company Guarantees of Certain Obligations
Schedule 9.10 Existing Affiliate Transactions
-iv-
<PAGE> 6
DEFINITIONS
1997 Senior Notes, 1
Acquired Indebtedness, 1
Additional Costs, 43
Affiliate, 2
Agent, 1
Agent's Account, 23
Aggregate Available Revolving Commitments, 2
Agreement, 1
Applicable Lending Office, 2
Applicable Margin, 2
Arranger, 1
Assignment and Acceptance, 91
Bankruptcy Code, 3
Base Rate, 3
Base Rate Loans, 3
Bid Rate, 25
Bid Rate Borrowing, 24
Bid Rate Loan, 3
Bid Rate Loan Subfacility, 3
Bid Rate Notes, 28
Bid Rate Quote, 3
Bid Rate Quote Request, 24
Business Day, 3
Capital Lease Obligations, 4
Casualty Event, 4
CERCLA, 4
CERCLIS, 4
Closing Date, 4
Co-Agents, 4
Code, 4
Commitments, 4
Company, 1
Compliance Certificate, 62
Consolidated Real Estate Assets, 4
Consolidated Subsidiary, 4
Consolidated Tangible Net Worth, 5
Construction and Development Investment, 5
Continuation, 5
Continue, 5
Continued, 5
Continuing Agreement, 5
control, 2
controlled by, 2
Conversion, 5
Convert, 5
-i-
<PAGE> 7
Converted, 5
Credit Documents, 5
Credit Event, 5
Default Rate, 5
Disposition, 6
Dollar, 6
Dollars, 6
Down REIT, 6
Down REIT Partners, 6
Drawing, 6
EBITDAR, 6
Employee Benefit Plan, 6
Environmental and Safety Laws, 7
Environmental Claim, 6
Equity Issuance, 7
ERISA, 7
ERISA Affiliate, 7
ERISA Event, 7
Eurodollar Base Rate, 8
Eurodollar Loans, 8
Eurodollar Rate, 8
Event of Default, 79
Existing Credit Agreement, 1
Facing Bank, 1
Federal Funds Rate, 8
Fee Letter, 36
Fees, 8
Financing Plan, 8
Funded Debt, 9
GAAP, 9
Governmental Agency, 9
Guarantee, 9
Hazardous Materials, 9
Health Care Facility, 9
Historical Financial Statements, 51
Indebtedness, 10
Insufficiency, 10
Intangible Assets, 10
Interest Coverage Ratio, 10
Interest Expense, 10
Interest Period, 10
Interest Rate Protection Agreement, 11
Investment, 11
Investment Security, 11
Lenders, 1
Letter of Credit, 12
Letter of Credit Request, 32
-ii-
<PAGE> 8
Letter of Credit Reserve Account, 11
Letter of Credit Subcommitment, 12
Leverage Ratio, 12
Lien, 12
Loans, 12
Margin Stock, 54
Material Acquisition, 12
Material Adverse Effect, 12
Material Contract, 12
Maturity Date, 12
Maximum Loan Amount, 23
Moody's, 12
Multiemployer Plan, 13
Necessary Authorizations, 60
Net Available Proceeds, 13
Net Income, 14
Notes, 14
Notice of Borrowing, 40
Notice of Continuation, 40
Notice of Conversion, 40
Notice of Default, 84
Obligations, 82
Operating Partnership Units, 14
Other Taxes, 48
Participant, 93
PBGC, 14
Permits, 57
Permitted Investments, 14
Permitted Liens, 14
Permitted Subsidiary, 16
Person, 16 PG Assets, 16
PG Excess Proceeds, 16
PG Indebtedness, 16
PG Sites, 16
PG Stock, 16
Plan, 16
Preferred Stock, 17
Prime Rate, 17
Principal Office, 17
Pro Rata Share, 17
Projected Financial Statements, 17
Property, 17
Purchase Money Lien, 15
RCRA, 17
Real Estate Investments, 17
Redeemable Stock, 18
-iii-
<PAGE> 9
Regulations D, G, T, U and X, 18
Regulatory Change, 18
Reimbursement Obligations, 18
REIT, 18
Release, 18
Rental Expense, 18
Rentals, 18
Required Lenders, 19
Requirement of Law, 19
Reserve Requirement, 19
Restricted Payment, 19
Revolving Credit Commitment, 19
Revolving Credit Loans, 23
Revolving Credit Notes, 28
S&P, 20
Senior Long Term Debt, 20
Senior Long Term Debt Rating, 20
Series B Preferred Stock, 20
Stated Amount, 20
Subsidiary, 20
Subsidiary Guarantors, 20
Subsidiary Guaranty, 21
Taxes, 48
Type, 22
UCC, 21
under common control with, 2
Unmatured Default, 21
Wells Fargo, 21
Wholly-Owned Subsidiary, 21
Working Capital Loans, 21
-iv-
<PAGE> 10
This AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is dated
as of December 23, 1997 among American Health Properties, Inc. (the "Company");
each of the banks listed on the signature pages hereto or which, pursuant to
Section 13.6., shall become a "Lender" hereunder (individually, a "Lender" and,
collectively, the "Lenders"); Banque Paribas, as Co-Agent, First Union National
Bank, as Co-Agent, NationsBank of Texas, N.A., as Co-Agent and Wells Fargo Bank,
National Association, as agent for the Lenders (in such capacity, together with
its successors in such capacity, the "Agent"), as arranger of the facilities
provided hereby (in such capacity, the "Arranger"), and as the issuer of the
Letters of Credit (in such capacity, together with its successors in such
capacity, the "Facing Bank").
Pursuant to the terms of that certain Credit Agreement dated as of
December 27, 1995 (the "Existing Credit Agreement"), by and between the Company,
the Lenders, the Co-Agents, the Agent, the Arranger and the Facing Bank, the
Lenders made available to the Company a revolving credit facility with a letter
of credit subfacility in an aggregate principal amount up to but not exceeding
$150,000,000 at any one time outstanding.
The Company, the Lenders, the Co-Agents, the Agent, the Arranger and
the Facing Bank desire to amend and restate the terms of the Existing Credit
Agreement to increase the amount of such revolving credit facility to an
aggregate principal amount of up to but not exceeding $250,000,000 at any one
time outstanding, to add a bid rate subfacility, to change certain covenants,
and for other purposes all as more particularly set forth herein.
Accordingly, the parties hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING MATTERS
1.1. CERTAIN DEFINED TERMS
As used herein, the following terms shall have the following meanings
(all terms defined in this Section 1.1. or in other provisions of this Agreement
in the singular to have the same meanings when used in the plural and vice
versa):
"1997 Senior Notes" shall mean, collectively, each of (a) $100,000,000
of the Company's 7.05% Notes due January 15, 2002 and (b) $120,000,000 of the
Company's 7.50% Notes due January 15, 2007.
"Acquired Indebtedness" shall mean Indebtedness of others secured by a
Lien on the real property of others immediately prior to or simultaneously with
the time of the acquisition of such real property by the Company or a
Subsidiary, whether or not the
<PAGE> 11
Indebtedness so secured has been assumed by the Company or a Subsidiary.
Acquired Indebtedness shall be deemed to be incurred by the Company or a
Subsidiary on the date of the related acquisition of the real property by the
Company or a Subsidiary from any Person. Anything herein to the contrary
notwithstanding, Acquired Indebtedness of a Down REIT may not be a general
liability of the Company or any of its Wholly-Owned Subsidiaries but shall be
limited as to recovery to the assets of the Down REIT; provided, however, that
nothing herein shall be deemed to preclude the Company or its Wholly Owned
Subsidiary which is the general partner or manager of the Down REIT from
entering into Guaranties of the type described in Schedule 9.7. attached hereto.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, spouse and children) of such
individual, any trust whose principal beneficiary is such individual or one or
more members of such individual's immediate family and any Person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of the subject Person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise); provided that, in any event, any Person
which owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed an Affiliate of such corporation or other Person.
"Aggregate Available Revolving Commitments" shall mean, on any date of
determination thereof: (a) the Revolving Credit Commitments in effect on such
date minus (b) the sum of (i) the aggregate outstanding principal amount of
Revolving Credit Loans on such date, (ii) the aggregate outstanding principal
amount of Bid Rate Loans on such date, (iii) the aggregate Stated Amounts of all
Letters of Credit then outstanding and (iv) the aggregate amount of outstanding
Reimbursement Obligations on such date.
"Applicable Lending Office" shall mean, for each Lender and for each
Loan, the "Lending Office" of such Lender (or of an affiliate of such Lender)
designated for such Loan on the signature pages hereof or such other office of
such Lender (or of an affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Company as the office by which each such Loan
is to be made and maintained.
"Applicable Margin" shall mean, for any Base Rate or Eurodollar Loan,
the per annum rate set forth in the following table opposite the Company's
Senior Long Term Debt Rating:
-2-
<PAGE> 12
<TABLE>
<CAPTION>
Senior Long Term Debt Rating Applicable Margin for Applicable Margin for Base
Eurodollar Loans Rate Loans
---------------------------- --------------------- --------------------------
<S> <C> <C> <C>
A-/A3 0.350% 0.000%
BBB+/Baa1 0.425% 0.000%
BBB/Baa2 0.500% 0.000%
BBB-/Baa3 0.625% 0.000%
less than BBB-/Baa3 or not 1.000% 0.000%
rated
</TABLE>
For purposes hereof, in the event Moody's and S&P shall assign different ratings
to the Company's Senior Long Term Debt, the median of the Applicable Margins
corresponding to such ratings shall apply. A change in any Applicable Margin
shall be effective as of the date of such change in rating.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended from time to time, or any successor federal statute.
"Base Rate" shall mean, for any day, the higher of (a) the Federal
Funds Rate for such day plus 1/2 of 1% per annum and (b) the Prime Rate for such
day. Each change in any interest rate provided for herein based upon the Base
Rate resulting from a change in the Base Rate shall take effect at the time of
such change in the Base Rate. If for any reason the Agent shall have determined
that it is unable to ascertain the Federal Funds Rate for such day, including,
without limitation, the inability or failure of the Agent to obtain sufficient
bids or publications as contemplated by the definition of the Federal Funds
Rate, the Base Rate for such day shall be the Prime Rate.
"Base Rate Loans" shall mean Loans which bear interest at rates based
upon the Base Rate.
"Bid Rate Loan" shall mean a Loan made by those Lenders whose Bid Rate
Quotes have been accepted by the Company pursuant to the same Bid Rate Request
under the bidding procedure described in Section 2.5. for the same Interest
Period and interest rate (with the understanding that two Bid Rate Loans may be
made pursuant to a single Bid Rate Request).
"Bid Rate Loan Subfacility" shall mean the subfacility established
pursuant to Section 2.4.
"Bid Rate Quote" means an offer in accordance with Section 2.5. by a
Lender to make a Bid Rate Loan with one single specified interest rate.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in San Francisco and, if such day relates to a
borrowing of, a payment or prepayment of principal of or interest on, or a
Conversion of or into, or an Interest
-3-
<PAGE> 13
Period for, a Eurodollar Loan or a notice by the Company with respect to any
such borrowing, payment, prepayment, Conversion or Interest Period, which is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person with respect to any lease of (or other agreement
conveying the right to use) any Property (whether real, personal or mixed) which
is classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Accounting Standards No. 13
of the Financial Accounting Standards Board) and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP (including such Statement No. 13).
"Casualty Event" shall mean any loss of or damage to, or any
condemnation or other taking of, any Property of the Company and its
Subsidiaries that results in the receipt of insurance proceeds, proceeds of a
condemnation award or other compensation.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
successor federal statute.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Inventory System.
"Closing Date" shall mean the date upon which the conditions precedent
to the initial extension of credit hereunder set forth in Article 6. have been
satisfied and the initial extension of credit hereunder made, but in no event
later than December 23, 1997, unless otherwise agreed to by the parties hereto.
"Co-Agents" shall mean each of Banque Paribas, First Union National
Bank, and NationsBank of Texas, N.A., in their respective capacities as
Co-Agents hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.
"Commitments" shall mean the Revolving Credit Commitments.
"Consolidated Real Estate Assets" shall mean on any date of
determination, the gross value of Real Estate Investments of the Company and its
Consolidated Subsidiaries determined in accordance with GAAP, as shown on the
most recent consolidated balance sheet of the Company delivered to the Lenders
pursuant to Section 8.1.
hereof.
"Consolidated Subsidiary" shall mean, as to any Person, each Subsidiary
of such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should be) consolidated with the
financial statements of such Person in accordance with GAAP. The foregoing to
the contrary not withstanding, any Down REIT shall be treated as a Consolidated
Subsidiary, for purposes of calculating compliance with
-4-
<PAGE> 14
the covenants in Article 10., even if the financial statements of such Down REIT
would not be (or should not be) consolidated with the financial statements of
the Company in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, on the date any
determination thereof is to be made, the amount calculated as the difference of:
(a) the Company's consolidated stockholders' equity (calculated before provision
for the foreign currency exchange reserves, if any, required under Financial
Accounting Standards Board Statement No. 52), determined on a consolidated
basis; minus (b) any treasury stock to the extent any of the same is included in
the Company's consolidated stockholders' equity minus (c) the Intangible Assets
of the Company and its Subsidiaries, determined on a consolidated basis.
"Construction and Development Investment" shall mean, any Investment
made, directly or indirectly, for the construction and development of any Health
Care Facility owned entirely by the Company or a Permitted Subsidiary, so long
as: (a) such Health Care Facility has been in existence less than twenty-four
months following the receipt of a certificate of occupancy or an initial license
with respect thereto; and (b) the revenues received by the operator of such
Health Care Facility in respect of such facility for any fiscal quarter are not
greater than the Rentals and interest expense payable by such operator in
respect of such facility for such fiscal quarter.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.2. of a Eurodollar Loan from one Interest
Period to the next succeeding Interest Period.
"Continuing Agreement" shall mean a Continuing Standby Letter of Credit
Agreement dated [on or before the date hereof] by and between the Company and
the Facing Bank and substantially in the form of Exhibit J hereto.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.2. of Base Rate Loans into Eurodollar Loans or of
Eurodollar Loans into Base Rate Loans, which may be accompanied by the transfer
by a Lender (at its sole discretion) of a Revolving Credit Loan from one
Applicable Lending Office to another.
"Credit Documents" shall mean, collectively, this Agreement, the Notes,
the Subsidiary Guaranty, any Letter of Credit, the Continuing Agreement and any
application for a Letter of Credit.
"Credit Event" shall mean each issuance, Continuation or Conversion of
a Revolving Credit Loan, each issuance of a Bid Rate Loan and each issuance,
extension or other modification of a Letter of Credit.
"Default Rate" a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid pursuant to Section 2.6.(a);
provided, however, that in no
-5-
<PAGE> 15
event shall such rate be less than 2% plus the rate per annum in effect at the
time of the occurrence of any Event of Default.
"Disposition" shall mean any sale, assignment, transfer or other
disposition (including a long term ground lease or other long term obligation
which under GAAP constitutes a sale of such Property) of any Property (whether
now owned or hereafter acquired) of the Company or any of its Subsidiaries other
than inventory in the ordinary course of business.
"Dollars", "Dollar" and "$" shall mean lawful money of the United
States of America.
"Down REIT" shall mean a Permitted Subsidiary of the Company which is a
partnership, limited liability company or any other entity taxable as a
partnership (other than a General Partnership) which is not a Wholly-Owned
Subsidiary but which is directly or indirectly controlled by the Company and is
created in conjunction with the Down REIT Partners.
"Down REIT Partners" shall mean those Persons, other than the Company
or its Subsidiaries which own Operating Partnership Units in a Down REIT and
which formerly owned (whether directly or indirectly through one or more
intermediate entities), prior to the acquisition by the Down REIT of any real
property, an interest in such real property.
"Drawing" shall mean a drawing under a Letter of Credit.
"EBITDAR" shall mean, for any period, the sum of the following
(determined without duplication) for the Company and its Consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP; (i)
Net Income (or loss) for such period, plus (ii) to the extent reflected in Net
Income (or loss) for such period, the aggregate for such period of (A) Interest
Expense, (B) provision for income taxes, (C) depreciation expense, (D)
amortization expense, (E) other non-cash charges, and (F) Rental Expense, minus
(iii) to the extent reflected in Net Income (or loss) for such period,
extraordinary gain (or plus any extraordinary loss) for such period plus (iv) to
the extent reflected in Net Income (or loss) for such period, losses (or minus
gains) during such period respecting Dispositions.
"Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by the Company or
any of its ERISA Affiliates, other than a Multiemployer Plan.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim, demand or other communication (whether written or oral) alleging
or asserting such Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other Property,
personal injuries, fines or penalties arising out of, based on or resulting from
(a) the presence, handling, generation, treatment, storage, disposal, Release or
threatened Release into the environment of any Hazardous Material at
-6-
<PAGE> 16
any location, whether or not owned by such Person, or (b) circumstances forming
the basis of any violation, or alleged violation, of any Environmental and
Safety Law.
"Environmental and Safety Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and common law concerning public
health or safety, worker health or safety or pollution or protection of the
environment, including without limitation those relating to any emissions,
discharges or Releases of Hazardous Materials to ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, control, clean-up or
handling of Hazardous Materials.
"Equity Issuance" means any issuance or sale by the Company or any of
its Subsidiaries of its capital stock or any warrants, options or similar rights
to acquire, or securities convertible into or exchangeable for, such capital
stock; provided, however, neither the issuance of any Operating Partnership
Units in connection with the creation of a Down REIT nor the issuance of shares
of capital stock of the Company in connection with the redemption or conversion
of such Operating Partnership Units shall constitute an Equity Issuance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute.
"ERISA Affiliate" of any Person shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as such Person or which is under
common control (within the meaning of Section 414(c) of the Code) with such
Person.
"ERISA Event" with respect to any Person shall mean (a) the occurrence
of a reportable event, within the meaning of Section 4043 of ERISA, with respect
to any Plan of such Person or any of its ERISA Affiliates, unless the 30-day
notice requirement with respect to such event has been waived by the PBGC; (b)
the provision by the administrator of any Plan of such Person or any of its
ERISA Affiliates of a notice of intent to terminate such Plan pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(a)(2) of ERISA); (c) the cessation of
operations at a facility of such Person or any of its ERISA Affiliates in the
circumstances described in Section 4062(e) of ERISA with respect to a Plan; (d)
the withdrawal by such Person or any of its ERISA Affiliates from a Plan during
a plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (e) the failure by such Person or any of its ERISA
Affiliates to make a payment to a Plan required under Section 302(f)(1) of
ERISA; (f) the adoption of an amendment to a Plan of such Person or any of its
ERISA Affiliates requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (g) the institution by the PBGC of proceedings to
terminate a Plan of such Person or any of its ERISA Affiliates pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA that could
-7-
<PAGE> 17
constitute grounds for the termination of, or the appointment of a trustee to
administer, such Plan.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period therefor, the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%), as determined by the Agent, of the rates
per annum offered to the Agent at approximately 11:00 a.m. London time (or as
soon thereafter as practicable) on the date two Business Days prior to the first
day of such Interest Period for Dollar deposits in the London interbank market
having a term comparable to such Interest Period and in an amount comparable to
the principal amount of such Eurodollar Loan.
"Eurodollar Loans" shall mean Revolving Credit Loans which bear
interest at rates based upon the Eurodollar Base Rate.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate for
such Revolving Credit Loan for such Interest Period multiplied by a fraction,
the numerator of which is 1 and the denominator of which is 1 minus the Reserve
Requirement for such Revolving Credit Loan for such Interest Period.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
the Federal Funds Rate for the immediately preceding Business Day, and (ii) if
such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rate charged by three federal funds brokers of
recognized standing selected by the Agent on such day for such transactions as
reasonably determined by the Agent.
"Fees" shall mean the fees owing by the Company pursuant to Section
4.1.
"Financing Plan" shall mean a written statement certified by the chief
executive officer or the chief financial officer of the Company and reasonably
acceptable in form and substance to the Required Lenders, setting forth with
respect to a Material Acquisition: (a) the source and use of funds necessary to
consummate such acquisition, including the amount and timing of the borrowing
contemplated in connection with such acquisition; (b) the time schedule and plan
for arranging and executing a refinancing transaction repaying (whether through
equity or long term debt offerings or otherwise) any borrowing referenced under
clause (a) above; and (c) such other matters as the Required Lenders may
reasonably request.
-8-
<PAGE> 18
"Funded Debt" shall mean, with respect to any Person, all Indebtedness
of such Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than one
year from, or is directly or indirectly renewable or extendible at the option of
the debtor to a date more than one year (including an option of the debtor under
a revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of more than one year) from, the date of the
creation thereof, including, without limitation, all payments in respect thereof
that are required to be made within one year from the date of any determination
of Funded Debt, whether or not included in current liabilities of such Person
determined in accordance with GAAP.
"GAAP" shall have the meaning ascribed to such term in Section 1.2.(a)
hereof.
"Governmental Agency" shall mean any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee", "Guaranty", "Guaranteed", and the like, shall refer to a
guarantee, an endorsement, a contingent agreement to purchase or to furnish
funds for the payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to,
any Indebtedness or other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or
other distributions upon the stock or equity interests of any Person,
or an agreement to purchase, sell or lease (as lessee or lessor)
Property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to issue a letter of credit for the benefit
of another Person, but excluding endorsements for collection or deposit in the
ordinary course of business.
"Hazardous Materials" shall mean, collectively, any polychlorinated
biphenyls, petroleum or petroleum derived substance, friable asbestos, and any
toxic or otherwise hazardous waste, material or substance, including, without
limitation, all substances with respect to which liability or standards of
conduct may be imposed pursuant to RCRA, CERCLA or any other Environmental and
Safety Law.
"Health Care Facility" shall mean any nursing home, assisted living
facility (including assisted living facilities providing care primarily or
exclusively to Persons suffering from Alzheimer's disease, senility or other
forms of dementia), rehabilitation hospital, acute care hospital, medical office
building or other facility either related to the delivery of health care
services or otherwise offering medical services similar to those offered by or
in connection with the foregoing facilities, and other facilities and structures
related to the foregoing such as parking facilities; provided that, the term
"Health Care Facility" shall not include any psychiatric hospital, clinic or
office or any other health care facility offering exclusively or primarily
psychiatric or psychological services.
-9-
<PAGE> 19
"Indebtedness" shall mean, without duplication, as to any Person (a)
indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance or sale of debt securities) whether or not
recourse is limited to specific assets of such Person; (b) obligations of such
Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable arising in the ordinary course of
business so long as such trade accounts payable are not for borrowed money and
are paid within 60 days of the date the respective goods are delivered or the
respective services are rendered (unless such trade account payable is being
contested in good faith); (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the Indebtedness so secured has been
assumed by such Person; (d) reimbursement obligations of such Person in respect
of letters of credit or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (e) Capital Lease
Obligations of such Person; (f) Indebtedness of others Guaranteed by such
Person; and (g) obligations or exposures of such Person under Interest Rate
Protection Agreements.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Intangible Assets" shall mean that portion of the book value of any
Person's assets which would be treated as intangibles under GAAP, including all
items such as goodwill, trademarks, trade names, brand names, trade secrets,
customer lists, computer software, copyrights, patents, licenses, franchises,
franchise conversion rights, covenants not to compete, research and development
expense, and rights with respect to any of the foregoing and all unamortized
debt discount and expenses.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
EBITDAR for such period to the sum of Interest Expense for such period plus
Rental Expense for such period.
"Interest Expense" shall mean, for any period, the sum of the following
for the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP: (a) all interest in respect of Indebtedness accrued or
which is, or in accordance with GAAP should be, capitalized during such period
(whether or not actually paid during such period), (b) the net amounts payable
under Interest Rate Protection Agreements accrued during such period (whether or
not actually paid during such period), and (c) the aggregate amount of Fees
accrued during such period pursuant to Section 4.1.(b), (c), (d) or (e).
"Interest Period" shall mean,
(a) with respect to any Eurodollar Loan, each period commencing on the
date such Eurodollar Loan is made (including pursuant to Conversion from a Base
Rate Loan) or the last day of the next preceding Interest Period for such
Eurodollar Loan and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Company may select as
provided in Section 4.7., except that each
-10-
<PAGE> 20
Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month and
(b) with respect to any Bid Rate Loan, the period commencing on the
date such Bid Rate Loan is made and ending on any Business Day not less than 7
nor more than 180 days thereafter, as the Company may select as provided in
Section 2.5.;
Notwithstanding the foregoing, (i) no Interest Period may end after the Maturity
Date; (ii) each Interest Period which would otherwise end on a day which is not
a Business Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day), and (iii) no Interest Period with respect to an
Eurodollar Loan shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter period,
such Eurodollar Loan shall not be available hereunder.
"Interest Rate Protection Agreement" shall mean, as to any Person, an
interest rate hedge agreement between such Person and a financial institution
providing for the transfer or mitigation of interest risks either generally or
under specific contingencies. For purposes hereof, the "exposure" at any time of
any Person under an Interest Rate Protection Agreement to which such Person is a
party shall be determined at such time in accordance with the standard methods
of calculating such exposure under similar arrangements as prescribed from time
to time by the Agent taking into account the respective termination provisions
set forth herein, the notional principal amount and term thereof and assuming
that U.S. Treasury rates generally are equal to the per annum rate of interest
which the Agent at such time determines to be the most probable lowest U.S.
Treasury rate to occur in the relevant period following such date.
"Investment" shall mean any investment, made in cash or by delivery of
Property, by the Company or any Subsidiary:
(a) in any Person, whether by acquisition of stock,
indebtedness or other obligation or Investment Security, or by loan,
Guarantee, advance, capital contribution or otherwise; or
(b) in any Property.
The amount of any Investment shall be its cost (the amount of cash or the fair
market value of other Property given in exchange therefor).
"Investment Security" shall mean "security" as defined in Section 2(1)
of the Securities Act of 1933, as amended.
"Letter of Credit Reserve Account" shall mean the special collateral
account, if any, established by the Company with the Agent pursuant to the
provisions of Article 11. hereof.
-11-
<PAGE> 21
"Letter of Credit Subcommitment" shall mean $15,000,000 (as the same
may be reduced from time to time pursuant to Section 2.13. or Section 2.14.).
"Letters of Credit" shall mean the letters of credit issued pursuant to
Article 3.1. hereof.
"Leverage Ratio" shall mean, for any period, the ratio of Funded Debt
of the Company and its Subsidiaries as of the end of such period to Consolidated
Tangible Net Worth as of the end of such period, in each case determined on a
consolidated basis in accordance with GAAP.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind whatsoever in
respect of such asset. For purposes of this Agreement, the Company or any of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loans" shall mean, collectively, the Revolving Credit Loans and the
Bid Rate Loans.
"Material Acquisition" shall mean any acquisition or Potential
Acquisition of assets by any one or more of the Company and its Subsidiaries,
whether directly or through the acquisition of a Subsidiary, where the value of
the total consideration (whether in the form of cash, deferred payment
obligations issued by the Company or any of its Subsidiaries, or assets paid in
kind or exchanged) paid, or agreed or contemplated to be paid, by the Company or
any of its Subsidiaries for such acquisition or in the aggregate for such
acquisition and any related series of acquisitions is equal to or exceeds
$75,000,000.
"Material Adverse Effect" shall mean any event, circumstance or
condition that, individually or when aggregated with all other similar events,
circumstances or conditions, could reasonably be expected to have a material
adverse effect on (a) the business, Property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole; (b) the ability of the Company
or one of its Subsidiaries to perform its respective obligations under any of
the Credit Documents to which it is a party; (c) the validity or enforceability
of any of the Credit Documents; or (d) the rights and remedies of the Lenders,
the Facing Bank and the Agent under any of the Credit Documents.
"Material Contract" shall mean, with respect to the Company and its
Subsidiaries, each of those contracts and agreements listed on Schedule 7.12.
hereto.
"Maturity Date" shall mean December 31, 2000 or as otherwise extended
pursuant to Section 4.2. hereof.
"Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors; provided that, if such corporation shall be
dissolved or liquidated or
-12-
<PAGE> 22
shall no longer perform the functions of a securities rating agency, then
"Moody's" shall mean any other nationally recognized securities rating agency
designated by the Required Lenders by notice to the Agent and the Company.
"Multiemployer Plan" of any Person shall mean a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions have been made
by such Person or any ERISA Affiliate of such Person and which is covered by
Title IV of ERISA.
"Net Available Proceeds" shall mean:
(i) (A) in the case of any Disposition, the aggregate amount
of all cash payments received (including, without limitation, all cash payments
received by way of deferred payment of principal or interest pursuant to a note
or installment receivable or otherwise, but only as and when received) by the
Company or one of its Subsidiaries in connection with such Disposition, directly
or indirectly, or (B) in the case of any Casualty Event, the aggregate amount of
cash proceeds of insurance, condemnation awards and other compensation received
by the Company or one of its Subsidiaries in respect of such Casualty Event, in
each case net of (a) the amount of any out-of-pocket legal, title and recording
tax expenses, commissions and other fees and expenses reasonably incurred by the
Company or such Subsidiary in connection with such Disposition or Casualty
Event, (b) any federal, state and local income taxes reasonably estimated in
good faith to be payable by the Company or one of its Subsidiaries in connection
with such Disposition or Casualty Event and other taxes thereon to the extent
such other taxes are actually paid by the Company or such Subsidiary, (c) any
repayments by the Company or such Subsidiary of Indebtedness to the extent that
such Indebtedness is secured by a Lien on the Property that is the subject of
such Disposition and the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid as a condition to the Disposition of
such Property, and (d) any repayments by the Company or such Subsidiary of
Indebtedness to the extent that such Indebtedness is secured by a Lien on the
Property that is the subject of such Casualty Event, and the holder of the Lien
on such Property assert its prior right (if appropriate) to such proceeds; and
(ii) in the case of any Equity Issuance, the aggregate amount
of all cash received by the Company in respect of such Equity Issuance net of
fees, commissions and expenses (including attorneys' fees) reasonably incurred
by the Company in connection therewith; and
(iii) in the case of the incurrence of Indebtedness, the
aggregate amount of the cash proceeds of such Indebtedness received by the
Company or one of its Subsidiaries net of fees, commissions and expenses
(including attorneys' fees) reasonably incurred by the Company or such
Subsidiary in connection therewith;
provided however, Net Available Proceeds of a Disposition by a Permitted
Subsidiary which is not a Wholly-Owned Subsidiary shall mean the amount of the
proceeds of such Disposition distributable to the Company or one of its
Subsidiaries, as determined by reference to the governing documents of such non
Wholly-Owned Subsidiary.
-13-
<PAGE> 23
"Net Income" shall mean with respect to any Person, the net income
(loss) of such Person for any period determined in accordance with GAAP;
provided, that there shall be excluded therefrom: (a) the income (loss) of any
other Person accrued prior to the date it either becomes a Subsidiary of such
Person, is merged into or consolidated with such Person, or such other Person's
assets are acquired by such Person, and (b) the income (loss) of any other
Person (except for a Subsidiary of such Person) in which such Person has an
ownership interest, except to the extent that any such income has actually been
received by such person in the form of dividends or similar distributions during
such period.
"Notes" shall mean the Revolving Credit Notes and the Bid Rate Notes.
"Operating Partnership Units" shall mean securities issued by a Down
REIT (including without limitation any limited partnership interests or limited
liability company interests) which are convertible into capital stock of the
Company or which are redeemable in consideration of the delivery of capital
stock of the Company and which are issued in connection with the creation of a
Down REIT by the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" of any Person shall mean: (a) direct
obligations of the United States of America or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America or of any agency thereof, in either case maturing not more than 1 year
from the date of acquisition thereof by such Person; (b) marketable direct
obligations issued by any State of the United States of America or any political
subdivision of any such State or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having the highest or second highest rating obtainable from either
S&P or Moody's; (c) commercial paper maturing no more than one year from the
date of the creation thereof and, at the time of acquisition, having the highest
or second highest rating obtainable from either S&P or Moody's; (d) any Dollar
denominated (i) certificates of deposit, (ii) time deposits, (iii) repurchase
agreements or (iv) bankers' acceptances maturing within one year from the date
of acquisition thereof issued by any Lender or by any bank or trust company
organized under the laws of the United States of America or any State thereof
and having capital, surplus and undivided profits of at least $1,000,000,000;
and (e) money market funds organized under the laws of the United States of
America or any State thereof that invest not less than 90% of their funds in any
of the Investments permitted under subparagraphs (a), (b), (c), (d) or (e).
"Permitted Liens" shall mean:
(a) Liens imposed by any Governmental Agency for taxes,
assessments or charges not yet due or which are being contested in good faith
and with due diligence and with respect to which adequate reserves have been
established;
-14-
<PAGE> 24
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business not
yet delinquent or which are being contested in good faith and with due diligence
and with respect to which adequate reserves have been established;
(c) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than a trade contract which constitutes Indebtedness), leases
(other than Capital Lease Obligations), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, zoning restrictions and other
similar encumbrances of record on real property incurred in the ordinary course
of business which, in the aggregate, are not material in dollar amount, and
which do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(f) Liens existing on the date hereof and disclosed on
Schedule 7.16. hereto;
(g) Purchase Money Liens, Liens securing Acquired Indebtedness
and Liens pursuant to Capital Lease Obligations which secure Indebtedness
permitted pursuant to Section 9.3. hereof, provided that such Liens with respect
to Acquired Indebtedness extend only to the Property (and any applicable
insurance thereon) acquired in connection with the incurrence of the
Indebtedness secured thereby;
(h) any attachment or judgment Lien either in existence less
than 30 calendar days after the entry thereof, or with respect to which
execution has been stayed, or with respect to which payment in full above any
deductible is covered by insurance (so long as no reservation of rights has been
made by the insurer in connection with such coverage); and
(i) renewals of any of the foregoing Liens in connection with
the refinancings, renewals or extensions of Indebtedness in accordance with
Section 9.3.(i).
For purposes of this definition, the term "Purchase Money Lien" shall mean any
Lien on fixed assets, plant or equipment (and any intangible assets associated
therewith) acquired by the Company or any of its Subsidiaries securing the
payment of all or a portion of the purchase price therefor or Liens to which
such purchased assets are subject immediately prior to or simultaneously with
such acquisition; provided, however, that (i) the transaction in which any
Purchase Money Lien is proposed to be created or assumed is permitted by this
Agreement; (ii) any Purchase Money Lien shall attach only to the assets acquired
(and any applicable insurance thereon) in such transaction and shall not extend
to or cover any other assets of the Company or any of its Subsidiaries; (iii)
the Indebtedness
-15-
<PAGE> 25
secured or covered by any Purchase Money Lien shall not exceed the cost
(including reasonable costs directly incurred in connection with such
acquisition) to the Company or any of its Subsidiaries of the assets acquired;
and (iv) such Indebtedness is either (x) incurred within 30 days following the
date of the acquisition of the assets so acquired or (y) incurred for the
purpose of refinancing or refunding any Indebtedness secured by a Purchase Money
Lien provided the unpaid balance is not thereby increased.
"Permitted Subsidiary" shall mean any Subsidiary of the Company (i)
which existed on the Closing Date, or (ii) that has (A) executed the Subsidiary
Guaranty and (B) that is either Wholly-Owned or is otherwise permitted by
Section 9.5.(j).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"PG Assets" means (a) the PG Sites to the extent such Property, plant,
and equipment constitute assets of the Company or its consolidated Subsidiaries,
(b) any Indebtedness owed to the Company or its consolidated Subsidiaries and
secured by any PG Site, and (c) any Indebtedness owed to the Company or its
consolidated Subsidiaries by the owner or operator, other than an owner or
operator who is an Affiliate of the Company, of any PG Site as a result of
operating advances made by the Company or any of its consolidated Subsidiaries
to such owner or operator in connection with the operation or maintenance of
such PG Site.
"PG Excess Proceeds" means at any time the amount, if any, by which (a)
the cumulative Net Available Proceeds of the Disposition of PG Assets made on or
before such time exceeds (b) the outstanding balance of the PG Indebtedness at
such time plus the cumulative repayments of PG Indebtedness made on or before
such time.
"PG Indebtedness" means the following Indebtedness of the Company
allocated by the Company to the acquisition, maintenance, and operation of the
PG Assets: (a) $9,175,000 in fixed rate Indebtedness and (b) up to $7,930,000 in
variable rate Indebtedness, reflected as liabilities in that portion of
financial statements of the Company entitled "Psychiatric Group Condensed
Balance Sheets."
"PG Sites" means the five psychiatric hospital sites listed on Schedule
9.6. hereto and all Property, plant, and equipment with respect to such sites.
"PG Stock" means the class of Preferred Stock of the Company designated
as "Psychiatric Group Preferred Stock" with a par value of $.01 having the
rights, restrictions, and other attributes set forth in the Certificate of
Designation filed with the Secretary of State of the State of Delaware on July
7, 1995
"Plan" of the Company or any of its Subsidiaries shall mean an employee
benefit or other plan established or maintained by such Person or any ERISA
Affiliate of such Person
-16-
<PAGE> 26
and which is covered by Title IV of ERISA, other than a Multiemployer Plan of
such Person.
"Potential Acquisition" shall mean a potential acquisition which is
subject to a binding purchase agreement between the Company or a Subsidiary and
the entity or entities whose equity interests or assets the Company or such
Subsidiary intends to acquire.
"Preferred Stock" shall mean, for any corporation, any class or series
of equity securities of such corporation which is entitled, upon any
distribution of such corporation's assets, whether by dividend or by
liquidation, to a preference over another class or series of equity securities
of such corporation, and which by its terms is either: (a) entitled to receive
cash distributions (or asset distributions or distributions of securities other
than distributions in kind of preferred stock of the same class and series) of
such corporation's or any of its Subsidiaries, assets, whether by dividend or by
liquidation; or (b) mandatorily redeemable or redeemable at the option of the
issuer or holder thereof for cash (or assets or securities other than
distributions in kind of preferred stock of the same class and series) by such
corporation or any of its Subsidiaries, or is convertible or exchangeable,
mandatorily or at the option of the issuer or holder thereof, into Indebtedness
of such corporation or any of its Subsidiaries; provided, however, that
"Preferred Stock" shall not include Operating Partnership Units.
"Prime Rate" shall mean the rate of interest from time to time
announced by Wells Fargo in San Francisco as its prime commercial lending rate.
"Principal Office" shall mean the principal office of Wells Fargo,
presently located at 201 Third Street, 8th Floor, San Francisco, California
94103.
"Projected Financial Statements" shall mean (i) projected consolidated
statements of cash flows of the Company and its Subsidiaries for each fiscal
year and (ii) projected consolidated income statements and balance sheets of the
Company and its Subsidiaries for each fiscal year, as required in Sections
8.1.(k) and (l) hereof.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" means the fraction of each Lender's Commitment divided
by the aggregate amount of all Commitments, converted into a percentage.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
as amended.
"Real Estate Investments" shall mean Investments of the Company and its
Consolidated Subsidiaries included, in conformity with GAAP, in line items
designated as "Real property and mortgage notes", "Construction in progress" and
"Other notes receivable and direct financing leases" on the Company's financial
statements and any
-17-
<PAGE> 27
other similar line items evidencing investments related to real estate as may be
used from time to time by the Company on its financial statements in accordance
with GAAP.
"Redeemable Stock" shall mean any capital stock that by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable or any other agreement) or upon the happening of any event matures
or is or will become mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, or is exchangeable for or convertible into a security of a
Person other than the issuer of such capital stock or into Indebtedness;
provided, however, that "Redeemable Stock" shall not include Operating
Partnership Units.
"Regulations D, G, T, U and X" shall mean, respectively, Regulations D,
G, T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
enacted or adopted after the date of this Agreement in United States federal,
state or foreign law or regulations (including, without limitation, Regulation
D) or the adoption or publication after the date of this Agreement of any
interpretations, directives or requests (whether or not having the force of law)
applying to a class of banks including such Lender of or under any United States
federal, state or foreign law or regulations by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reimbursement Obligations" shall mean, at any time, all obligations of
the Company to the Facing Bank, and to the Lenders to the extent of their
participation therein, in respect of the Letters of Credit, and shall consist of
all amounts which have been paid by the Facing Bank pursuant to the Letters of
Credit, if and to the extent the Facing Bank has not received reimbursement
therefor from the Company.
"REIT" shall mean a Person qualifying for treatment as a "real estate
investment trust" under the Code.
"Release" shall mean any "release" as such term is defined in 42 U.S.C.
ss. 9601(22), or any successor federal statute or analogous state law.
"Rental Expense" shall mean, with respect to any Person for any fiscal
period, the aggregate rent expense of such Person with respect to all
obligations of such Person for the payment of rent for any real or personal
property under leases or agreements to lease other than Capital Lease
Obligations. When such term is used with respect to the Company, "Rental
Expense" shall mean the Rental Expense of the Company and its Consolidated
Subsidiaries.
"Rentals" shall mean all fixed rents payable by any Person as lessee or
sublessee under a lease of any asset, but shall be exclusive of any amounts
required to be paid by such Person (irrespective of whether designated as rents
or additional rents) on account of
-18-
<PAGE> 28
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Required Lenders" shall mean (i) at any time prior to the occurrence
of an Event of Default, the Lenders holding at least 51% of the outstanding
Commitments and (ii) at any time after the occurrence and during the
continuation of an Event of Default the Lenders holding at least 51% of the
outstanding Loans, Reimbursement Obligations and Letters of Credit (or, if no
Loans, Reimbursement Obligations or Letters of Credit are outstanding, at least
51% of the outstanding Commitments).
"Requirement of Law" shall mean, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Agency, in each case applicable to or binding upon the Person or
any of its Property or to which the Person or any of its Property is subject.
"Reserve Requirement" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.1., or (ii) any category of extensions of credit or other assets which
includes Eurodollar Loans.
"Restricted Payment" shall mean (i) dividends by or on behalf of the
Company (in cash, Property or obligations, but excluding dividends payable
solely in shares of capital stock other than Redeemable Stock) or any Subsidiary
on, or other payments or distributions on account of or with respect to, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of capital stock or other equity interests of the Company or such
Subsidiary, (ii) any prepayment by the Company or any of its Subsidiaries of
principal, optional redemption, purchase, retirement prior to stated maturity,
defeasance, or similar optional prepayment with respect to any Indebtedness for
borrowed money other than the Loans, or (iii) any loans, advances or any other
payments by the Company or any of its Affiliates to, or transactions by the
Company or any of its Affiliates with, any Affiliate of such Person, except in
the case of transactions (other than loans, advances or other payments) which
are no less favorable to the Company or its Subsidiaries than transactions
negotiated at arms length with nonaffiliated third parties.
"Revolving Credit Commitment" shall mean, as to each Lender, the
obligation of such Lender to make Revolving Credit Loans and Letters of Credit
available to the Company in an aggregate amount at any one time outstanding up
to but not exceeding the
-19-
<PAGE> 29
amount set forth opposite the name of such Lender on Schedule I hereto under the
caption "Revolving Credit Commitment" (as the same may be reduced from time to
time pursuant to Section 2.14. or Section 2.14.).
"S&P" shall mean Standard & Poor's Corporation, a New York corporation,
and its successors; provided that, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, then "S&P" shall mean any other nationally recognized securities rating
agency designated by the Required Lenders by notice to the Agent and the
Company.
"Senior Long Term Debt" means all outstanding Indebtedness of the
Company which by its terms matures more than one year from the date of its
creation or is extendible for such a period at the option of the Company and
which has not been subordinated in right of payment to any other Indebtedness of
the Company.
"Senior Long Term Debt Rating" means the rating given from time to time
by S&P and/or Moody's with respect to the outstanding Senior Long Term Debt of
the Company.
"Series B Preferred Stock" shall mean 40,000 shares of the Company's
8.60% Cumulative Redeemable Preferred Stock, Series B, issued prior to November
28, 1997, which shares shall have a liquidation preference of $2,500.00 per
share and shall not be redeemable prior to October 27, 2002 (or such later date
as may be selected by the Company) and may be represented by and traded as
depository shares.
"Stated Amount" means the maximum amount available to be drawn under a
Letter of Credit from time to time in accordance with its terms, without regard
to whether any conditions to a drawing could then be met. The Stated Amount of
any Letter of Credit shall be deemed to be outstanding from the date of the
issuance of such Letter of Credit until such Letter of Credit is returned to the
Facing Bank notwithstanding the prior expiration of such Letter of Credit in
accordance with its terms.
"Subsidiary" shall mean, as to any Person, any corporation,
partnership, limited liability company or joint venture, whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which at
least a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (other than stock having such voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person and/or one or more of its Subsidiaries, (ii) in the
case of a partnership or joint venture, in which such Person or a Subsidiary of
such Person is a general partner or joint venturer or of which a majority of the
partnership or other ownership interests are at the time owned by such Person
and/or one or more of its Subsidiaries or (iii) in the case of a limited
liability company, in which such Person or a Subsidiary of such Person is a
manager (or a Person with the power to elect a manager) or of which a majority
of the membership interests are at the time owned by such Person and/or one or
more of its Subsidiaries.
-20-
<PAGE> 30
"Subsidiary Guarantors" means: (a) each of those Subsidiaries of the
Company in existence on the Closing Date other than those set forth on Schedule
7.14. hereto and (b) each Subsidiary of the Company which becomes a guarantor
under a Subsidiary Guaranty following the Closing Date.
"Subsidiary Guaranty" means that certain Guaranty Agreement, dated as
of the Closing Date, executed by the Subsidiary Guarantors in favor of the Agent
and the Lenders and each such agreement executed by a Permitted Subsidiary after
the Closing Date, in each case substantially in the form of Exhibit A hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of California.
"Unmatured Default" shall mean an event which with notice or lapse of
time or both would become an Event of Default.
"Wells Fargo" shall mean Wells Fargo Bank, National Association
"Wholly-Owned Subsidiary" shall mean any corporation, association or
other business entity of which l00% of the outstanding shares of all classes of
capital stock or other ownership interests is at the time owned directly or
indirectly by, such Person or one or more of the other Wholly-Owned Subsidiaries
of such Person or a combination thereof.
"Working Capital Loans" means working capital loans made by the Company
in connection with Section 9.5.(d), which loans will be secured by a first
priority security interest in the accounts generated from the operation of such
facility to the extent consistent with Requirements of Law.
1.2. ACCOUNTING TERMS AND DETERMINATIONS
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, all calculations for purposes of determining
compliance with the terms of this Agreement shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared in accordance with
generally accepted accounting principles applied in the United States and
practices which are recognized as such by the American Institute of Certified
Public Accountants ("GAAP") applied for all periods to the extent practicable on
a basis consistent with that used in the preparation of the Historical Financial
Statements, so as to present fairly the financial condition and the results of
operations of the applicable Person. In the event of a change in GAAP that is
applicable to the Company, compliance with the financial covenants contained
herein shall continue to be determined in accordance with GAAP as in effect
prior to such change; provided, however, that the Company and the Required
Lenders will thereafter negotiate in good faith to revise such covenants to the
extent necessary to conform such covenants to GAAP as then in effect.
-21-
<PAGE> 31
(b) To enable the ready and consistent determination of compliance with
the covenants set forth in Article 9. and Article 10., the Company will not
change the last day of its fiscal year from December 31 of each year or the last
days of the first three fiscal quarters in each of its fiscal years from the
last day in March, June and September of each year, respectively.
1.3. OTHER REFERENTIAL PROVISIONS
All terms in this Agreement, the Exhibits and Schedules hereto shall
have the same defined meanings when used in any other Credit Documents, unless
the context shall require otherwise. Except as otherwise expressly provided
herein, all accounting terms not specifically defined or specified herein shall
have the meanings generally attributed to such terms under GAAP including,
without limitation, applicable statements and interpretations issued by the
Financial Accounting Standards Board and bulletins, opinions, interpretations
and statements issued by the American Institute of Certified Public Accountants
or its committees. All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provisions of this Agreement. Titles of Articles and Sections in this
Agreement are for convenience only, do not constitute part of this Agreement and
neither limit nor amplify the provisions of this Agreement, and all references
in this Agreement to Articles, Sections, subsections, paragraphs, clauses,
subclauses, Schedules or Exhibits shall refer to the corresponding Article,
Section, subsection, paragraph, clause or subclause of, or Schedule or Exhibit
attached to, this Agreement, unless specific reference is made to the articles,
sections or other subdivisions or divisions of, or to schedules or exhibits to,
another document or instrument. Each definition of a document in this Agreement
shall include such document as amended, modified, supplemented or restated from
time to time in accordance with the terms of this Agreement. Except where
specifically restricted, reference to a party to a Credit Document includes that
party and its successors and assigns permitted hereunder or under such Credit
Document. Unless otherwise specifically stated, whenever a time is referred to
in this Agreement or in any other Credit Document, such time shall be the local
time in the city in which the Principal Office of the Agent is located. Whenever
the phrase "to the knowledge of the Company" or words of similar import relating
to the knowledge of the Company are used herein, such phrase shall mean and
refer to (i) the actual knowledge of the President or chief financial officer of
the Company or (ii) the knowledge that such Persons would have obtained if they
had engaged in good faith in the diligent performance of their duties, including
the making of such reasonable specific inquiries as may be necessary of the
appropriate persons in a good faith attempt to ascertain the accuracy of the
matter to which such phrase relates.
-22-
<PAGE> 32
1.4. TYPES OF REVOLVING CREDIT LOANS
Revolving Credit Loans hereunder are distinguished by "Type". The
"Type" of a Revolving Credit Loan refers to whether such Revolving Credit Loan
is a Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type.
2. REVOLVING CREDIT LOANS; BID RATE LOANS
2.1. REVOLVING CREDIT LOANS
Each Lender severally (but not jointly) agrees, on the terms and
subject to the conditions contained herein, to make loans to the Company during
the period from and including the Closing Date to but not including the Maturity
Date in an aggregate principal amount at any one time outstanding of up to but
not exceeding the amount of the Revolving Credit Commitment of such Lender as in
effect from time to time (such Loans being herein called "Revolving Credit
Loans"); provided, however, that subject to the ultimate sentence of Section
2.15. in no event shall the aggregate principal amount of all outstanding
Revolving Credit Loans and the aggregate principal amount of all outstanding Bid
Rate Loans, exceed $250,000,000 (as such amount may be reduced pursuant to
Sections 2.13. and 2.14. hereof), such amount to be referred to herein as the
"Maximum Loan Amount", minus the aggregate Stated Amounts of all outstanding
Letters of Credit and all outstanding Reimbursement Obligations. Subject to the
terms contained herein, the Company may borrow, repay and reborrow the Revolving
Credit Loans.
2.2. CONVERSION OR CONTINUATION OF REVOLVING CREDIT LOANS
The Company may Convert Revolving Credit Loans of one Type into
Revolving Credit Loans of another Type or Continue Revolving Credit Loans of one
Type as Revolving Credit Loans of the same Type, provided that (i) the Company
shall give the Agent notice of each such Conversion or Continuation as provided
in Section 4.7.; (ii) Eurodollar Loans may be Continued or Converted only on the
last day of an Interest Period for such Eurodollar Loans; (iii) no Revolving
Credit Loan may be Converted into or Continued as a Eurodollar Loan during the
continuance of an Unmatured Default or an Event of Default; and (iv) no more
than 8 separate Interest Periods in respect of Eurodollar Loans from any Lender
may be outstanding at any one time.
2.3. REVOLVING CREDIT LOAN BORROWINGS
The Company shall give the Agent (which shall promptly notify the
Lenders) notice of each borrowing hereunder as provided in Section 4.7., which
notice when given shall be irrevocable. Not later than 11:00 a.m. (San Francisco
time) on the date specified for each borrowing hereunder, each Lender shall make
available the amount of the
-23-
<PAGE> 33
Revolving Credit Loan to be made by it on such date to the Agent, at account
number [4518 049 994] maintained by the Agent at the Principal Office (the
"Agent's Account"), in immediately available funds, for account of the Company.
The amounts so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company maintained at the
Principal Office.
2.4. BID RATE LOANS.
In addition to borrowings of Revolving Credit Loans, at any time during
the period from the Closing Date to but excluding the Maturity Date, and so long
as the Company has been assigned a Senior Long Term Debt Rating from either of
S&P or Moody's of at least BBB- or Baa3, as applicable, the Company may, as set
forth in Section 2.5., request the Lenders to make offers to make Bid Rate Loans
to the Company in Dollars. The Lenders may, but shall have no obligation to,
make such offers and the Company may, but shall have no obligation to, accept
any such offers in the manner set forth in Section 2.5.
2.5. BID RATE LOANS BORROWINGS.
(a) Requests for Bid Rate Loans. When the Company wishes to request
from the Lenders offers to make Bid Rate Loans, it shall give the Agent notice
(a "Bid Rate Quote Request") so as to be received no later than 9:00 a.m. (San
Francisco time) two Business Days prior to the date of borrowing proposed
therein. The Agent shall deliver to each Lender a copy of each Bid Rate Quote
Request promptly upon receipt thereof by the Agent. The Company may request
offers to make Bid Rate Loans for up to 2 different Interest Periods in each Bid
Rate Quote Request; provided that the request for each separate Interest Period
shall be deemed to be a separate Bid Rate Quote Request for a separate borrowing
(a "Bid Rate Borrowing"). Each Bid Rate Quote Request shall be substantially in
the form of Exhibit F-1 and shall specify as to each Bid Rate Borrowing:
(i) the proposed date of such borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Rate Borrowing, which
shall not cause any of the limits specified in Section 2.15. to be
violated; and
(iii) the duration of the Interest Period applicable thereto.
Except as otherwise provided in the penultimate sentence of the
previous paragraph in this subsection (a), the Company shall deliver no more
than four Bid Rate Quote Requests in any calendar month and no Bid Rate Quote
Request shall be delivered within five Business Days of the giving of any other
Bid Rate Quote Request.
(b) Bid Rate Quotes.
-24-
<PAGE> 34
(i) Each Lender may submit one or more Bid Rate Quotes, each
containing an offer to make a Bid Rate Loan in response to any Bid Rate
Quote Request; provided that, if the Company's request under Section
2.5. (a) specified more than one Interest Period, such Lender may make
a single submission containing only one Bid Rate Quote for each such
Interest Period. Each Bid Rate Quote must be submitted to the Agent not
later than 7:30 a.m. (San Francisco time) on the proposed date of
borrowing and the Agent shall disregard any Bid Rate Quote received
after such time; provided that the Agent (in its capacity as Lender)
may submit a Bid Rate Quote only if it notifies the Company of the
terms of the offer contained therein not later than 7:00 a.m. (San
Francisco time) on the proposed date of such borrowing. Subject to
Articles 6. and 11., any Bid Rate Quote so made shall be irrevocable..
(ii) Each Bid Rate Quote shall be substantially in the form of
Exhibit F-2 and shall specify:
(A) the proposed date of borrowing and the Interest
Period therefor;
(B) the principal amount of the Bid Rate Loan for
which each such offer is being made; provided that the
aggregate principal amount of all Bid Rate Loans for which a
Lender submits Bid Rate Quotes (A) may be greater or less than
the Commitment of such Lender but (B) shall not exceed the
principal amount of the Bid Rate Borrowing for a particular
Interest Period for which offers were requested;
(C) the rate of interest per annum (rounded upwards,
if necessary, to the nearest 1/1,000th of 1%) offered for each
such Bid Rate Loan (the "Bid Rate");
(D) the identity of the quoting Lender; and
(E) any Bid Rate Quote shall be in a minimum amount
of $5,000,000 and integral multiples of $1,000,000 in excess
thereof.
No Bid Rate Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the applicable Bid
Rate Quote Request and, in particular, no Bid Rate Quote may be conditioned upon
acceptance by the Company of all (or some specified minimum) of the principal
amount of the Bid Rate Loan for which such Bid Rate Quote is being made.
(c) Notification by Agent. The Agent shall, as promptly as practicable
after the Bid Rate Quotes are submitted (but in any event not later than 8:30
a.m. (San Francisco time) on the proposed date of borrowing), notify the Company
of the terms (i) of any Bid Rate Quote submitted by a Lender that is in
accordance with this Section 2.5. and (ii) of any Bid Rate Quote that amends,
modifies or is otherwise inconsis-
-25-
<PAGE> 35
tent with a previous Bid Rate Quote submitted by such Lender with respect to the
same Bid Rate Quote Request. Any such subsequent Bid Rate Quote referred to in
clause (ii) of the immediately preceding sentence shall be disregarded by the
Agent unless such subsequent Bid Rate Quote is submitted solely to correct a
manifest error in such former Bid Rate Quote. The Agent's notice to the Company
shall specify (A) the aggregate principal amount of the Bid Rate Borrowing for
which offers have been received and (B) the principal amounts and Bid Rates so
offered by each Lender (identifying the Lender that made each Bid Rate Quote).
(d) Acceptance by Company.
(i) Not later than 9:30 a.m. (San Francisco time) on the
proposed date of borrowing, the Company shall notify the Agent of its
acceptance or nonacceptance of the offers so notified to it pursuant to
Section 2.5. which notice shall be in the form of Exhibit F-3. In the
case of acceptance, such notice shall specify the aggregate principal
amount of offers for each Interest Period that are accepted. The
failure of the Company to give such notice by such time shall
constitute nonacceptance. The Company may accept any Bid Rate Quote in
whole or in part; provided that:
(A) the aggregate principal amount of each Bid Rate
Borrowing may not exceed the applicable amount set forth in
the related Bid Rate Quote Request;
(B) the aggregate principal amount of each Bid Rate
Borrowing shall comply with the provisions of Section 4.6. but
shall not cause the limits specified in Section 2.15. to be
violated;
(C) acceptance of offers may be made only in
ascending order of Bid Rates in each case beginning with the
lowest rate so offered;
(D) any acceptance in part by the Company shall be in
a minimum amount of $1,000,000; and
(E) the Company may not accept any offer that fails
to comply with Section 2.5. or otherwise fails to comply with
the requirements of this Agreement).
(ii) If offers are made by two or more Lenders with the same
Bid Rates for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period,
the principal amount of Bid Rate Loans in respect of which such offers
are accepted shall be allocated by the Agent among such Lenders in
proportion to the aggregate principal amount of such offers.
Determinations by the Agent of the amounts of Bid Rate Loans shall be
conclusive in the absence of manifest error.
-26-
<PAGE> 36
(e) Obligation to Make Bid Rate Loans. The Agent shall promptly (and in
any event not later than 10:00 a.m. (San Francisco time) on the proposed date of
borrowing) notify each Lender that submitted a Bid Rate Quote as to whose Bid
Rate Quote has been accepted and the amount and rate thereof. No Lender shall be
relieved of its obligation to fund a Bid Rate Loan prior to the time the
applicable Bid Rate Loan is funded. Any Lender whose offer to make any Bid Rate
Loan has been accepted shall, not later than 11:00 a.m. (San Francisco time) on
the date specified for the making of such Bid Rate Loan, make the amount of such
Bid Rate Loan available to the Agent at its Principal Office in immediately
available funds, for account of the Company. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Company promptly upon receipt by the Agent by depositing the same, in
immediately available funds, in an account of the Company designated by the
Company.
2.6. INTEREST
(a) The Company agrees to pay to the Agent for the account of each
Lender in accordance with Sections 4.3. and 4.5. interest on the unpaid
principal amount of each Loan made by such Lender for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following rates per annum:
(i) during the periods that such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin;
(ii) during the periods that such Loan is a Eurodollar Loan,
for each Interest Period relating thereto, the Eurodollar Rate for such
Loan for such Interest Period plus the Applicable Margin, and
(iii) during the periods such Loan is a Bid Rate Loan, at the
Bid Rate for such Loan for the Interest Period therefor quoted by the
Lender making such Loan in accordance with Section 2.5.
Accrued interest on each Loan shall be payable (i) in the case of a Base Rate
Loan, quarterly in arrears on the last Business Day of each calendar quarter and
on the Maturity Date, (ii) in the case of a Eurodollar Loan or a Bid Rate Loan,
on the last day of each Interest Period thereof (except that interest shall be
payable at the end of each three-month period in the case of an Interest Period
of greater than three months), (iii) in the case of each Eurodollar Loan, upon
the payment or prepayment thereof or the Conversion of such Eurodollar Loan to a
Revolving Credit Loan of another Type (but only on the principal amount so paid,
prepaid or Converted), and (iv) in the case of each Base Rate Loan, following
the payment thereof or the Conversion of such Base Rate Loan to a Revolving
Credit Loan of another Type on the first to occur of the Maturity Date or the
last Business Day of the calendar quarter in which such payment or Conversion
occurred.
-27-
<PAGE> 37
(b) If an Event of Default shall have occurred and be continuing, the
Company agrees to pay to the Agent, for the account of each Lender, interest on
the unpaid principal amount of each Loan owing to each Lender (and, to the
extent permitted by law, on the unpaid amount of all interest, Fees and other
amounts payable hereunder or under the Credit Documents that is not paid when
due) at the Default Rate on demand.
2.7. REDUCTIONS OF COMMITMENTS IRREVOCABLE
The Commitments once terminated or reduced may not be reinstated or
increased.
2.8. LENDING OFFICES
The Revolving Credit Loans of each Type and the Bid Rate Loans made by
each Lender shall be made and maintained at such Lender's Applicable Lending
Office for such Loans.
2.9. SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT
The failure of any Lender to make any Loan to be made by it on the date
specified therefor shall not relieve any other Lender of its obligation to make
its Loan on such date, but neither any Lender nor the Agent shall be responsible
for the failure of any other Lender to make a Loan to be made by such other
Lender. Nothing herein shall affect the obligation of any Lender pursuant to any
commitment issued by such Lender with respect to the financing contemplated
hereby prior to the initial Loans hereunder; provided, however, that all such
commitments shall be superseded by this Agreement upon the making of such
initial Loans. The amounts payable by the Company at any time hereunder and
under the Notes to each Lender shall be a separate and independent debt and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and the Notes, and it shall not be necessary for any other Lender or
the Agent to consent to, or be joined as an additional party in, any proceedings
for such purposes.
2.10. NOTES
(a) The Revolving Credit Loans made by each Lender shall be evidenced
by a single promissory note to be executed by the Company in substantially the
form of Exhibit B hereto, dated the date hereof, payable to such Lender in a
principal amount equal to the amount of its Revolving Credit Commitment as
originally in effect and otherwise duly completed. As used herein, the term
"Revolving Credit Notes" shall mean the promissory notes provided for by this
subsection.
(b) The Bid Rate Loans made by any Lender shall be evidenced by a
single promissory note to be executed by the Company in substantially the form
of Exhibit C hereto, dated the date hereof, payable to such Lender and otherwise
duly completed. As
-28-
<PAGE> 38
used herein, the term "Bid Rate Notes" shall mean the promissory notes provided
for by this subsection.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan made by each Lender to the Company, and each
payment made on account of, the principal thereof, shall be recorded by such
Lender on its books and, prior to any transfer of the Note evidencing the Loans
held by it, endorsed by such Lender on the schedule attached to such Note or any
continuation thereof; provided that the failure of such Lender to make any such
recordation or endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing under such Note.
(d) No Lender shall be entitled to have its Revolving Credit Note
subdivided by exchange for promissory notes of lesser denominations or
otherwise, except in connection with a permitted assignment of all or any
portion of such Lender's Revolving Credit Loans pursuant to Section 13.6.(b).
(e) No Lender shall be entitled to have its Bid Rate Note subdivided by
exchange for promissory notes of lesser denominations or otherwise.
2.11. SCHEDULED REPAYMENTS
(a) Revolving Credit Loans. Revolving Credit Loans shall be due and
payable in full on the Maturity Date.
(b) Bid Rate Loans. Each Bid Rate Loan shall be due and payable in full
on the earlier of (i) the last day of the Interest Period for such Bid Rate Loan
or (ii) the Maturity Date.
2.12. OPTIONAL PREPAYMENTS
Subject to Section 4.6., the Company may prepay (a) Base Rate Loans, at
any time or from time to time, without premium or penalty and (b) Eurodollar
Loans, (i) on the last day of the Interest Period applicable thereto without
premium or penalty, or (ii) upon three Business Day's prior notice, at any time
during an Interest Period or in connection with a prepayment of all outstanding
Loans and the termination of all Commitments, in which case the Company as a
condition to such prepayment shall pay all amounts contemplated by Article 5.
(including, but not limited to, Section 5.5. with respect to optional
prepayments) in connection with such prepayment. All prepayments of Eurodollar
Loans made pursuant to this Section shall include the payment of interest
accrued to the date of such prepayment. Bid Rate Loans may not be prepaid
pursuant to this Section 2.12. by the Company.
-29-
<PAGE> 39
2.13. MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS
The Company will apply Net Available Proceeds described in subsections
(a) through (d) of this Section 2.13. as provided in subsection (e) of this
Section 2.13.
(a) Casualty Events. 100% of the Net Available Proceeds of any Casualty
Event other than a Casualty Event whose Net Available Proceeds are applied
toward replacement, restoration or repair of the damaged Property within 90 days
after the receipt of such Net Available Proceeds, or if such replacement,
restoration or repair cannot reasonably be completed within 90 days, within such
longer period as is reasonable, but in no event more than 6 months after receipt
of such Net Available Proceeds.
(b) Sale of Assets. (i) 100% of the Net Available Proceeds of any
Disposition other than (x) a Disposition described in (a) above, (y) a
Disposition of any PG Assets or (z) a Disposition of obsolete assets or assets
which results in Net Available Proceeds in an amount less than $1,000,000 that
are applied toward the purchase of replacement assets within 90 days after such
Disposition, and (ii) the lesser of (x) 100% of the Net Available Proceeds
arising from the Disposition of any PG Assets pursuant to Section 9.9.(b) and
(y) the outstanding amount of the PG Indebtedness as of the date of such
Disposition.
(c) Incurrence of Indebtedness. 100% of the Net Available Proceeds
resulting from (i) the incurrence by the Company of any Indebtedness of the type
specified in Section 9.3.(h) or (ii) the incurrence by the Company of any
Indebtedness by issuance of debt securities in a private placement or in the
public markets to the extent the same are permitted by Section 9.3. hereof.
(d) Equity Issuance. 100% of the Net Available Proceeds resulting from
any Equity Issuance.
(e) Application. Net Available Proceeds described in subsections (a)
through (d) of this Section 2.13. shall be applied as follows:
(i) Prior to an Event of Default. So long as no Event of
Default has occurred and is continuing, such Net Available Proceeds
shall be applied to the prepayment of Revolving Credit Loans promptly,
but in no event longer than 3 Business Days (or such longer period of
time as the Agent may agree in its sole and absolute discretion), after
receipt thereof (in each case with Base Rate Loans being prepaid prior
to Eurodollar Loans).
(ii) After an Event of Default. If Event of Default has
occurred, and so long as the same is continuing, promptly, but in no
event longer than 3 Business Days, after receipt thereof, such Net
Available Proceeds shall be applied as follows.
-30-
<PAGE> 40
(A) first, to prepayment of Loans and outstanding
Reimbursement Obligations on a pro rata basis, with a corresponding
permanent reduction in the Revolving Credit Commitments;
(B) second, to the Letter of Credit Reserve Account,
to the extent of the aggregate Stated Amounts of the outstanding
Letters of Credit; and
(C) third, to the extent Net Available Proceeds are
retained by the Company after the payment or application provided for
in clauses (A) and (B), the Revolving Credit Commitments, including any
unused portion of the Letter of Credit Subcommitment will be reduced by
an amount equal to such retained Net Available Proceeds.
(f) Minimum Amounts. Notwithstanding any other provisions of this
Section 2.13., no mandatory prepayment pursuant to subsection (e) of this
Section 2.13. shall be required until such time as the aggregate amount subject
to recapture pursuant to such subsection equals $1,000,000, at which time such
amount shall be applied as set forth in Section 2.13. in integral multiples of
$50,000 in excess thereof.
2.14. VOLUNTARY REDUCTIONS OF COMMITMENTS
The Company shall have the right to terminate or reduce the aggregate
amount of the Commitments, including any unused portion of the Letter of Credit
Subcommitment; at any time or from time to time; provided that: (i) the Company
shall give notice of each such termination or reduction as provided in Section
4.7., which notice when given shall be irrevocable; (ii) each partial reduction
shall be in an aggregate amount at least equal to $5,000,000 or an integral
multiple of $1,000,000 in excess thereof; and (iii) in no event shall any
reduction reduce the aggregate amount of Commitments below the sum of (w) the
aggregate principal amount of the outstanding Revolving Credit Loans, (x) the
aggregate principal amount of the outstanding Bid Rate Loans, (y) the aggregate
Stated Amounts of all outstanding Letters of Credit, and (z) the aggregate
amount of all Reimbursement Obligations then outstanding.
2.15. AMOUNT LIMITATIONS.
Notwithstanding any other term of this Agreement or any other Credit
Document, at no time may (a) the aggregate principal amount of all outstanding
Revolving Credit Loans, together with the aggregate principal amount of all
outstanding Bid Rate Loans and the aggregate Stated Amounts of all outstanding
Letters of Credit and all outstanding Reimbursement Obligations, exceed the
Maximum Loan Amount at such time or (b) the aggregate principal amount of all
outstanding Bid Rate Loans exceed 50% of the Maximum Loan Amount at such time.
The amount of any Bid Rate Loan made by any Lender shall not constitute a
utilization of such Lender's Commitment. For avoidance of doubt, neither a Bid
Rate Loan which is paid with the proceeds of a Revolving Credit Loan
simultaneously with the funding of such Revolving Credit Loan nor a Revolving
-31-
<PAGE> 41
Credit Loan which is paid with the proceeds of a Bid Rate Loan simultaneously
with the funding of such Bid Rate Loan shall be deemed to be outstanding for
purposes of the first sentence of this Section.
2.16. USE OF PROCEEDS
The proceeds of the Loans shall be used by the Company for (i)
acquisitions of and Investments in Health Care Facilities as described in
Section 9.5. and (ii) for general corporate purposes.
3. LETTERS OF CREDIT.
3.1. LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, the Facing
Bank, on behalf of the Lenders, agrees to issue and amend (including, without
limitation to extend or renew) for the account of the Company for the period
from and including the Closing Date to, but excluding, the Maturity Date one or
more Letters of Credit in such form and containing such terms as may be
requested from time to time by the Company and acceptable to the Facing Bank up
to a maximum aggregate Stated Amounts of all Letters of Credit at any one time
outstanding equal to the lesser of (i) the Letter of Credit Subcommitment, or
(ii) the Aggregate Available Revolving Commitments; provided, however, that the
Facing Bank will have no obligation to issue a Letter of Credit if the issuance
thereof would conflict with any legal or regulatory restriction applicable to
the Facing Bank or any Lender as notified by such Lender before the date of
issuance of the Letter of Credit.
(b) The Letters of Credit shall be standby letters of credit required
by the Company or its Subsidiaries in the ordinary course of business.
(c) At the time of issuance, the amount and the terms and conditions of
each Letter of Credit shall be subject to approval by the Facing Bank and the
Company. In no event may the expiration date of any Letter of Credit issued
hereunder extend longer than one year from the date of issuance thereof or later
than the Maturity Date. Any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding any
other provisions thereof, it shall have a final expiration date no later than
the Maturity Date.
3.2. ISSUANCE OF THE LETTERS OF CREDIT
(a) Notice of Issuance. The Company shall give the Facing Bank and the
Agent written notice (or telephonic notice confirmed in writing) by 10:00
o'clock A.M.
-32-
<PAGE> 42
San Francisco time at least 2 Business Days prior to the requested date of
issuance of a Letter of Credit, such notice to be in substantially the form of
Exhibit D hereto (a "Letter of Credit Request"). The Company shall also execute
and deliver the Continuing Agreement and such other customary letter of credit
application forms as requested from time to time by the Facing Bank.
(b) Issuance. Provided the Company has given notice prescribed by
Section 3.2.(a) and subject to the other terms and conditions of this Agreement,
including the satisfaction of any applicable conditions precedent set forth in
Article 6., the Facing Bank shall issue the requested Letter of Credit on the
requested date of issuance as set forth in the applicable Letter of Credit
Request on behalf of the Lenders for the benefit of the stipulated beneficiary
named therein and shall deliver the original of such Letter of Credit to such
beneficiary at the address specified in the Company's notice. At the request of
the Company, the Facing Bank shall deliver a copy of each Letter of Credit to
the Company within a reasonable time after the date of issuance thereof. Upon
the written request of the Company, the Facing Bank shall deliver to the Company
a copy of any Letter of Credit proposed to be issued hereunder prior to the
issuance thereof.
(c) Reporting to Lenders. The Facing Bank shall report to the Agent
which shall report to the Lenders monthly any change in the Stated Amount of any
Letter of Credit, the aggregate Stated Amounts of all Letters of Credit then
outstanding and such other information concerning the Letters of Credit as a
Lender shall reasonably request. The Facing Bank shall, at the request of a
Lender, deliver copies of any Letter of Credit issued hereunder to such Lender.
The failure of the Facing Bank to perform its requirements under this subsection
shall not relieve the reimbursement obligation of any Lender under Section 4.9.
3.3. REIMBURSEMENT OF DRAWINGS
(a) Notice. The Facing Bank shall promptly notify the Agent of each
Drawing honored by it under any Letter of Credit (although any failure or delay
in the giving of such notice shall not diminish or impair the obligation of any
Lender to fund its Pro Rata Share of such Drawing, or diminish or impair the
Company's obligation to pay the Reimbursement Obligations in connection with
such Drawing). At such time as the Agent shall be so notified by the Facing
Bank, the Agent shall promptly notify the Company and each Lender, by telephone
or telecopy, of the amount of the Drawing and, in the case of each Lender, such
Lender's Pro Rata Share of such Drawing.
(b) Reimbursement by the Company. The Company agrees to reimburse the
Facing Bank as follows for Drawings under a Letter of Credit honored by the
Facing Bank:
(i) The Company agrees to pay to the Agent, for the account of
the Facing Bank, no later than 3:00 p.m. (San Francisco time) on the
first Business Day following the date on which the Facing Bank notifies
the Company of a Drawing in an amount equal to the amount of each such
Drawing; or
-33-
<PAGE> 43
(ii) if (A) the Company has not reimbursed the Facing Bank
pursuant to subsection (i) above and (B) the applicable conditions set
forth in Article 6. have been fulfilled and (C) the Aggregate Available
Revolving Commitments in effect at such time exceed the amount of the
Drawing to be reimbursed, the Company agrees to cause the Facing Bank
to be reimbursed with the proceeds of a Revolving Credit Loan.
(c) Reimbursement by Loans. Unless the Company notifies the Agent and
the Facing Bank to the contrary, the Company shall be deemed to have requested
that a Drawing be reimbursed with the proceeds of a Revolving Credit Loan in the
amount of such Drawing as provided in (b)(ii) above. Unless the Company complies
with the applicable notice requirements as set forth in Section 4.7., which
compliance shall not be necessary, any Revolving Credit Loan used to repay any
Reimbursement Obligation shall initially be a Base Rate Loan.
3.4. INTEREST ON OUTSTANDING REIMBURSEMENT OBLIGATIONS
All outstanding Reimbursement Obligations in respect of any Letter of
Credit shall bear interest as if such Reimbursement Obligation were a Base Rate
Loan, and shall bear interest (a) from and including the date on which the
corresponding Drawing is honored by the Facing Bank to and through the date such
Reimbursement Obligation is due and payable pursuant to Section 3.3.(b), and (b)
thereafter shall bear interest at a per annum rate equal to the Default Rate
otherwise applicable to Base Rate Loans hereunder until paid, with such interest
being due and payable on demand.
3.5. REIMBURSEMENT OBLIGATIONS ABSOLUTE
The Company agrees that any action taken or omitted to be taken by the
Facing Bank in connection with the Letter of Credit, except for such actions or
omissions as shall constitute gross negligence or willful misconduct on the part
of such Facing Bank, shall be binding on the Company as between the Company and
the Facing Bank, and shall not result in any liability of the Facing Bank to the
Company. The obligation of the Company to reimburse the Facing Bank for a
Drawing under a Letter of Credit or to repay the Lenders for advances made by
them to the Facing Bank on account of Drawings made under the Letters of Credit
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, the following circumstances:
(a) Any lack of validity or enforceability of any Credit Document;
(b) Any amendment or waiver of or consent to any departure from any or
all of the Credit Documents;
(c) Any improper use which may be made of the Letter of Credit or any
improper acts or omissions of any beneficiary or transferee of the Letter of
Credit in connection therewith;
-34-
<PAGE> 44
(d) The existence of any claim, set-off, defense or any right which the
Company may have at any time against any beneficiary or any transferee of any
Letter of Credit (or Persons for whom any such beneficiary or any such
transferee may be acting), the Agent, the Facing Bank or any Lender or any other
Person, whether in connection with a Letter of Credit, any transaction
contemplated by any Letter of Credit, this Agreement, or any other Credit
Document, or any unrelated transaction;
(e) Any statement or any other documents presented under any Letter of
Credit proving to be insufficient, forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever,
provided that such payment shall not have constituted gross negligence or
willful misconduct of the Facing Bank, although the Company shall be subrogated
to the rights of the Facing Bank with respect to any such forgery, fraud,
invalidity, insufficiency, untruth or inaccuracy;
(f) The insolvency of any Person issuing any documents in connection
with the Letter of Credit;
(g) Any breach of any agreement between the Company and any beneficiary
or transferee of any Letter of Credit;
(h) Any irregularity in the transaction with respect to which a Letter
of Credit is issued, including any fraud by the beneficiary or any transferee of
such Letter of Credit;
(i) Any errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, wireless or otherwise,
whether or not they are in code;
(j) Any act, error, neglect or default, omission, insolvency or failure
of business of any of the correspondents of the Facing Bank;
(k) Any other circumstances arising from causes beyond the control of
the Facing Bank;
(l) Payment by the Facing Bank under a Letter of Credit against
presentation of a sight draft or a certificate which does not comply with the
terms of such Letter of Credit, provided that such payment shall not have
constituted gross negligence or willful misconduct of the Facing Bank; and
(m) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, provided that such other circumstances or
happenings shall not have been the result of gross negligence or willful
misconduct of any Lender or the Agent.
3.6. INDEMNIFICATION REGARDING LETTERS OF CREDIT
The Company will indemnify and hold harmless the Agent, the Facing Bank
and each other Lender and each of their respective employees, representatives,
officers and
-35-
<PAGE> 45
directors from and against any and all claims, liabilities, obligations, losses
(other than loss of profits), damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including
reasonable attorneys' fees, but excluding taxes) which may be imposed on,
incurred by or asserted against the Agent, the Facing Bank or any such other
Lender in any way relating to or arising out of the issuance of a Letter of
Credit, except that the Company shall not be liable to the Agent, the Facing
Bank or any such Lender for any portion of such claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements resulting from the gross negligence or willful
misconduct of the Agent, the Facing Bank or such Lender, as the case may be, as
determined by a non-appealable judicial order. This Section 3.6. shall survive
termination of this Agreement.
3.7. LIMITATION OF LIABILITY OF THE FACING BANK
The Facing Bank shall not be liable for failure to collect on the
Reimbursement Obligations, or any part thereof, or for any delay in so doing.
4. OTHER CREDIT COMMITMENT PROVISIONS
4.1. FEES
(a) Arranger's, Agent's and Upfront Fees. In consideration for the
arrangement of the financial accommodations evidenced hereby and for acting as
Agent, the Company shall pay to the Agent each of those fees listed in that
certain Fee Letter dated November 21, 1997, executed by the Company and the
Agent (the "Fee Letter").
(b) Facility Fee. The Company shall pay to the Agent for the account of
each Lender a fee equal to the per annum percentage (as set forth in the
following table opposite the Company's Senior Long Term Debt Rating) of the
Commitments in effect from time to time. The amount of the Commitments shall be
determined as of each day in the quarterly period specified below without regard
to the amount of outstanding Loans, Stated Amounts of Letters of Credit or
Reimbursement Obligations but shall reflect any reductions made pursuant to
Article 2 hereof.
<TABLE>
<CAPTION>
Senior Long Term Debt Rating Effective Per Annum Facility
Fee Rate
<S> <C>
A-/A3 0.150%
BBB+/Baa1 0.200%
BBB/Baa2 0.250%
BBB-/Baa3 0.250%
less than BBB-/Baa3 or if not rated 0.375%
</TABLE>
-36-
<PAGE> 46
For purposes hereof, in the event Moody's and S&P shall assign different ratings
to the Company's Senior Long Term Debt, the median of the Applicable Margins
corresponding to such ratings shall apply. A change in any Effective Per Annum
Facility Fee Rate shall be effective as of the date of such change in rating.
Such fee will be payable for the period from the Closing Date to the first to
occur of
(i) the Maturity Date or
(ii) the date on which all Commitments have been terminated pursuant to
Sections 2.13. and 2.14. and no Letters of Credit or Reimbursement Obligations
remain outstanding,
quarterly in arrears on the last Business Day of each calendar quarter and on
the Maturity Date.
(c) Utilization Fee. If, during any fiscal quarter of the Company (or a
portion thereof) (i) the daily sum of (A) the aggregate principal amount of the
Loans and (B) the aggregate Reimbursement Obligations outstanding exceeds
$175,000,000 and (ii) both S&P and Moody's assigns the Company a Senior Long
Term Debt Rating equal to or less than BBB- and Baa3, respectively, the Company
shall pay to the Agent for the account of each Lender a fee of 0.25% per annum
of such daily sum; provided however, if only one of S&P and Moody's, but not
both, assigns the Company a Senior Long Term Debt Rating equal to or less than
BBB- and Baa3, as applicable, then the Company shall pay to the Agent for the
account of each Lender a fee of 0.125% per annum of such daily sum. Such fee
will be payable quarterly in arrears on the last Business Day of each of March,
June, September and December during the term hereof and on the Maturity Date.
(d) Bid Rate Loan Fees. The Company agrees to pay to the Agent together
with each Bid Rate Loan Acceptance an administrative fee of $1500.
(e) Letter of Credit Fees. The Company shall pay to the Agent for the
account of each Lender a per annum fee equal to the Applicable Margin for
Eurodollar Loans multiplied by the aggregate Stated Amounts of all Letters of
Credit outstanding. Such fee shall be payable during the term hereof (i) with
respect to each Letter of Credit, on its date of issue for the fiscal quarter of
the Company in which it is issued and (ii) with respect to all Letters of Credit
outstanding on the first day of any fiscal quarter of the Company, quarterly in
advance on the first day of each of January, April, July and October for the
fiscal quarter beginning on such date. For the purpose of any such quarterly
payment, the fee will be determined based upon the aggregate Stated Amounts of
the Letters of Credit outstanding on such payment date without regard to any
reductions to the Stated Amounts of the Letters of Credit outstanding occurring
during such fiscal quarter. In addition the Company shall pay to the Facing
Bank, in consideration for the issuance of the Letters of Credit, fronting,
amendment, transfer, negotiation and administrative fees,
-37-
<PAGE> 47
as determined by the Facing Bank in accordance with its then current fee
policies of general application.
4.2. EXTENSION OF MATURITY DATE
If the Company wishes to obtain an extension of the then effective
Maturity Date, the Company shall provide the Agent with a written notice to such
effect not more than 90 days and not less than 60 days prior to the then
effective Maturity Date. If no Unmatured Default or Event of Default then exists
or is continuing, the Lenders may, by unanimous vote, each Lender voting in its
sole and absolute discretion, by written notice to the Agent, the Facing Bank
and the Company, extend the Maturity Date by one year; provided that any Lender
that does not vote for any such extension may be replaced in accordance with the
terms of Section 13.7. The Lenders' failure to provide written notice of
extension to the Company by the then effective Maturity Date, shall be deemed to
be a rejection of the Company's request for an extension. Only two such
extensions to the Maturity Date will be permitted.
4.3. PAYMENTS
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement and the Notes and, except to the extent otherwise provided therein,
all payments to be made by the Company under any other Credit Document, shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Agent's Account, not later than 11:00 a.m. San Francisco
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).
(b) The Company shall, at the time of making each payment under this
Agreement or any Note, specify to the Agent the Loans, Reimbursement Obligations
or Fees to which such payment is to be applied (and in the event that it fails
to so specify, or if an Event of Default has occurred and is continuing, the
Agent may distribute such payment to the Lenders in such manner as it or the
Required Lenders may determine to be appropriate, subject to Section 4.4.).
(c) Each payment actually received by the Agent under this Agreement or
any Note for the account of a Lender shall be made available promptly to such
Lender, in immediately available funds, for account of such Lender's Applicable
Lending Office for the Loan in respect of which such payment is made.
(d) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day which is not a Business Day, such date shall be
extended to the next succeeding Business Day and interest shall be payable for
any principal so extended for the period of such extension.
-38-
<PAGE> 48
4.4. PRO RATA TREATMENT
Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Article 2. shall be made from the Lenders, each payment of
Fees under Section 4.1. shall be made for the account of the relevant Lenders,
each funding of the Letters of Credit under Article 3.1. shall be made by the
Lenders, and each termination or reduction of the amount of the Commitments
under Section 2.14. or Section 2.13. shall be applied to the respective
Commitments of the Lenders, pro rata according to the amounts of their
respective Commitments; (b) the making, Conversion and Continuation of Loans
shall be made pro rata among the Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or Revolving Credit
Loans (in the case of Conversions and Continuations of Revolving Credit Loans)
and the then-current Interest Period for each simultaneous Eurodollar Loan shall
be coterminous; (c) each payment or prepayment of principal of Revolving Credit
Loans shall be made for the account of the Lenders pro rata in accordance with
the respective unpaid principal amounts of the Revolving Credit Loans held by
the Lenders; (d) each payment of interest on Revolving Credit Loans shall be
made for the account of the Lenders pro rata in accordance with the amounts of
such interest due and payable to the respective Lenders and (e) each payment of
principal or interest on a Bid Rate Loan by the Company shall be made for
account of the Lenders which made such Bid Rate Loan pro rata in accordance with
the respective unpaid principal amounts of such Bid Rate Loan then owing to each
such Lender.
4.5. COMPUTATIONS
Interest on all Loans, Reimbursement Obligations and Fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
amounts are payable.
4.6. MINIMUM AMOUNTS
Except for Conversions or prepayments made pursuant to Section 5.4.,
(i) each borrowing of Eurodollar Loans (including a Continuation of, or
Conversion into, Eurodollar Loans) shall be in an amount at least equal to
$1,000,000 and incremental multiples of $500,000 in excess thereof, (ii) except
for Revolving Credit Loans made pursuant to Section 3.3. hereof, each borrowing
of Base Rate Loans (including a Continuation of, or Conversion into, Base Rate
Loans) shall be in an amount at least equal to $1,000,000 and integral multiples
of $500,000 in excess thereof, (iii) each borrowing of Bid Rate Loans shall be
in a minimum amount of $5,000,000 and incremental multiples of $1,000,000 in
excess thereof, (iv) each voluntary prepayment of Eurodollar Loans shall be in
an amount at least equal to $1,000,000 and incremental multiples of $500,000 in
excess thereof and (v) each voluntary prepayment of Base Rate Loans shall be in
an amount at least equal to $1,000,000 and incremental multiples of $500,000 in
excess thereof (borrowings, prepayments or Conversions of Revolving Credit Loans
into Revolving Credit Loans of different Types or, in the case of Eurodollar
Loans, having different
-39-
<PAGE> 49
Interest Periods to be deemed separate borrowings, prepayments or Conversions
for purposes of the foregoing, one for each Type or Interest Period). Anything
in this Agreement to the contrary notwithstanding, the aggregate principal
amount of Eurodollar Loans having the same Interest Period shall be at least
equal to $1,000,000 and, if any Eurodollar Loans would otherwise be in a lesser
principal amount for any period, such Revolving Credit Loans shall be Base Rate
Loans during such period.
4.7. CERTAIN NOTICES
Notwithstanding anything contained in Section 13.2. to the contrary,
notices by the Company to the Agent of borrowings (which shall be in the form of
Exhibit E-1 hereto, each a "Notice of Borrowing"), Conversions (which shall be
in the form Exhibit E-2 hereto, each a "Notice of Conversion"), Continuations
(which shall be in the form of Exhibit E-3 hereto, each a "Notice of
Continuation"), optional terminations or reductions of Commitments, and optional
prepayments of Revolving Credit Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the Agent in
writing or by telephone promptly confirmed in writing or telecopy not later than
9:00 a.m. San Francisco time on the number of Business Days prior to the date of
the relevant optional termination, reduction, borrowing, Conversion,
Continuation or prepayment or the first day of such Interest Period specified
below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Initial Borrowing on Closing Date 3
Termination or reduction of Commitments 5
Borrowing or prepayment of, or Conversions into, Base Rate Loans 0
Borrowing or prepayment of, Conversions into, Continuations
as, or duration of Interest Period for Eurodollar Loans 3
</TABLE>
Subject to Section 2.14., each such notice of optional termination or
reduction of Commitments shall specify the amount of Commitments to be
terminated or reduced. Each Notice of Borrowing, Conversion, Continuation or
optional prepayment shall specify the Revolving Credit Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 4.6.) and
Type of each Revolving Credit Loan to be borrowed, Converted, Continued or
prepaid and the date thereof (which shall be a Business Day), and each Notice of
Borrowing shall also state the purpose for which the Revolving Credit Loan shall
be used. Each such notice of the duration of an Interest Period shall specify
the Revolving Credit Loans to which such Interest Period is to relate. The Agent
shall promptly notify the Lenders of the contents of each such notice. In the
event that the Company fails to select the Type of Revolving Credit Loan, or the
duration of any Interest Period for any Eurodollar Loan, within the time period
and otherwise as provided in this
-40-
<PAGE> 50
Section 4.7., such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the
then-current Interest Period for such Revolving Credit Loan or (if outstanding
as a Base Rate Loan) will remain as, or (if not then outstanding) will be made
as, a Base Rate Loan.
The notices and procedures for Bid Rate Loans are set forth in Sections
2.4. and 2.5.
4.8. NON-RECEIPT OF FUNDS BY THE AGENT
Unless the Agent shall have received notice (which notice shall be
effective upon receipt) from a Lender prior to the date of any Revolving Credit
Loan that such Lender will not make available to the Agent such Lender's ratable
portion of such Revolving Credit Loan, the Agent may assume that such Lender has
made such portion available to the Agent on the date of such Revolving Credit
Loan in accordance with Sections 2.3. or 3.3.(c) above, and the Agent may (but
shall not be required to), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Company severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, from the date such
amount is made available to the Company until the date such amount is repaid to
the Agent, at (i) in the case of the Company, the interest rate payable at such
time under Section 2.6. with respect to such Loans and (ii) in the case of such
Lender, the Federal Funds Rate if paid within 2 Business Days from the date such
amount is due and the Base Rate plus 2% if paid thereafter.
4.9. PARTICIPATIONS OF LETTER OF CREDIT LENDERS
Immediately upon the issuance or amendment by the Facing Bank of any
Letter of Credit in accordance with Article 3.1., each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from the Facing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Lender's Pro Rata Share of the liability of the Facing Bank
with respect to such Letter of Credit (including, without limitation, all
obligations of the Company with respect thereto, other than amounts owing to the
Facing Bank consisting of fees owing to the Facing Bank) and all Reimbursement
Obligations. Upon any failure of the Company to pay any Reimbursement Obligation
when due and owing, or to reimburse the Facing Bank for any Drawing pursuant to
Section 3.3., or if the Facing Bank is required at any time to return to the
Company or to a trustee, receiver, liquidator, custodian or other Person any
portion of any payment by the Company of any reimbursement of any Letter of
Credit or any other Reimbursement Obligation, each Lender severally agrees that
it shall be unconditionally and irrevocably liable, without regard to the
occurrence of any Unmatured Default or Event of Default or any condition
precedent whatsoever, to the extent of such Lender's Pro Rata Share, to
reimburse the Facing Bank on demand in immediately available funds in Dollars
for the amount of each such recapture, Drawing or other Reimbursement
Obligation. Each Lender (except the Facing Bank to the extent it is also a
Lender), shall,
-41-
<PAGE> 51
not later than the Business Day it receives notice from the Facing Bank to such
effect, if such notice is received before 11:00 a.m. (San Francisco time), or
not later than the following Business Day, if such notice is received after such
time, pay to the Facing Bank an amount equal to its Pro Rata Share of the amount
of such Reimbursement Obligation, together with interest on such amount accrued
from the date payment of such amount was paid by the Facing Bank to the date of
such payment by the Lender at a rate per annum equal to (x) from the date of
such amount was made by the Facing Bank to the date two Business Days after
payment by such Lender is due hereunder, the Federal Funds Rate for each such
day and (y) from the date two Business Days after such payment is due from such
Lender to the date such payment is made by such Lender the Base Rate in effect
for each such day. Each such Lender shall thereafter be entitled to receive its
Pro Rata Share of each payment received on the relevant Drawing or other
Reimbursement Obligation and of interest paid thereon, with the Facing Bank
retaining its Pro Rata Share thereof as a Lender hereunder. The failure of any
Lender to honor its obligations hereunder shall not relieve any other Lender of
its duty to comply with this Section.
4.10. SHARING OF PAYMENTS. ETC.
(a) The Company agrees that, upon the occurrence and during the
continuation of an Event of Default, in addition to (and without limitation of)
any right of set-off, bankers' lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option, to offset balances held by it for
the account of any of the Company and its Subsidiaries at any of its offices, in
Dollars or in any other currency, against any principal of or interest on any of
such Lender's Loans and Pro Rata Share of Reimbursement Obligations, or any
other amount payable to such Lender hereunder (regardless of whether such
balances are then due to the Company), in which case it shall promptly notify
the Company and the Agent thereof, provided that such Lender's failure to give
such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from the Company or any of its
Subsidiaries payment of any principal of or interest on any Loan owing to it or
on its Pro Rata Share of any Reimbursement Obligation or payment of any other
amount under this Agreement or any Note held by it or any other Credit Document
through the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Agent as provided herein) and,
as a result of such payment, such Lender shall have received a greater
percentage of the principal, interest or other amounts then due hereunder by the
Company to such Lender than the percentage received by any other Lenders, it
shall promptly purchase from such other Lenders participations in (or, if and to
the extent specified by such Lender, direct interests in) the Loans or Pro Rata
Share of Reimbursement Obligations or other amounts owing to such other Lenders
(or in interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
the Lenders shall share the benefit of such excess payment (net of any expenses
which may be incurred by such Lender in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid princi-
-42-
<PAGE> 52
pal and/or interest on the Loans or other amounts (as the case may be) owing to
each of the Lenders. To such end, all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. Notwithstanding the
foregoing, to the extent that the Facing Bank has not been reimbursed by any
Lender or Lenders with respect to Drawing as required by Section 3.6., the
Facing Bank is entitled to receive the entire amount of such non-participating
Lenders' Pro Rata Share of any payment referred to in the first sentence of this
subsection (b).
(c) The Company agrees that any Lender purchasing such a participation
(or direct interest) may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.10. applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.10. to share in the
benefits of any recovery on such secured claim.
5. ADDITIONAL COSTS; YIELD PROTECTION; CAPITAL ADEQUACY; TAXES
5.1. ADDITIONAL COSTS
(a) Events Entitling a Lender to Receive Compensation. The Company
shall pay directly to each Lender (through the Agent) from time to time such
amounts as such Lender may determine in good faith to be necessary to compensate
it for any costs which such Lender determines are attributable to its making or
maintaining any Eurodollar Loans or its obligation to make any Eurodollar Loans
hereunder, or any reduction in any amount receivable by such Lender hereunder in
respect of any of such Eurodollar Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs") resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Lender
under this Agreement or its Note in respect of any of such Eurodollar
Loans (other than taxes imposed on or measured by the overall net
income of such Lender or of its Applicable Lending Office for any of
such Loans by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
-43-
<PAGE> 53
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including any of such Loans or any
deposits referred to in the definition of Eurodollar Base Rate in this
Agreement), or any commitment of such Lender (including the
Commitment(s) of such Lender hereunder); or
(iii) imposes any other condition affecting the interests of any Lender under
this Agreement or its Notes (or any of such extensions of credit or
liabilities) or its Commitment.
If any Lender requests compensation from the Company under this Section
5.1.(a), the Company may, by notice to such Lender (with a copy to the Agent),
(i) suspend the obligation of such Lender to make or Continue Eurodollar Loans,
or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.4. shall be applicable) or (ii) require such Lender to designate
another of its existing facilities as the Applicable Lending Office for making
Eurodollar Loans or take other reasonable action if such designation or other
action would avoid the need for, or reduce the amount of, compensation pursuant
to this Section 5.1.(a) and would not in such Lender's good faith judgment be
disadvantageous to such Lender.
(b) Right of a Lender to Terminate Obligation to Make Eurodollar Loans.
Without limiting the effect of the provisions of Section 5.1.(a), in the event
that, by reason of any Regulatory Change, any Lender either (i) incurs
Additional Costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender which
includes deposits by reference to which the interest rate on Eurodollar Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of such Lender which includes Eurodollar Loans or (ii) becomes
subject to restrictions on the amount of any such category of liabilities or
assets which it may hold, then, if such Lender so elects (through the Agent) by
notice to the Company, the obligation of such Lender to make or Continue, or to
Convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended
until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 5.4. shall be applicable). Notwithstanding the foregoing,
the obligation of any Lender to make or Continue, or Convert Base Rate Loans
into, Eurodollar Loans shall not be affected by any other Lender's suspension of
its obligations as set forth in this Section 5.1.(a).
(c) Determination of Amount of Compensation; Capital Adequacy. Without
limiting the effect of the foregoing provisions of this Section 5.1. (but
without duplication), the Company shall pay directly to each Lender (through the
Agent) from time to time on request such amounts as such Lender may determine in
good faith to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any increased
costs which it determines are attributable to the maintenance by such Lender (or
any Applicable Lending Office or such bank holding
-44-
<PAGE> 54
company) of capital in respect of its Commitment or Loans pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law) of any court or governmental or monetary authority (i)
following any Regulatory Change or (ii) implementing any risk-based capital
guideline or requirement (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) heretofore or hereafter
issued by any government or governmental or supervisory authority implementing
at the national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) and the Final
Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency
(12 CFR Part 3, Appendix A)), such compensation to include, without limitation,
an amount equal to any reduction of the rate of return on assets or equity of
such Lender (or any Applicable Lending Office or such bank holding company) to a
level below that which such Lender (or any Applicable Lending Office or such
bank holding company) could have achieved but for such law, regulation,
interpretation, directive or request. For purposes of this Section 5.1.(c),
"Basle Accord" shall mean the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement thereof.
(d) Notice of the Occurrence of an Event Entitling a Lender to
Compensation. Each Lender (through the Agent) shall notify the Company of any
event occurring after the date of this Agreement that will entitle such Lender
to compensation under Section 5.1.(a) or (c) as promptly as practicable, but in
any event within 90 days after such Lender obtains actual knowledge thereof;
provided, however, that if any Lender fails to give such notice within 90 days
after it obtains actual knowledge of such an event, such Lender shall, with
respect to compensation payable pursuant to this Section 5.1. in respect of any
costs resulting from such event, only be entitled to payment under this Section
5.1. for costs incurred from and after the date 90 days prior to the date that
such Lender does give such notice. Each Lender (through the Agent) will furnish
to the Company a certificate setting forth the basis and amount of each request
by such Lender for compensation under Section 5.1.(a) or (c). Determinations and
allocations by any Lender for purposes of this Section 5.1. of the effect of any
Regulatory Change pursuant to Section 5.1.(a) or (b), of the effect of capital
maintained pursuant to Section 5.1.(c) on its costs or rate of return of
maintaining Loans or its obligation to make Loans or on amounts receivable by it
in respect of Loans, and of the amounts required to compensate such Lender under
this Section 5.1., shall be made in a manner consistent with that applied by
such Lender in similar contexts and shall be conclusive in the absence of
manifest error.
5.2. LIMITATION ON TYPES OF REVOLVING CREDIT LOANS
Anything herein to the contrary notwithstanding, if on or prior to the
determination of any Eurodollar Base Rate for any Interest Period:
-45-
<PAGE> 55
(a) the Agent determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Base Rate" are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or
(b) if the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of Eurodollar Base Rate in this Agreement upon the basis of
which the rate of interest for Eurodollar Loans for such Interest Period is to
be determined are not likely to adequately cover the cost to such Lenders of
making or maintaining Eurodollar Loans for such Interest Period;
then the Agent shall give the Company and each Lender notice thereof, and so
long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or
to Convert Base Rate Loans into Eurodollar Loans, and the Company shall, on the
last day(s) of the then-current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Eurodollar Loans or Convert such Eurodollar
Loans into Base Rate Loans in accordance with Section 2.2.
5.3. ILLEGALITY
Notwithstanding any other provision of this Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
honor its obligation to make or maintain Eurodollar Loans hereunder, then such
Lender (through the Agent) shall promptly notify the Company thereof and such
Lender's obligation to make or Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended until such time as such Lender may again
make and maintain Eurodollar Loans (in which case the provisions of Section 5.4.
shall be applicable). Notwithstanding the foregoing, the obligation of any
Lender to make, Continue or Convert Base Rate Loans into Eurodollar Loans shall
not be affected by any other Lender's suspension of its obligations as set forth
in this Section 5.3.
5.4. TREATMENT OF AFFECTED LOANS
If the obligation of any Lender to make, Continue or Convert Base Rate
Loans into Eurodollar Loans shall be suspended pursuant to Sections 5.1. or
5.3., such Lender's Eurodollar Loans shall be automatically Converted into Base
Rate Loans on the last day(s) of the then-current Interest Period(s) for such
Eurodollar Loans (or, in the case of a Conversion required by Sections 5.1.(b)
or 5.3., on such earlier date as such Lender may specify to the Company with a
copy to the Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Sections 5.1. or 5.3. which gave rise
to such Conversion no longer exist:
-46-
<PAGE> 56
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its Base
Rate Loans; and
(b) all Revolving Credit Loans which would otherwise be made or
Continued by such Lender as Eurodollar Loans shall be made or Continued instead
as Base Rate Loans and all Base Rate Loans of such Lender which would otherwise
be Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Company with a copy to the Agent
that the circumstances specified in Sections 5.1. or 5.3. which gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 5.4. no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Lender's
Base Rate Loans shall be automatically Converted (and the outstanding Eurodollar
Loans extended by the remaining Lenders proportionately reduced), on the first
day(s) of the next succeeding Interest Period(s) (if any) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Revolving Credit Loans held by the Lenders holding Eurodollar Loans (if any)
commencing on the first day(s) of such Interest Period(s) and by such Lender are
held pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.
5.5. COMPENSATION
The Company shall pay to the Agent for account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient to compensate it for any loss, cost, or expense which such Lender
determines in good faith is attributable to:
(a) any payment, prepayment or Conversion of a Eurodollar Loan or a Bid
Rate Loan, as applicable (whether voluntary or mandatory) made by such Lender
for any reason (including, without limitation, the acceleration of the Loans
pursuant to Article 11.) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in Article
6. to be satisfied) to borrow a Eurodollar Loan or Bid Rate Loan from such
Lender on the date for such borrowing specified in the relevant Notice of
Borrowing given pursuant to Section 2.3.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then-current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date
-47-
<PAGE> 57
specified for such borrowing) at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest which would otherwise have
accrued on such principal amount at a rate per annum equal to the interest rate
such Lender would have bid in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and with maturities
comparable to such period (as determined in good faith by such Lender).
5.6. TAXES
(a) Any and all payments by the Company hereunder shall be paid (except
to the extent required by law) 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 franchise
taxes and taxes based on net income imposed on the Agent or any Lender by the
United States or the jurisdiction (or any political subdivision thereof) in
which the Agent or such Lender, as the case may be, has its principal office or
Applicable Lending Office (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Company shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to the Lenders or the Agent (i) the sum
payable by the Company shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 5.6.) such Lender or the Agent (as the case may
be) shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, and (iii) the
Company shall pay the full amount deducted to the relevant taxing authority or
other Governmental Agency in accordance with applicable law.
(b) In addition, the Company 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 from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 5.6.) paid by such Lender
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made within five Business Days after the date of
receipt of a written demand therefor from such Lender or the Agent, as the case
may be.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Company in respect of any payment to any Lender or the
Agent, the Company will furnish to the Agent, at its address referred to in
Section 13.2., the original or a certified copy of a receipt evidencing payment
thereof.
-48-
<PAGE> 58
(e) Any Lender or the Agent, as the case may be, claiming any
additional amounts payable pursuant to this Section 5.6. shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested by the Company if the making of
such a filing would avoid the need for or reduce the amount of any such
additional amounts which may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such Lender.
(f) Each Lender that is incorporated or organized under the laws of any
jurisdiction other than the United States or any State thereof agrees that, on
or prior to the date the initial payment is due to be made to it hereunder, it
will furnish to the Agent:
(i) two valid, duly completed copies of Internal Revenue
Service Form 4224 or Internal Revenue Form 1001 or successor applicable
form, as the case may be, certifying in each case that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any federal income taxes, and
(ii) a valid, duly completed Internal Revenue Service Form W-8
or W-9 or successor applicable form, as the case may be, to establish
an exemption from United States backup withholding tax.
Each Lender which so delivers to the Agent a Form 1001 or 4224 and Form W-8 or
W-9 (or successor applicable forms) agrees to deliver to the Agent updated
forms, or other manner of certification acceptable to the Agent, on or before
the date that any such form expires or becomes obsolete or otherwise is required
to be resubmitted as a condition to obtaining an exemption from withholding tax,
or after the occurrence of any event requiring a change in the most recent form
previously delivered by it, and such extensions or renewals thereof as may
reasonably be requested by the Agent, unless in any such case an event
(including any changes in any law) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Agent
that it is not capable of receiving payments without any deduction or
withholding of federal income tax.
6. CONDITIONS PRECEDENT
6.1. INITIAL EXTENSIONS OF CREDIT
The obligation of any Lender to make its initial extension of credit
hereunder or the obligations of the Facing Bank to issue any Letter of Credit
hereunder is subject to the condition precedent that the Company deliver to the
Agent each of the following, each of which shall be satisfactory in form and
substance to the Agent and the Agent's counsel:
-49-
<PAGE> 59
(a) Organizational Documents. Each of the following documents, each
certified as indicated below:
(i) a copy of the articles of incorporation, articles of
organization, certificate of limited partnership or other comparable
organizational instrument (if any) of each of the Company and the
Subsidiary Guarantors which have not previously delivered such
organizational instruments, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as of a recent date from such Secretary of State as to the good
standing of the Company and the Subsidiary Guarantors;
(ii) a certificate of the secretary of each of the Company and
each Subsidiary Guarantor, dated the Closing Date and certifying (A)
that such entity's by-laws, limited partnership agreement, operating
agreement or other comparable document have not been amended since the
date of certification thereof under the Existing Credit Agreement, or
if they have been amended or have not been previously delivered, that
attached thereto is a true and complete copy of such document, as
amended, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by their respective boards of directors
authorizing the execution, delivery and performance of (to the extent
it is a party thereto) this Agreement, the Notes, and each of the other
Credit Documents and the extensions of credit hereunder, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that such entity's articles of
incorporation, articles of organization, certificate of limited
partnership or other comparable organizational instrument (if any) has
not been amended since, (I) in the case of the Company or a Subsidiary
Guarantor which has not previously delivered any such organizational
instrument, the date of the certification thereto furnished pursuant to
clause (i) above and (II) in the case of each other Subsidiary
Guarantor, as of the date of certification thereof under the Existing
Credit Agreement or if such charter has been amended, that attached
thereto is a true and complete copy of such amendment, and (D) as to
the incumbency and specimen signature of each of their respective
officers executing this Agreement, the Notes, and each of the Credit
Documents to the extent it is a party thereto and each other document
to be delivered by the Company and the Subsidiary Guarantors from time
to time in connection therewith (and the Agent and each Lender may
conclusively rely on such certificate until the Agent receives notice
in writing from the Company to the contrary); and
(iii) a certificate of another officer of each of the Company
and the Subsidiary Guarantors as to the incumbency and specimen
signature of the secretary of each such corporation.
(b) Notes. The Notes, duly completed and executed by the Company.
(c) Subsidiary Guaranty. The Subsidiary Guaranty, duly executed by each
Subsidiary Guarantor.
-50-
<PAGE> 60
(d) Opinion of Counsel. The opinion of Davis, Graham & Stubbs, L.L.P.,
counsel to the Company and the Subsidiary Guarantors, substantially in the form
of Exhibit G hereto.
(e) Historical Financial Statements. The following financial statements
in form and substance satisfactory to the Lenders as reported for the following
periods on forms 10-k and 10-Q (including all notes to such financial statements
and management's discussion and analysis of such financial statements): audited
consolidated balance sheets and statements of operations and cash flows of the
Company and its Subsidiaries for the fiscal years ended December 31, 1995 and
1996 and unaudited consolidated balance sheets and statements of operations and
cash flows of the Company and its Subsidiaries for the nine months ended
September 30, 1997 (collectively, the "Historical Financial Statements").
(f) Projected Financial Statements. Projected financial statements of
the Company and its Subsidiaries for the period from January 1, 1998 through
December 31, 2000 in form and substance satisfactory to Agent.
(g) Fees, Expenses and Other Consideration. The Agent, the Facing Bank
and each of the Lenders shall have received all amounts payable by the Company
in respect of Fees and expenses, including attorney's fees, to the extent due
and payable on or prior to the making of the initial Loans hereunder, and the
Agent, the Facing Bank and each of the Lenders shall have received all other
consideration due from the Company and its Subsidiaries in connection therewith.
(h) Officer's Certificate. A Certificate executed by the chief
executive officer and chief financial officer of the Company, stating that: (a)
on such date, and after giving effect to the transaction contemplated hereby, no
Unmatured Default or Event of Default has occurred and is continuing; (b) no
material adverse change in the financial condition or operations of the business
of the Company or any of its Subsidiaries or the projected cash flow of the
Company and its Subsidiaries has occurred; (c) the representations and
warranties set forth in Article 7. are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date; and (d) the Company on such date is in compliance with all the terms and
provisions set forth in this Agreement on its part to be observed and performed.
(i) Compliance Certificate. A Compliance Certificate (as hereinafter
defined) executed by the chief financial officer of the Company.
(j) Consents. Copies of all consents, approvals, authorizations,
registrations or filings required to be made or obtained by the Company and its
Subsidiaries in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(k) Accountant's Letter. A letter authorizing the independent certified
public accountants of the Company to communicate with the Agent and the Lenders.
-51-
<PAGE> 61
(l) Continuing Agreement. A fully executed copy of the Continuing
Agreement.
(m) Termination of Existing Credit Agreement. An executed copy of the
letter terminating the Existing Credit Agreement and commitments (as defined in
the Existing Credit Agreement) thereunder effective as of the Closing Date.
Notwithstanding anything set forth in Section 4.7. of the Existing Credit
Agreement to the contrary, the delivery of such letter shall constitute
sufficient notice of such termination.
(n) Other Documents. The Agent shall have received such other documents
as the Agent or any Lender or counsel to the Lenders may reasonably request.
6.2. INITIAL AND SUBSEQUENT EXTENSIONS OF CREDIT
The obligation of each Lender to make any Loan (including the initial
Loan) or the obligation of the Facing Bank to issue any Letter of Credit
hereunder is subject to the further conditions precedent that, both immediately
prior to such Loan, or the issuance of such Letter of Credit, and also after
giving effect thereto:
(a) no Unmatured Default or Event of Default shall have occurred and be
continuing;
(b) the representations and warranties made by the Company and its
Subsidiaries in Article 7. and by each party in each of the other Credit
Documents shall be, in accordance with Section 13.9.(b) hereof, true, complete
and correct in all material respects on and as of the date of the making of such
extension of credit with the same force and effect as if made on and as of such
date (or, in the case of any such representation and warranty made only as of a
particular date, as of such particular date);
(c) the Agent shall have timely received a duly executed Notice of
Borrowing, Letter of Credit Request or Bid Rate Loan Request, as the case may
be.
Each Notice of Borrowing, Notice of Conversion, Notice of Continuation,
Bid Rate Loan Request and Letter of Credit Request hereunder shall constitute a
certification by the Company and each of its Subsidiaries to the effect set
forth in subsections (a) and (b) above (both as of the date of such notice and
as of the date of such extension of credit).
7. REPRESENTATIONS AND WARRANTIES
The Company, on behalf of itself and each of its Subsidiaries,
represents and warrants to the Agent, the Facing Bank and the Lenders that:
-52-
<PAGE> 62
7.1. EXISTENCE
Each of the Company and the Subsidiary Guarantors (a) is a corporation,
limited partnership, limited liability company or other legal entity duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite power, and has all
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be conducted
and to consummate the transactions contemplated by the Credit Documents; and (c)
is qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect.
7.2. AUTHORIZATION; NO CONFLICT
The execution, delivery and performance by the Company and the
Subsidiary Guarantors of each of the Credit Documents (to the extent it is a
party thereto) (a) have been duly authorized by all requisite action on the part
of each of the Company and the Subsidiary Guarantors and (b) will not (i)
violate any provision of law, statute, rule or regulation, any order of any
Governmental Agency applicable to the Company or any Subsidiary Guarantor or any
provision of the organizational documents of the Company or the Subsidiary
Guarantors, (ii) violate, conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default or an event of default
under any indenture, agreement, mortgage, deed of trust, note, lease, contract
or other instrument to which the Company or a Subsidiary Guarantor is a party or
by which the Company or a Subsidiary Guarantor or any of its Property is or may
be bound, or (iii) result in the creation or imposition of any Lien upon any
Property or assets of any of the Company and the Subsidiary Guarantors.
7.3. ENFORCEABILITY
This Agreement and each other Credit Document has been duly executed
and delivered by the Company and each Subsidiary Guarantor (to the extent it is
a party thereto) and constitute the legal, valid and binding obligations of the
Company and each such Subsidiary Guarantor, as the case may be, enforceable
against the Company or such Subsidiary Guarantor in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
7.4. APPROVALS
No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Agency are necessary for the execution,
delivery or performance by the
-53-
<PAGE> 63
Company and each Subsidiary Guarantor of the Credit Documents to which it is a
party or for the validity or enforceability thereof, except for such
authorizations, approvals, consents, filings or registrations as shall have been
obtained and set forth on Schedule 7.4.
7.5. FINANCIAL CONDITION
The Historical Financial Statements are complete and correct in all
material respects and fairly present the financial condition and results of
operations of the Company and its consolidated Subsidiaries as of and for the
periods covered thereby. Since December 31, 1996, there has been no material
adverse change in the business, Property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of the
Company and its Subsidiaries.
7.6. LITIGATION
Except as set forth on Schedule 7.6 there are no actions, suits or
proceedings at law or in equity by or before any Governmental Agency now pending
or, to the best knowledge of the Company or any Subsidiary, threatened against
or affecting the Company or any Subsidiary or its respective business, Property
or rights (i) which involve any Credit Document or (ii) which, if adversely
determined would, individually or in the aggregate, result in a Material Adverse
Effect. There exists no judgment, order, injunction or other restraint issued or
filed which is material to the Company or any Subsidiary or its business,
Property or rights.
7.7. FEDERAL RESERVE REGULATIONS
None of the extensions of credit to be provided hereunder will be used
in violation of Regulations G, T, U or X. Neither the Company nor any Subsidiary
is engaged in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying Margin Stock. No part
of the proceeds of any extension of credit hereunder, whether directly or
indirectly, and whether immediately, incidentally or ultimately, will be used
(i) to purchase or carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the Regulations
of the Board of Governors of the Federal Reserve System, including Regulations
G, T, U or X. As used herein, the term "Margin Stock" shall mean margin stock
within the meaning of Regulations G, T, U and X.
7.8. ERISA
(a) Neither the Company nor any Subsidiary maintains or contributes to
any Employee Benefit Plan or Multiemployer Plan other than those identified on
Schedule 7.8.
-54-
<PAGE> 64
(b) The Company and each Subsidiary are in compliance in all material
respects with all applicable provisions of ERISA and the Code with respect to
all Employee Benefit Plans. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such Plan has been
determined to be exempt from federal income tax under Section 501(a) of the
Code. The actuarial present value of all accumulated benefit obligations under
each Plan, as disclosed in the most recent actuarial report with respect to such
Plan, do not exceed the fair market value of the assets of such Plan. No
material liability has been incurred by the Company or any Subsidiary or any of
their ERISA Affiliates which remains unsatisfied for any taxes, penalties or
other amount (other than contributions in the ordinary course) with respect to
any Employee Benefit Plan or any Multiemployer Plan, and to the best knowledge
of the Company no such material liability is expected to be incurred.
(c) Neither the Company nor any Subsidiary has: (i) engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid; (iii) failed to make a required contribution or
payment to a Multiemployer Plan; or (iv) failed to make a required installment
or other required payment under Section 412 of the Code.
(d) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan or Multiemployer Plan maintained or contributed to by the
Company or any Subsidiary.
(e) No material proceeding, claim (other than routine claims for
benefits), lawsuit and/or investigation is existing or, to the Company's
knowledge, threatened concerning or involving any Employee Benefit Plan or
Multiemployer Plan maintained or contributed to by the Company or any
Subsidiary.
7.9. TAXES
(a) The Company and each Subsidiary have filed all federal income tax
returns and all other tax returns and reports, domestic and foreign, required to
be filed by it and has paid all taxes, assessments, fees and other governmental
charges payable by it which have become due, other than those not yet
delinquent. All such returns are true and correct in all material respects. The
Company and each Subsidiary have paid or, in the case of taxes which are not yet
due and payable, has provided adequate reserves for the payment of, all federal,
state and foreign taxes applicable for all prior fiscal years and for the
current fiscal year to the date hereof. To the best knowledge of the Company and
each Subsidiary, there is no proposed tax assessment against the Company or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect.
(b) No United States Federal income tax returns of the "affiliated
group" (as defined in the Code) of which the Company is a member are currently
being audited by a
-55-
<PAGE> 65
Governmental Authority. The members of such affiliated group have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by any of them. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Company, adequate.
(c) The Company was organized to be and has been and is being operated
in accordance with the rules for qualification as a REIT under the provisions of
the Code and presently qualifies as a REIT under the Code.
(d) Neither the Company nor any of the Subsidiary Guarantors has
incurred any liability for excise taxes pursuant to Section 4981 of the Code.
7.10. INVESTMENT COMPANY ACT
Neither the Company nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
7.11. PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Company nor any Subsidiary is a "holding company" or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
7.12. MATERIAL AGREEMENTS
Other than this Agreement and the other Credit Documents, and except as
set forth on Schedule 7.12., neither the Company nor any Subsidiary is a party
to or otherwise bound or affected by (a) any credit agreement, loan agreement,
indenture, purchase agreement, guarantee or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or commitment
for any extension of credit) to, or guarantee by, the Company or any Subsidiary,
or (b) any Material Contract, or (c) any collective bargaining agreement,
management agreement, employment agreement or consulting agreement. Neither the
Company nor any Subsidiary is a party to any agreement or instrument or subject
to any corporate restriction that has resulted or could reasonably be expected
to result in a Material Adverse Effect. The representations and warranties in
subsections (b) and (c) of the first sentence of this Section 7.12. are made as
of the Closing Date only.
-56-
<PAGE> 66
7.13. ENVIRONMENTAL AND SAFETY MATTERS
Except as set forth on Schedule 7.13. hereto:
(a) The Company and each Subsidiary have obtained all permits, licenses
and other authorizations which are required to be obtained by them under
Environmental and Safety Laws (collectively "Permits").
(b) The Company and each Subsidiary have complied and are in compliance
with the terms and conditions of all Permits and with all Environmental and
Safety Laws which are applicable to the Company or any Subsidiary.
(c) With respect to the Company and each Subsidiary, no notice,
notification, demand, request for information, citation, summons or order has
been issued and delivered to the Company or any Subsidiary, no complaint has
been filed and served on the Company or any Subsidiary, no penalty has been
assessed and no investigation is pending against the Company or any Subsidiary
of which the Company has knowledge, or, to the Company's best knowledge,
threatened by any Person with respect to any alleged failure to obtain any
Permits or any violation of any Environmental and Safety Laws, or with respect
to the generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release or threatened Release, of any Hazardous Materials.
(d) No Property or facility now or previously owned or operated by the
Company and each Subsidiary has been or is presently operated in a manner which
requires permitting as a hazardous waste treatment, storage or disposal facility
for purposes of RCRA or any analogous state law.
(e) None of the following is presently in violation of any applicable
Environmental and Safety Laws at any Property or facility now or previously
owned or operated by the Company or any Subsidiary: (i) polychlorinated
biphenyls contained in electrical or other equipment; (ii) asbestos-containing
insulation or building material; or (iii) active or inactive underground storage
tanks.
(f) No Hazardous Materials have been released into the environment at
or from any Property or facility now or previously owned or operated by the
Company or any Subsidiary so as to give rise to any present or future material
liability or obligation under any Environmental and Safety Laws.
(g) Neither the Company nor its Subsidiaries have transported or
arranged for the transportation of any Hazardous Material to any location which
is on the CERCLA National Priorities List (or proposed for such listing), the
CERCLIS list or any similar state list or which is the subject of federal, state
or local enforcement actions or other investigations which may lead to claims
against the Company or any Subsidiary under any Environmental and Safety Laws.
-57-
<PAGE> 67
(h) No oral or written notification of a Release of a Hazardous
Material has been made by or on behalf of the Company or any Subsidiary and no
Property or facility now or previously owned or operated by the Company or any
Subsidiary is on the CERCLA National Priorities List (or proposed for such
listing), the CERCLIS list or any similar state list.
(i) No Liens have arisen under or pursuant to any Environmental and
Safety Laws on any Property or facility now or previously owned or operated by
the Company or any Subsidiary, no governmental actions have been taken or are in
process which could subject any such Property or facility to such Liens, and
neither the Company nor its Subsidiaries have been required to place any notice
or restriction relating to the presence of Hazardous Materials in any deed to
such Property or facility.
(j) To the Company's best knowledge, there have been no environmental
investigations, studies, audits, tests, reviews or other analyses of any
Property or facility now or previously owned or operated by the Company or any
Subsidiary which have not been provided to the Lenders.
(k) Neither the Company nor its Subsidiaries have assumed or succeeded
to by agreement or, to the best knowledge of the Company and each Subsidiary,
otherwise become liable (contingently or otherwise) for the obligations of any
other Person pursuant to Environmental and Safety Laws, by operation of law or
otherwise.
(l) Without limiting the generality of the foregoing, to the best
knowledge of the Company and each Subsidiary, there are no other facts, events
or conditions relating to the past or present operations, properties or
facilities of the Company or any Subsidiary which may give rise to any liability
under any Environmental and Safety Laws.
7.14. SUBSIDIARIES
Except as set forth on Schedule 7.14., (a) the Company has no
Subsidiaries other than Permitted Subsidiaries and (b) all Subsidiaries of the
Company are Subsidiary Guarantors.
7.15. COMPLIANCE WITH LAW
The Company and each Subsidiary are in compliance with all applicable
laws, rules, regulations and orders of, and all applicable restrictions imposed
by, all Governmental Agencies in respect of the conduct of their respective
businesses and the ownership of their respective properties (including
applicable laws, rules, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliance as would not,
individually or in the aggregate, have a Material Adverse Effect.
-58-
<PAGE> 68
7.16. TITLE TO PROPERTIES
The Company and each Subsidiary have good, indefeasible and insurable
title to, or valid leasehold interests in, all its real properties and good
title to its other assets, free and clear of all Liens other than Permitted
Liens.
7.17. FINANCIAL CONDITION
The Company and its Subsidiaries are not entering into the arrangements
contemplated by this Agreement and the other Credit Documents with actual intent
to hinder, delay or defraud either present or future creditors. On and as of the
Closing Date on a pro forma basis after giving effect to the transactions
contemplated by the Credit Documents and to all debts incurred or to be created
in connection herewith and on the date of each Credit Event:
(a) the present fair salable value of the assets of the Company and
each Subsidiary, respectively, (on a going concern basis) will exceed the
probable liability of the Company and each Subsidiary on its respective debts
(including its contingent obligations);
(b) neither the Company nor any Subsidiary has incurred, nor does it
intend to or believe that it will incur, debts (including contingent
obligations) beyond its ability to pay such debts as such debts mature (taking
into account the timing and amounts of cash to be received from any source, and
of amounts to be payable on or in respect of debts); and the amount of cash
available to the Company and each Subsidiary after taking into account all other
anticipated uses of funds is anticipated to be sufficient to pay all such
amounts on or in respect of its respective debts, when such amounts are required
to be paid; and
(c) the Company and each Subsidiary will have sufficient capital with
which to conduct their respective present and proposed businesses and the
Property of the Company or such Subsidiary does not constitute unreasonably
small capital with which to conduct their respective present or proposed
business.
For purposes of this Section 7.17. "debt" means any liability on a (i)
right to payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured; or (ii) right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such a right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
-59-
<PAGE> 69
7.18. FULL DISCLOSURE
No representation or warranty contained in this Agreement or in any
other document furnished from time to time pursuant to the terms of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not misleading in any material respect as of the date made or
deemed to be made. Except as may be set forth herein, there is no fact known to
the Company or any Subsidiary which has had, or is reasonably expected to have,
a Material Adverse Effect.
7.19. INSURANCE
The Company and each Subsidiary currently maintain or cause their
respective lessees to maintain insurance with respect to their respective
properties and business, with financially sound and reputable insurers, having
coverages against losses or damages of the kinds customarily insured against by
reputable companies in the same or similar businesses, such insurance being in
amounts no less than those amounts which are customary for such companies under
similar circumstances. The Company, on its behalf and on behalf of its
Subsidiaries, has paid or caused their respective lessees to pay all material
amounts of insurance premiums now due and owing with respect to such insurance
policies and coverages, and such policies and coverages are in full force and
effect.
7.20. NECESSARY AUTHORIZATIONS AND PERMITS
To the best of the Company's knowledge, after due diligence, inquiry
and investigation, the Company and each Subsidiary have secured all Necessary
Authorizations, except as the failure to have any such Necessary Authorizations
would not have a Material Adverse Effect. As used herein, the term "Necessary
Authorizations" shall mean all authorizations, consents, approvals, permits,
licenses and exemptions of, filings and registrations with, and reports to, any
Governmental Agency, which are necessary or required for the lawful ownership,
leasing or operation of any properties or assets owned, leased or operated by
the Company.
7.21. NOT PROHIBITED TRANSACTIONS
The execution, delivery and performance of this Agreement, and the
borrowing and repayment of amounts hereunder, do not and will not constitute
"prohibited transactions" under ERISA or the Code.
7.22. NO DEFAULT
No Unmatured Default or Event of Default has occurred and is
continuing.
-60-
<PAGE> 70
7.23. CUSTOMERS OF THE COMPANY AND ITS SUBSIDIARIES
To the Company's knowledge, no Person which leases any Property from
the Company or a Subsidiary Guarantor or in which the Company or any Subsidiary
Guarantor has made an Investment (excluding any such Person which is a
Wholly-Owned Subsidiary) has since December 31, 1996, except as reflected in the
Historical Financial Statements experienced any event, circumstance or condition
that, individually or when aggregated with all other similar events,
circumstances or conditions, could reasonably be expected to have a material
adverse effect on the business, Property, assets, liabilities, condition
(financial or otherwise), operations, results of operations or prospects of such
Person.
8. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any of the
Commitments are in effect or the principal or interest on any Loan or
Reimbursement Obligation shall remain unpaid, or any Letter of Credit shall
remain outstanding, the Company will, and (as applicable) will cause each
Subsidiary to:
8.1. FINANCIAL STATEMENTS AND OTHER INFORMATION
Deliver to each of the Lenders:
(a) as soon as available and in any event within 100 days after the end
of each fiscal year of the Company, audited consolidated statements of income,
retained earnings and cash flow of the Company and its Consolidated Subsidiaries
for such fiscal year and the related audited consolidated balance sheets as of
the end of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures (i) for such fiscal year as set forth in the
Historical Financial Statements and (ii) for the preceding fiscal year, and
accompanied by a report of the Company's independent auditors, which report
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Company and
its Consolidated Subsidiaries in accordance with GAAP without material
qualification;
(b) as soon as available and in any event within 55 days after the end
of each of the first three quarterly fiscal periods of each fiscal year of the
Company, consolidated statements of income, and cash flow of the Company and its
Consolidated Subsidiaries for such quarterly period (consolidated statements of
income, only) and for the period from the beginning of the current fiscal year
to the end of such period (both consolidated state-
-61-
<PAGE> 71
ments of income and cash flow), and the related consolidated balance sheets as
of the end of such period, setting forth in each case in comparative form the
corresponding consolidated figures (i) for such periods as set forth in the
Historical Financial Statements and (ii) for the corresponding periods in the
preceding fiscal year, and accompanied by a certificate of the chief financial
officer of the Company, which certificate shall state that such consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Company and its Consolidated Subsidiaries in
accordance with GAAP (subject to normal year-end adjustments and absence of full
footnote disclosures);
(c) simultaneously with the delivery of the annual financial statements
referred to in Section 8.1.(a), a report of the independent auditors who audited
such statements stating that, in connection with their audit of such statements
(and without conducting any procedures other than those customarily conducted in
a year-end audit), such auditors have obtained no knowledge of any condition or
event which constitutes an Unmatured Default or Event of Default, or if such
auditors shall have obtained knowledge of any such condition or event,
specifying in such report each such condition or event of which they have
knowledge and the nature and status thereof ; provided, however, that such
auditors shall not be liable by reason of any failure to obtain knowledge of any
condition or event which constitutes an Unmatured Default or Event of Default
that would not be disclosed in the course of their audit examination;
(d) simultaneously with the delivery of any financial statements
pursuant to Sections 8.1.(a) and (b), a certificate of the chief financial
officer of the Company substantially in the form of Exhibit H (the "Compliance
Certificate") (i) to the effect that no Unmatured Default or Event of Default
has occurred and is continuing (or, if any Unmatured Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action that the Company (or such other Person, as appropriate)
has taken and proposes to take with respect thereto) and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Company is
in compliance with Section 2.13., the Sections contained in Article 10., and
Sections 9.3., 9.4., 9.5. and 9.6. (as applicable), in each case as of the end
of the period for which such financial statements are delivered;
(e) promptly upon the receipt thereof, copies of all "management
letters" received by the Company or any Subsidiary from its independent
accountants;
(f) as soon as possible, and in any event within thirty days after the
Company or any Subsidiary knows or has reason to know that any of the events or
conditions specified below have occurred or exist, a statement signed by the
chief financial officer of the Company setting forth details respecting such
event or condition and the action, if any, which the Company or such Subsidiary
or its ERISA Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to the PBGC by the Company
or any Subsidiary or any of its ERISA Affiliates as of such date with respect to
such event or condition):
-62-
<PAGE> 72
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan of
the Company or any Subsidiary or any of its ERISA Affiliates, as to
which the PBGC has not by regulation waived the requirement of Section
4043 (a) of ERISA that it be notified within 30 days of the occurrence
of such event (provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan of the Company or any Subsidiary or any of
its ERISA Affiliates or the termination of any such Plan;
(iii) the institution by the PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan of the Company or any Subsidiary or any of its
ERISA Affiliates, or the receipt by the Company or any Subsidiary or
any of its ERISA Affiliates of a notice from a Multiemployer Plan of
the Company or any Subsidiary or any of its ERISA Affiliates that such
action has been taken by the PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal by the Company or any
Subsidiary or any of its ERISA Affiliates under Section 4201 or 4204 of
ERISA from a Multiemployer Plan, or the receipt by the Company or any
Subsidiary or any such ERISA Affiliate of notice from such a
Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, which in any such case could
reasonably be expected to result in the imposition of withdrawal
liability upon the Company or any Subsidiary or any of its ERISA
Affiliates;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any Subsidiary or any of its
ERISA Affiliates to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days; and
(vi) If the fair market value of the assets of any Plan does
not equal or exceed the accumulated benefit obligations with respect to
such Plan, as disclosed on the most recent actuarial report with
respect to such Plan.
(g) promptly after any Unmatured Default or Event of Default has
occurred, a notice of such Unmatured Default or Event of Default describing the
same in reasonable detail together with a description of the action that the
Company (or such other appropriate party, as the case may be) has taken and
proposes to take with respect thereto;
-63-
<PAGE> 73
(h) promptly after receipt of written request from the Agent, such
other information regarding the business, affairs or financial condition of the
Company or any Subsidiary as the Agent may reasonably request;
(i) as soon as possible, and in any event within three Business Days
after the Company or any Subsidiary receives notice or otherwise has actual
knowledge that any of the following events have occurred or exist, a statement
signed by the chief financial officer of the Company setting forth details
regarding such event or condition and the action, if any, which the Company or
such Subsidiary proposes to take with respect thereto (along with all relevant
documentation): (i) any violation by the Company or any Subsidiary of any
Environmental and Safety Laws; (ii) any request for information or notice of
potential responsibility under Environmental and Safety Laws with respect to
cleanup of any Property or facility of the Company or any Subsidiary or any
offsite location; (iii) the imposition of any Lien on any assets of the Company
or any Subsidiary under Environmental and Safety Laws; (iv) the commencement of
any litigation, enforcement action or investigation with respect to the Company
or any Subsidiary under Environmental and Safety Laws; or (v) any Release or
threatened Release of any Hazardous Material at or from any Property or facility
of the Company or any Subsidiary;
(j) promptly upon their becoming available, copies of any statements,
reports and other communications, if any, which the Company or any Subsidiary
shall have provided to its stockholders or filed with the Securities and
Exchange Commission (or any governmental agency substituted therefor), any
national securities exchange or the National Association of Securities Dealers,
Inc.;
(k) as soon as practicable and, in any event, on or before the date
which is forty-five days prior to the close of each fiscal year of the Company,
the Projected Financial Statements for the Company and its Subsidiaries for each
of the next three years;
(l) as soon as practicable, a copy of each Financing Plan in respect of
a Material Acquisition, together with an update, as necessary, of any of the
Projected Financial Statements delivered by the Company pursuant to Section
8.1.(k) reflecting the effects of such Financing Plan and Material Acquisition;
(m) promptly upon their becoming available, copies of all material
notices respecting the 1997 Senior Notes received by the Company from any holder
(or trustee, agent, or representative of any holder) thereof and sent to the
Company pursuant to the provisions of any instrument or agreement evidencing
such Indebtedness or pursuant to which such Indebtedness was issued;
(n) promptly upon becoming available, each quarterly operational and
statistical report on the Company's Investments in Health Care Facilities,
similar in form and content to such reports as provided to the Company's Board
of Directors;
-64-
<PAGE> 74
(o) promptly after request of any Lender, such other information and
data with respect to the Company or any of its Subsidiaries as from time to time
may be reasonably requested by such Lender by notice to the Agent, the Company
and the other Lenders; and
(p) within 10 days of the date any Acquired Indebtedness is incurred, a
certificate of the chief financial officer of the Company certifying as to
aggregate amount of Acquired Indebtedness of the Company and its Subsidiaries
after giving effect to the incurrance of such Acquired Indebtedness.
8.2. LITIGATION
Promptly (and in any event within three Business Days of receipt) give
to the Agent notice of the filing or commencement of, or any written notice of
intention of any Person to file or commence, any action, suit or proceeding
affecting the Company or any Subsidiary, whether at law or in equity by or
before any Governmental Agency which if adversely determined would result in
liability to the Company or any Subsidiary of $2,000,000 or more (unless covered
by insurance) or would otherwise have a Material Adverse Effect, and of any
adverse development in respect of such legal or other proceedings.
8.3. EXISTENCE. ETC.
Except as expressly permitted by this Agreement: preserve and maintain
its existence, and all of its material rights, privileges and franchises; comply
in all material respects with the requirements of all applicable laws, rules,
regulations and orders of all Governmental Agencies; maintain all of its
material properties used in its business in good working order and condition,
ordinary wear and tear excepted; and preserve and enforce its rights (including
rights to indemnification) under any Material Contracts.
8.4. REIT STATUS
Maintain at all times (a) its qualifications as a REIT and (b) the
applicability of the method of taxation provided for in Section 857(b) of the
Code (as such section is from time to time amended or supplemented).
8.5. INSURANCE
(a) Maintain or cause to be maintained, with financially sound and
reputable insurers satisfactory to the Agent, insurance with respect to its
assets and businesses and the assets and businesses of its Subsidiaries against
loss or damage of the kinds as are reasonable and appropriate for their
respective businesses, and in such amounts as are reasonable and appropriate for
their respective businesses; provided that in no event shall
-65-
<PAGE> 75
such insurance be for a Dollar amount less than the replacement cost of the
assets so insured.
(b) Notwithstanding anything to the contrary contained in Section
8.5.(a), if, in connection with any lease entered into between the Company or
any of its Subsidiaries and a third Person respecting any Health Care Facility
of the Company or any such Subsidiary, such third Person is contractually
obligated to provide insurance with respect to such Health Care Facility or any
of the Company's or any of such Subsidiary's assets located therein, then the
Company shall and shall cause any such Subsidiary to require that any such
insurance be maintained with financially sound and reputable insurers (i)
against loss or damage of the kinds as are customarily insured against by
Persons engaged in such business or in the operation of such assets and (ii) in
such amounts as are customary in such business; provided that any such third
party lessee may provide self-insurance with respect to such Health Care
Facility or any of the Company's or any of its Subsidiaries' assets located
therein so long as: (A) the board of directors of the Company or any such
Subsidiary, as applicable, shall determine that permitting such self-insurance
is prudent and sufficient in light of other available sources of insurance, and
(B) so long as such self-insurance provides insurance (1) against loss or damage
of the kinds as are customarily insured against by Persons engaged in such
business or in the operation of such assets and (2) in such amounts as are
customary in such business.
(c) Without limiting the obligations of the Company under the foregoing
provisions of this Section 8.5., in the event the Company or any Subsidiary
shall fail to maintain in full force and effect insurance as required by the
foregoing provisions of this Section 8.5., then the Agent may, but shall have no
obligation to, procure insurance covering the interests of the Lenders and the
Agent in such amounts and against such risks as the Agent (or the Required
Lenders) shall deem appropriate, and the Company shall reimburse the Agent in
respect of any premiums paid by the Agent as provided in Section 13.3.(c).
8.6. OBLIGATIONS AND TAXES
Pay its Indebtedness and other obligations in accordance with their
terms and pay and discharge promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its Property, and in any event before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof; provided, however, that such payment and discharge shall not
be required so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings which effectively stay the execution of any
such Lien and the Company shall (or shall cause its Subsidiaries to) set aside
on its books adequate reserves in accordance with GAAP with respect thereto.
-66-
<PAGE> 76
8.7. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS
Maintain all financial records in accordance with GAAP and permit any
representatives designated by the Agent to visit and inspect the properties of
the Company or any Subsidiary and to inspect their financial and business
records and make extracts therefrom and copies thereof, all at reasonable times
and in a manner so as not to unreasonably disrupt the operations of the Company
or such Subsidiary and as often as reasonably requested, and permit any
representatives designated by the Agent to discuss the affairs, finances and
condition of the Company or any Subsidiary with the officers thereof and
independent accountants therefor.
8.8. COMPLIANCE WITH LAWS
The Company shall comply, and shall cause each Subsidiary to comply, in
all material respects with all Requirements of Law of any Governmental Agency
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith with due diligence
and so long as enforcement thereof against the Company or such Subsidiary (i) is
stayed or as to which a bona fide dispute may exist or (ii) would not have a
Material Adverse Effect upon the Company or such Subsidiary.
8.9. COMPLIANCE WITH ERISA
The Company shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
8.10. ENVIRONMENTAL AND SAFETY MATTERS
(a) Comply with all Environmental and Safety Laws in all material
respects.
(b) Keep its properties and facilities free from any Liens arising
under any Environmental and Safety Laws.
(c) Respond promptly to any Release or threatened Release of any
Hazardous Materials in a manner which complies in all material respects with all
Environmental and Safety Laws and mitigates any associated risk to human health
or the environment to the maximum extent commercially practicable.
(d) If the Agent at any time has reason to believe that any Property or
facility owned or operated by the Company or any Subsidiary has been or may be
either (i) oper-
-67-
<PAGE> 77
ated in violation of any Environmental and Safety Laws; (ii) contaminated with
any Hazardous Materials; or (iii) subject to any government-imposed obligation
to conduct any environmental investigation or clean-up, any of which, in the
good faith judgment of the Required Lenders may impair in any material respect
the ability of the Company or such Subsidiary to satisfy any of the obligations,
the Company shall, upon the written request of the Required Lenders, at the
Company's sole cost and expense, conduct or cause such Subsidiary to conduct
such investigation or study, through retention of a consulting firm reasonably
satisfactory to the Required Lenders, as is necessary in the good faith judgment
of the Required Lenders to demonstrate that no such impairment could reasonably
be expected to have a Material Adverse Effect.
8.11. SUBSIDIARY GUARANTY
Promptly upon any Person becoming one of its Subsidiaries, the Company
shall cause such Person to become a party to the Subsidiary Guaranty.
8.12. PHASE I REPORTS
Obtain Phase I reports (and if such Phase I report indicates further
inquiry would be prudent, reports of such further inquiry) from reputable
consultants with respect to each Health Care Facility acquired by the Company or
any of its Subsidiaries following the Closing Date, and deliver to the Agent
copies of such reports promptly after receipt of a written request therefor.
8.13. FURTHER ASSURANCES
At any time or from time to time upon the request of the Agent, the
Company shall and shall cause each of its Subsidiaries to execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order to effect fully the purposes of each of the Credit
Documents and to provide for payment of the Loans, Reimbursement Obligations and
other Obligations hereunder, with interest thereon in accordance with the terms
of this Agreement and the Notes.
8.14. MAINTENANCE OF PROPERTIES
Maintain or cause to be maintained (which requirement may be met by
causing the lessees of a Health Care Facility to comply with the terms and
conditions of the applicable lease) in good repair, working order, and condition
all of those assets useful or necessary to its businesses or the businesses of
each of its Subsidiaries or which are used in connection therewith or related
thereto, except for assets which in the aggregate are not material to the
business or operations of the Company and its Subsidiaries, taken as a whole.
From time to time, the Company shall make or cause to be made, consistent with
past practices, all appropriate repairs, renewals, and replacements thereto and
thereof. Notwithstanding
-68-
<PAGE> 78
the foregoing, the Company and its Subsidiaries shall not be required to comply
with the requirements of this Section 8.14. to the extent that compliance
therewith would not be economical and the failure to so comply would not have a
Material Adverse Effect on the Company and its Subsidiaries.
8.15. MAINTENANCE OF RATINGS
The Company shall cause both Moody's and S&P (or such other successor
rating agency reasonably acceptable to the Required Lenders) to maintain and
issue ratings on the Senior Long Term Debt of the Company.
9. NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any of the
Commitments are in effect or the principal or interest on any Loan or
Reimbursement Obligation shall remain unpaid, or any Letter of Credit shall
remain outstanding, the Company will not, nor will it permit any Subsidiary to:
9.1. PROHIBITION OF FUNDAMENTAL CHANGES
Effect any of the following: (i) any transaction of merger,
consolidation, recapitalization, reorganization, liquidation or dissolution
(other than (A) the merger of a Permitted Subsidiary with and into the Company
pursuant to which the Company is the surviving corporation or with and into any
other Permitted Subsidiary, (B) the conversion of Operating Partnership Units
into capital stock of the Company or the redemption of such Operating
Partnership Units with cash or such capital stock or (C) the dissolution of a
Down REIT in connection with or as a result of the transaction or series of
transactions described in the immediately preceding clause (B)); (ii) the
acquisition of any business or assets (other than Investments), except for
purchases of inventory and supplies to be used in the ordinary course of
business; (iii) any Investments other than Investments permitted under Section
9.5.; (iv) any Disposition except as provided in Section 9.9.; or (v) engage in
any line of business other than those engaged in on the Closing Date.
9.2. LIMITATION ON LIENS
(a) Create, incur, assume or suffer to exist any Lien upon any of its
Property, assets or revenues, whether now owned or hereafter acquired, except
Permitted Liens; and
(b) Other than in any document or agreement existing on the date hereof
and listed in part (a) of Schedule 7.12., enter into, assume, or permit to exist
any agreement
-69-
<PAGE> 79
which prohibits the Company or its Subsidiaries from granting Liens in favor of
the Agent or the Lenders.
9.3. INDEBTEDNESS OF THE COMPANY
Create, incur or suffer to, exist any Indebtedness of the Company
except:
(a) Indebtedness to the Lenders created hereunder and under the Credit
Documents;
(b) Indebtedness existing on the Closing Date and described in part
(a-1) of Schedule 7.12.;
(c) Indebtedness under any Interest Rate Protection Agreements;
(d) Indebtedness secured by Liens permitted under subsection (g) of the
definition of "Permitted Liens" herein and not otherwise authorized pursuant to
subsections (g) and (j) of this Section 9.3. in an aggregate amount not to
exceed $1,000,000 outstanding at any time;
(e) Indebtedness incurred pursuant to Guaranties permitted pursuant to
Section 9.7.;
(f) Indebtedness of the Company to its Wholly-Owned Subsidiaries;
(g) Indebtedness secured by Permitted Liens other than those described
in subsection (g) of the definition of "Permitted Liens";
(h) Other Indebtedness of the Company so long as: (i) such Indebtedness
(A) has a term (after giving effect to any rights of the obligee of such
Indebtedness to accelerate the maturity of such Indebtedness other than as a
result of the occurrence of an event of default thereunder) expiring no less
than 12 months beyond the Maturity Date, (B) does not require, directly or
indirectly, the amortization of principal thereof (or provide a sinking fund in
respect thereto) during such term, and (C) is subject to covenants (including
financial covenants) and events of default contained in the agreements related
thereto (including the applicable definitions) which are not materially less
favorable to the Company than those contained herein or set forth in those
agreements listed on Schedule 7.12.; and (ii) both before and after giving
effect to the incurrence of such Indebtedness, no Unmatured Default or Event of
Default shall occurred and be continuing hereunder;
(i) Indebtedness resulting from the refinancings, renewals or
extensions of Indebtedness permitted under subparagraphs (b) through (h) and (j)
of this Section (and continuance or renewal of Permitted Liens associated
therewith) so long as: (i) the terms and conditions of such refinancings,
renewals, or extensions do not materially impair the prospects of repayment of
the Loans or the Letters of Credit by the Company; (ii) the net cash proceeds of
such refinancings, renewals or extensions do not result in an increase in
-70-
<PAGE> 80
the aggregate principal amount of the Indebtedness so refinanced, renewed, or
extended; and (iii) such refinancings, renewals, refundings, or extensions do
not result in a shortening of the average weighted maturity (at the time of
refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed,
or extended;
(j) Notwithstanding anything in subparagraph (d) or (g) above to the
contrary, as long as no Unmatured Default or Event of Default then exists or is
continuing or would result from the incurrence thereof, Acquired Indebtedness,
provided that:
(i) the aggregate outstanding principal amount of such
Indebtedness (including any such Indebtedness existing on the Closing
Date and set forth in part (a-2) of Schedule 7.12.) to which the
Company and the Company's Subsidiaries are subject at any time shall
not exceed 15% of the Company's Consolidated Real Estate Assets; and
(ii) the Company shall have complied with Section 8.1.(p)
hereof.
9.4. SUBSIDIARY INDEBTEDNESS
Create, incur, or suffer to exist any Indebtedness of any Subsidiary of
the Company except:
(a) Indebtedness of Subsidiary Guarantors to the Lenders created under
the Credit Documents;
(b) Indebtedness existing on the Closing Date and described in part
(a-1) of Schedule 7.12.;
(c) Indebtedness incurred pursuant to Guaranties permitted pursuant to
Section 9.7.;
(d) Indebtedness secured by Permitted Liens other than those described
in subsection (g) of the definition of "Permitted Liens" and not otherwise
permitted pursuant to subsection (f) of this Section 9.4.;
(e) Indebtedness owed to the Company to the extent permitted by Section
9.5.; and
(f) Notwithstanding anything in subparagraph (d) above to the contrary,
as long as no Unmatured Default or Event of Default then exists or is continuing
or would result from the incurrence thereof, Acquired Indebtedness, provided
that:
(i) the aggregate outstanding principal amount of
such Indebtedness (including any such Indebtedness existing on
the Closing Date and set forth in part (a-2) of Schedule
7.12.) to which the Company and the Company's Subsidiaries are
subject at any
-71-
<PAGE> 81
time shall not exceed 15% of the Company's Consolidated Real
Estate Assets; and
(ii) the Company shall have complied with Section
8.1.(p) of this Agreement.
9.5. INVESTMENTS
Make or permit to remain outstanding any Investments except:
(a) Permitted Investments;
(b) Investments existing on the Closing Date and set forth on part (a)
of Schedule 9.5.;
(c) the ownership of the capital stock of Wholly-Owned Permitted
Subsidiaries by the Company or its Subsidiaries;
(d) Working Capital Loans made by the Company to operators of Health
Care Facilities in an amount not to exceed $10,000,000 to any single operator of
a Health Care Facility and in an aggregate amount at any one time outstanding
not to exceed $15,000,000;
(e) (i) Loans from Wholly-Owned Subsidiaries to the Company permitted
pursuant to Section 9.3.(f); (ii) loans from the Company to Wholly-Owned
Subsidiaries (other than to any Subsidiary owning any PG Assets); and (iii)
loans from the Company to Wholly-Owned Subsidiaries owning PG Assets in an
aggregate principal amount not to exceed the PG Indebtedness;
(f) Investments by the Company or a Subsidiary in Health Care
Facilities so long as (i) the amount of any Investment made pursuant to this
Section 9.5.(f)(i) in any Health Care Facility does not exceed $75,000,000; and
(ii) immediately before and immediately after the consummation of such
Investment, after giving effect thereto, no Unmatured Default or Event of
Default shall exist or would exist;
(g) Construction and Development Investments (including those
Construction and Development Investments set forth in part (b) of Schedule
9.5.);
(i) the aggregate amount of which do not exceed $75,000,000 at
any one time, of which no more than $30,000,000 may be invested in any
one Person and its Affiliates or in any one Health Care Facility as a
Construction and Development Investment; and
(ii) the Board of Directors or other governing body of the
Person in which any such Investment is made approves the making of such
Investment;
-72-
<PAGE> 82
(h) Supplies and other similar inventory purchased by the Company in
the ordinary course of business;
(i) Investments by Subsidiaries owning PG Assets used for the repair,
maintenance and improvement of PG Assets and the related equipment to the extent
that the aggregate cost thereof does not exceed the PG Indebtedness;
(j) Investments in Permitted Subsidiaries that are not Wholly-Owned
Subsidiaries (including Down REITs and excluding any Permitted Subsidiary
created for the sole purpose of making the Investments permitted in Section
9.5.(k)) and which are not described in Schedule 9.5. hereof, in an aggregate
amount not to exceed 15% of the Consolidated Real Estate Assets immediately
prior to the date such Subsidiary is acquired or created, so long as:
(i) such Subsidiaries are corporations, limited partnerships
or limited liability companies;
(ii) the Company or one or more Wholly-Owned Subsidiaries owns
at least 80%, but less than 100%, of the outstanding capital stock,
partnership or other ownership interest of such Subsidiary which is not
a Down REIT;
(iii) the Company or a Wholly-Owned Subsidiary is (A) the sole
general partner of any such Subsidiary that is a limited partnership or
(B) a member of any such Subsidiary that is a limited liability
company;
(iv) in the case of a Down REIT which is not a limited
partnership, such Down REIT otherwise qualifies as a Subsidiary of the
Company; and
(v) the business of such Subsidiary will not cause the Company
to violate Section 8.4. hereof; and
(k) Investments by the Company or a Permitted Subsidiary (including a
Permitted Subsidiary that is not a Wholly Owned Subsidiary and, for the
avoidance of doubt, the Company shall be permitted to make Investments in
Permitted Subsidiaries which are not Wholly Owned Subsidiaries if such
Subsidiaries hold solely Investments permitted by this subsection (k))
consisting of the purchase of stock or other equity interests in operators of
Health Care Facilities in which the Company or a Subsidiary has made an
Investment pursuant to Sections 9.5.(f) or (g) hereof (or an Affiliate thereof)
and which are not described in Schedule 9.5 hereof, so long as:
(i) such Investments do not exceed $5,000,000 in any fiscal
year and $10,000,000 in the aggregate and
(ii) no Unmatured Default or Event of Default would be caused
thereby.
-73-
<PAGE> 83
9.6. RESTRICTED PAYMENTS
Make any Restricted Payment; provided, however, that
(a) any Affiliate of the Company who is an individual may serve as a
director, officer or employee of the Company or any of its Subsidiaries and
receive reasonable compensation for his or her services in such capacity,
(b) the Company's Subsidiaries may make any dividend or other
distribution to the Company or to another Wholly-Owned Subsidiary of the Company
to make a similar dividend or distribution ultimately resulting in the Company's
receipt thereof;
(c) the Company may pay a dividend or other distribution to the holders
of its common stock consisting of shares of its common stock or rights to
acquire its common stock;
(d) in addition to any payments or distributions pursuant to
subparagraph (f) below, the Company may make, as long as no Unmatured Default or
Event of Default then exists or is continuing or would result from the making
thereof, cash dividends or other distributions in an aggregate amount not to
exceed, during the period from January 1, 1995 to the date any determination is
to be made thereof, $5,000,000 plus (i) the greater of (A) 95% of the sum of (1)
EBITDAR minus (2) Interest Expense minus (3) Rental Expense, plus (4) gains
during such period respecting Dispositions (of any asset of the Company or its
Consolidated Subsidiaries other than PG Assets); and (B) the minimum amount
required for the Company to maintain its status as a REIT under the Code, and
(ii) in the case of the PG Stock only, the lesser of (A) the PG Excess Proceeds
and (B) $30,000,000 in the aggregate for all such dividends and distributions
made in respect of the PG Stock made at any time, and $15,000,000 in the
aggregate for all such cash or other distributions made in respect of the PG
Stock in any calendar year;
(e) the Company's Subsidiaries described in Section 9.5.(j) and other
Subsidiaries identified as less than Wholly-Owned Subsidiaries on Schedule 9.5
may make (i) distributions or other payments to holders of equity interests
therein other than Operating Partnership Units in an aggregate amount up to
$500,000 in any fiscal year of the Company and (ii) distributions to Down REIT
Partners in any fiscal year of the Company so long as such amount does not
exceed the lesser of (A) an amount equal to the sum of the Net Income of the
Down REIT plus the depreciation and amortization expense set forth on the
financial statements of such Down REIT and (B) an amount equal to the product of
10% per annum (on a cumulative basis) multiplied by the Down REIT Partners'
Investment in the Operating Partnership Units of all Down REIT Partners (for any
fiscal year of the Company for which the relevant Down REIT was not a Permitted
Subsidiary for the entirety of such fiscal year, the Company shall make such
downward adjustment in such amount as shall be reasonable under the
circumstances); and
-74-
<PAGE> 84
(f) in addition to any payments or distributions pursuant to
subparagraph (d) above, the Company may make, as long as no Unmatured Default or
Event of Default then exists or is continuing or would result from the making
thereof, cumulative annual cash dividends in the amount of $215.00 per share in
respect of the Series B Preferred Stock, and
(g) the Company and the Company's Subsidiaries may make, as long as no
Unmatured Default or Event of Default then exists or is continuing or would
result from the making thereof, payments or prepayments with respect to the
Acquired Indebtedness (including principal, interest and/or any other amounts
owing with respect to the Acquired Indebtedness).
9.7. GUARANTEES
Create or become liable, directly or indirectly, with respect any
Guarantee except:
(a) Guarantees resulting from the endorsement of instruments for
collection in the ordinary course of business;
(b) Guarantees disclosed in the Historical Financial Statements or
reflected on Schedule 7.12. and any refinancing, renewals, or extensions of such
Guarantee on terms substantially similar to the original terms thereof;
(c) Guarantees of the Company respecting obligations of the
Wholly-Owned Subsidiaries of the Company incurred in the ordinary course of
business in an aggregate amount not to exceed $10,000,000 at any one time
outstanding;
(d) Guarantees of the Company respecting obligations of one or more of
the Subsidiaries pursuant to Acquired Indebtedness; and
(e) Guarantees by the Company respecting certain obligations of the
Down REITs which obligations are not materially different from those described
on attached Schedule 9.7.
9.8. SALES AND LEASE-BACKS
Become liable, directly or indirectly, as lessee or as guarantor or
other surety with respect to any lease whether an operating lease or a Capital
Lease, of any assets, whether now owned or hereafter acquired:
(a) which the Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person; or
(b) which the Company or any of its Subsidiaries intends to use for
substantially the same purpose as any other asset which has been or is to be
sold or transferred by
-75-
<PAGE> 85
the Company or any such Subsidiaries to any Person in connection with such
lease, unless such sale or transfer is permitted pursuant to Section 9.9.,
without aggregation.
9.9. SALE OF ASSETS
Make any Disposition except for:
(a) the Disposition by the Company or its Subsidiaries of assets, other
than PG Assets for not less than the fair market value thereof, in an aggregate
Dollar amount not to exceed, during the term of this Agreement, 25% of the
average aggregate Dollar value of the Company's assets. For purposes of the
preceding sentence, the average aggregate Dollar value of the Company's assets
shall be measured over any period of 12 consecutive months selected by the
Company occurring after the Closing Date. Such average aggregate Dollar value
shall be the total assets of the Company, determined on a consolidated basis in
accordance with GAAP, less any PG Assets, as shown on the Company's balance
sheet as of the end of each such month;
(b) the sale or other disposition of any of the PG Assets by the
Company or any of its Subsidiaries for not less than the fair market value
thereof;
(c) involuntary sales or other dispositions of any of the businesses or
assets of the Company or its Subsidiaries;
(d) Dispositions of obsolete assets;
(e) Dispositions (whether individually or in a series of related
transactions) of assets at not less than their fair value which produce Net
Available Proceeds of not more than $1,000,000; or
(f) Dispositions of Investments made pursuant to Section 9.5.(k)
hereof.
At the time of any sale or other disposition under clause (a) or (b) of
this Section 9.9., the Company shall deliver to the Agent a certificate, duly
executed by the chief executive officer or the chief financial officer of the
Company, setting forth in detail the determination of the Net Available Proceeds
of such sale or other disposition, and such other information as is necessary to
demonstrate compliance with clause (a) or (b) of this Section 9.9., as
applicable.
9.10. TRANSACTIONS WITH AFFILIATES
Except for the transactions existing on the Closing Date and described
in Schedule 9.10., enter into any transaction or series of transactions, whether
or not related or in the ordinary course of business with any Affiliate of the
Company, other than pursuant to the reasonable requirements of the Company's or
such Subsidiary's business and on terms and conditions no less favorable to the
Company than would be obtainable by the Company at
-76-
<PAGE> 86
the time in a comparable arm's-length transaction with a Person not an Affiliate
of the Company.
9.11. EXECUTION AND MODIFICATIONS OF CERTAIN DOCUMENTS
Amend its certificate of incorporation, limited partnership
certificate, limited liability company certificate, bylaws, partnership
agreement, operating agreement or any other comparable organizational document
in a manner adverse to the Lenders; or amend, modify, cancel, terminate, waive
any default under or breach of, in any manner whatsoever, any Material Contract
other than in the ordinary course of business; or enter into any new agreement
that is inconsistent with the obligations of the Company or any Subsidiary under
any Credit Document.
9.12. ISSUANCE OF SECURITIES
(a) Issue any capital stock or any rights to acquire, or any
securities exchangeable for such capital stock, except that (i) the Company may
effect Equity Issuances so long as any Net Available Proceeds for each such
issuance are applied in the manner set forth in Section 2.13., (ii) the Company
may issue the Series B Preferred Stock, (iii) any Subsidiary may issue (A)
equity securities to the Company or a Wholly-Owned Subsidiary of the Company and
(B) Operating Partnership Units to the Down REIT Partners and (iv) the Company
or any Subsidiary may issue or cause the Company to issue shares of the capital
stock of the Company in connection with the redemption or conversion of any
Operating Partnership Units; or
(b) Create or issue any class of Preferred Stock except that
the Company may issue Preferred Stock so long as any Net Available Proceeds of
such issuance are applied in the manner set forth in Section 2.13.
9.13. RESTRICTIVE AGREEMENTS
Enter into any agreement which restricts the ability of any Subsidiary
of the Company to make payments to the Company by way of dividends, advances,
reimbursements, or otherwise, except that a Down REIT may agree to make
preferred distributions to holders of Operating Partnership Units to the extent
such distributions comply with subsection (e) of Section 9.6. of this Agreement.
9.14. PREPAYMENT OF INDEBTEDNESS
Prepay, redeem or purchase any Indebtedness (other than intercompany
Indebtedness and Acquired Indebtedness), nor enter into or modify any agreement
in a
-77-
<PAGE> 87
way which would be materially adverse to the interests of the Lenders or as a
result of which the terms of payment of any of the foregoing Indebtedness are
accelerated, except that the Company shall be entitled to perform its
obligations provided for in each of the Credit Documents (which includes the
making of any permitted voluntary prepayment of the Revolving Credit Loans
hereunder) .
9.15. SUBSIDIARIES
Create or permit to exist any Subsidiary other than a Permitted
Subsidiary.
10. FINANCIAL COVENANTS
The Company covenants and agrees that, so long as any of the
Commitments are in effect or the principal or interest on any Loan or
Reimbursement Obligation shall remain unpaid, or any Letter of Credit shall
remain outstanding, the Company will, and (as applicable) will cause each
Subsidiary to:
10.1. MAINTENANCE OF TANGIBLE NET WORTH
Cause its Consolidated Tangible Net Worth to be at least $260,000,000
plus 75% of the aggregate Net Available Proceeds of any Equity Issuance
consummated by the Company after September 30, 1995 and on or before the time as
of which Consolidated Tangible Net Worth is being determined.
10.2. INTEREST COVERAGE RATIO
Cause the Interest Coverage Ratio for the 12 consecutive fiscal months
ending on the last day of each fiscal quarter to be at least equal to 2.50:1.00.
10.3. LEVERAGE RATIO
Cause the Leverage Ratio at all times, measured on the last day of each
fiscal quarter to be equal to or less than 1.10:1.00.
-78-
<PAGE> 88
11. EVENTS OF DEFAULT
If one or more of the following events (herein collectively called
"Events of Default" and singularly called an "Event of Default") shall occur and
be continuing:
11.1. PAYMENTS UNDER CREDIT DOCUMENTS
The Company shall default in the payment when due of (a) any principal
of any Loan or any Reimbursement Obligation, (b) any interest on any Loan,
Reimbursement Obligation or other Obligation or (c) any Fee or any other
Obligations payable by it hereunder or under any other Credit Document, which
default in the case of a payment other than a payment of principal or interest
shall continue for a period of two Business Days.
11.2. OTHER INDEBTEDNESS
The Company or any Subsidiary shall default in the payment when due of
any principal of or interest on any of its Indebtedness (other than the
obligations under the Credit Documents) in an aggregate principal amount of
$5,000,000 or more; or any event specified in any note, agreement, indenture or
other document evidencing or relating to any Indebtedness of the Company or any
Subsidiary in an aggregate amount of $5,000,000 or more shall occur if the
effect of such event is to cause, or to permit the holder thereof to cause (with
the giving of notice or lapse of time or both), such Indebtedness to become due
or to be required to be prepaid (whether by redemption, purchase or otherwise)
prior to its stated maturity.
11.3. REPRESENTATIONS AND WARRANTIES
Any representation, warranty or certification made or deemed to be made
in any Credit Document by the Company or any Subsidiary or any certificate,
financial statement or other information furnished in writing to any Lender, the
Facing Bank or the Agent pursuant to the provisions hereof or thereof, shall
prove to have been false or misleading in any material respect as of the time
made or deemed to be made.
11.4. OTHER OBLIGATIONS
(i) The Company or any Subsidiary shall default in the performance of
any of their respective obligations under Section 2.16., Section 8.1. (which
default shall continue for five Business Days), Article 9. or Article 10.; or
(ii) the Company or any Subsidiary shall default in the performance of any of
its other obligations in this Agreement, or any other Credit Document and such
default shall continue unremedied for a period of 20 days
-79-
<PAGE> 89
after the Company or such Subsidiary receives notice or otherwise has actual
knowledge thereof.
11.5. ABILITY TO PAY DEBTS
The Company or any Subsidiary shall admit in writing its inability to,
or be generally unable to, pay its debts as such debts become due.
11.6. VOLUNTARY PROCEEDINGS
The Company or any Subsidiary shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its Property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (vi) take any
corporate action for the purpose of effecting any of the foregoing.
11.7. INVOLUNTARY PROCEEDINGS
A proceeding or case shall be commenced against the Company or any
Subsidiary, without its application or consent, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of all or
any substantial part of its assets, or (iii) similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 or more days;
or an order for relief against the Company or any Subsidiary shall be entered in
an involuntary case under the Bankruptcy Code.
11.8. JUDGMENTS
(a) A judgment or judgments for the payment of money in excess of
$2,000,000 (unless covered by insurance) in the aggregate shall be rendered by a
court or courts against the Company or any Subsidiary and the same shall not be
vacated, bonded or discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 30 days
from the date of entry thereof; or
-80-
<PAGE> 90
(b) A judgment creditor shall obtain possession of any of the assets of
the Company or its Subsidiaries which assets constitute a material portion of
the assets of the Company or any Subsidiary by any means, including levy,
distraint or self-help.
11.9. ERISA EVENT
(a) Any ERISA Event shall have occurred with respect to the Company or
any Subsidiary and the sum of the Insufficiency of such Plan (determined as of
the date of occurrence of such ERISA Event) and the Insufficiency of any and all
other Plans (determined as of the date of occurrence of such ERISA Event) of the
Company or any Subsidiary with respect to which an ERISA Event shall have
occurred (or the liability of the Company or any Subsidiary or its ERISA
Affiliates related to such ERISA Event) exceeds $100,000; or (b) the Company or
any Subsidiary or any of its ERISA Affiliates shall have been notified by a
Multiemployer Plan that it has incurred withdrawal liability to such
Multiemployer Plan and the imposition of such liability is reasonably likely to
be incurred in an amount that, when aggregated with all other amounts required
to be paid to Multiemployer Plans by the Company or any Subsidiary and its ERISA
Affiliates as withdrawal liability (determined as of the date of such
notification indemnification), requires payments exceeding $100,000 per annum or
$250,000 in the aggregate; (c) the Company or any Subsidiary or any of its ERISA
Affiliates shall have been notified by a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated within the
meaning of Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of such Person and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans immediately
preceding the plan year in which such reorganization or termination occurs by an
amount exceeding $100,000 or (d) the assets of the Company at any time
constitute assets, within the meaning of ERISA, the Code and the respective
regulations promulgated thereunder, of any ERISA Plan or Non-ERISA Plan.
11.10. TERMINATION OF CREDIT DOCUMENTS
Any of the Credit Documents shall cease to be in full force and effect,
or any Subsidiary Guarantor shall repudiate the Subsidiary Guaranty, for any
reason other than: (i) a release or termination thereof upon the full and
indefeasible payment and satisfaction of the Indebtedness due herewith, or under
the Notes or pursuant to the Reimbursement Obligations or any other Obligation
owing hereunder; or (ii) upon the written consent of the Required Lenders.
THEN: (1) In the case of an Event of Default, other than an Event of Default
referred to in Section 11.6. or Section 11.7., the Agent may (and shall at the
request of the Required Lenders), by notice to the Company, cancel the
Commitments and/or declare the then-outstanding principal amount of, and the
accrued interest on, the Loans and all other obliga-
-81-
<PAGE> 91
tions payable by the Company hereunder and under the Notes including, without
limitation, any amounts payable under Section 5.1. (collectively, such
principal, interest, obligations and other amounts being referred to as the
"Obligations"), and all Reimbursement Obligations to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company; and (2) in the case of the occurrence of
an Event of Default referred to in Section 11.6. or Section 11.7. above, the
Commitments shall automatically be canceled and the then-outstanding principal
amount of, and the accrued interest on, the Loans and all other Obligations
payable by the Company hereunder and all Reimbursement Obligations shall
automatically become immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company. In regard to the Letters of Credit insofar as presentment
for honor shall not have occurred at the time of any acceleration of the
Obligations pursuant to the provisions of this Article 11., the Company shall
promptly upon demand by the Agent deposit in a Letter of Credit Reserve Account
opened by the Agent for the benefit of the Facing Bank an amount equal to the
aggregate then undrawn and unexpired Stated Amounts of Letters of Credit.
Amounts held in such Letter of Credit Reserve Account shall be applied by the
Agent to the reimbursement of the Facing Bank for draws honored by it under the
Letters of Credit, and the unused portion thereof after such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to repay
other Obligations of the Company in the manner set forth in Section 2.13.
hereof. Pending the application of such deposit to the payment of the
Reimbursement Obligations of the Company in respect of the Letters of Credit,
the Agent shall, to the extent reasonably practicable, invest such deposit in an
interest bearing open account or similar available savings deposit account and
all interest accrued thereon shall be held with such deposit as additional
security for such Reimbursement Obligations. After the Letters of Credit shall
have expired or been fully drawn upon, all Reimbursement Obligations shall have
been satisfied, and all other Obligations shall have been paid in full, the
balance, if any, in such Letter of Credit Reserve Account shall be returned to
the Company. Except as expressly provided hereinabove, presentment, demand,
protest and all other notices of any kind are hereby expressly waived by the
Company.
12. THE AGENT
12.1. APPOINTMENT, POWERS AND IMMUNITIES
Each Lender hereby irrevocably (but subject to removal by the Required
Lenders pursuant to Section 12.8.) appoints and authorizes the Agent to act as
its agent hereunder and under the other Credit Documents with such powers as are
specifically delegated to the Agent by the terms of this Agreement and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Agent (which term as
-82-
<PAGE> 92
used in this sentence and in Section 12.5. and the first sentence of Section
12.6. shall include its Affiliates, officers, directors, employees and agents
and its Affiliates' respective officers, directors, employees and agents): (a)
shall not have any duties or responsibilities except those expressly set forth
in this Agreement and in the other Credit Documents, and shall not by reason of
this Agreement or any other Credit Document be a trustee for any Lender; (b)
shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any other Credit
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other Credit
Document, or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Credit Document or any other
document referred to or provided for herein or therein or for any failure by the
Company or any other Person to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Credit Document; and (d)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other Credit Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
12.2. RELIANCE BY THE AGENT
The Agent shall be entitled to rely upon any certification, notice or
other communication (including any thereof by telephone, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by it. The
Agent may deem and treat each Lender as the holder of Loans made by it for all
purposes hereof unless and until a notice of assignment or transfer thereof
satisfactory to the Agent signed by such Lender shall have been furnished to the
Agent, but the Agent shall not be required to deal with any Person who has
acquired a participation in any Loan from a Lender. As to any matters not
expressly provided for by this Agreement or any other Credit Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Required
Lenders or all of the Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Agent makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties, or representations made in or in connection with any of
the Credit Documents. The Agent 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 any of the Credit Documents on the part of any Person party
thereto or to inspect any asset (including the books and records) of the Company
or any of its Subsidiaries. The Agent shall not be responsible to any Lender for
the execution, legality, validity, enforceability, genuineness,
-83-
<PAGE> 93
sufficiency or value of any of the Credit Documents, or any other instrument or
document furnished pursuant thereto.
12.3. DEFAULTS
The Agent shall not be deemed to have knowledge or notice of the
occurrence of an Unmatured Default (other than the non-payment of principal of
or interest on Loans, Reimbursement Obligations or Fees to the extent the same
is required to be paid to the Agent for the account of the Lenders) unless the
Agent has received notice from a Lender or the Company specifying such Unmatured
Default and stating that such notice is a "Notice of Default." In the event that
the Agent receives such a notice of the occurrence of an Unmatured Default, the
Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non-payment). The Agent shall (subject to
Section 12.7.) take such action with respect to such Unmatured Default as shall
be directed by the Required Lenders; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Unmatured Default as it shall deem advisable and in the best interest of the
Lenders except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the
authorization of the Required Lenders or all of the Lenders; and provided
further that the Agent in any case shall not be required to take any such action
which it determines to be contrary to law.
12.4. RIGHTS AS A LENDER
With respect to its Commitment, the Loans made by it in its capacity as
a Lender, and the Letters of Credit issued by it in its capacity as the Facing
Bank, Wells Fargo (and any successor acting as Agent) shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent or the Facing Bank, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent and
the Facing Bank in its individual capacity. Wells Fargo (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Company and any of its Subsidiaries
or Affiliates as if it were not acting as the Agent or the Facing Bank
hereunder, and Wells Fargo and its Affiliates may accept fees and other
consideration from such Persons for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders. Although the
Agent and its Affiliates may in the course of such relationships acquire
information about the Company and its Affiliates, the Agent shall have no duty
to disclose such information to the Lenders.
-84-
<PAGE> 94
12.5. INDEMNIFICATION
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 13.3., but without limiting the obligations of the Company under
such Section 13.3.) ratably in accordance with the aggregate principal amount of
the Loans and Reimbursement Obligations held by the Lenders (or, if no Loans or
Reimbursement Obligations are at the time outstanding, ratably in accordance
with their respective Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent (including by any Lender) arising out
of or by reason of any investigation or in any way relating to or arising out of
this Agreement or any other Credit Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby
(including, without limitation, the costs and expenses which the Company are
obligated to pay under Section 13.3., but excluding, unless an Unmatured Default
has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the enforcement
of any of the terms hereof or thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be indemnified.
12.6. NON-RELIANCE ON THE AGENT OR OTHER LENDERS
Each Lender agrees that it has, independently and without reliance on
the Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Company and its
Subsidiaries and has made an independent decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Credit Documents. The
Agent shall not be required to keep itself informed as to the performance or
observance by the Company of this Agreement or any of the other Credit Documents
or any other document referred to or provided-for herein or therein or to
inspect the properties or books of the Company and its Subsidiaries. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Company or any Subsidiary Guarantor (or any of their Affiliates) which may come
into the possession of the Agent or any of its Affiliates.
-85-
<PAGE> 95
12.7. LIABILITY OF AGENT
Except for action expressly required of the Agent hereunder and under
the other Credit Documents, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 12.5. against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Neither the Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by the Agent in connection with any of the Loan Documents in the
absence of its own gross negligence or willful misconduct.
12.8. RESIGNATION OR REMOVAL OF THE AGENT
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice thereof to the
Lenders and the Company, and the Agent may be removed at any time with or
without cause by the Required Lenders. Upon any such resignation or removal, the
Required Lenders (after consultation with the Company) shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$1,000,000,000 which has its headquarters in the United States. Upon the
acceptance of any appointment as the 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 hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 12. shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
12.9. CONSENTS UNDER CREDIT DOCUMENTS
The Agent may, with the prior written consent of the Required Lenders
and subject to Section 13.4. (but not otherwise), consent to any modification,
supplement or waiver under any of the Credit Documents.
12.10. COLLATERAL SUB-AGENTS
Each Lender by its execution and delivery of this Agreement agrees
that, in the event it shall hold any Permitted Investments, such Permitted
Investments shall be held in
-86-
<PAGE> 96
the name and under the control of such Lender, and such Lender shall hold such
Permitted Investments as a collateral sub-agent for the Agent thereunder. The
Company by its execution and delivery of this Agreement hereby consents to the
foregoing.
12.11. LIABILITY OF THE AGENT
The Agent shall not have any liability or responsibility to the Company
on account of the failure of any Lender to perform its obligations hereunder or
to any Lender on account of the failure of the Company to perform its
obligations hereunder or under any other Credit Document, except as may result
from the Agent's own gross negligence or willful misconduct.
12.12. TRANSFER OF AGENCY FUNCTION
Without the consent of the Company or any Lender, the Agent may at any
time or from time to time transfer its functions as Agent hereunder to any of
its offices wherever located in the continental United States, provided that the
Agent shall promptly notify the Company and the Lenders of such transfer.
12.13. THE CO-AGENTS
No Co-Agent, as such, shall have any duties or obligations whatsoever
under this Agreement or any other Credit Document or any other document or any
matter related hereto or thereto, but shall nevertheless be entitled to all of
the indemnities and other protection afforded to the Agent under this Article
12.
13. MISCELLANEOUS
13.1. WAIVER
No failure on the part of the Agent or any Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or any Note or other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
-87-
<PAGE> 97
13.2. NOTICES
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
delivered personally, mailed by certified or registered mail, return receipt
requested and postage prepaid, sent via a nationally recognized overnight
courier, or sent via facsimile. Such notices, demands and other communications
will be sent to the address indicated below:
To the Company:
American Health Properties, Inc.
6400 South Fiddler's Green Circle, Suite 1800
Englewood, Colorado 80111
Attention: Chief Financial Officer and General Counsel
Telephone No: (303) 796-9793
Telecopy No: (303) 796-9708
To the Agent or the Facing Bank:
Wells Fargo Bank, National Association
633 Seventeenth Street, 3rd Floor
MAC 4931-031
Denver, Colorado 80202
Attention: Mr. Jim Edwards
Telephone No: (303) 293-5648
Telecopy No: (303) 293-5163
With a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309-3424
Attention: H. Sadler Poe, Esq.
Telephone No: (404) 881-7564
Telecopy No: (404) 881-7777
-88-
<PAGE> 98
To any Lender:
At its address set forth on the signature pages hereto.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party;
provided, however, that the failure to deliver copies of notices as indicated
above shall not affect the validity of any notice. Any such communication shall
be deemed to have been received (i) when delivered, if personally delivered, or
sent by nationally-recognized overnight courier or sent via facsimile or (ii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted if sent by certified or registered mail.
13.3. EXPENSES, ETC.
(a) Agreement to Pay and Reimburse. The Company agrees to pay or
reimburse the Agent and the Facing Bank, for: (a) all out-of pocket costs and
expenses (including, without limitation, the reasonable fees and expenses of
Alston & Bird LLP, special counsel to the Agent and the Facing Bank, and
allocated costs of the Agent's internal counsel) in connection with (i) the
negotiation, preparation, execution and delivery of this Agreement and the other
Credit Documents and the extension of credit hereunder and (ii) any amendment,
modification or waiver of any of the terms of this Agreement or any of the other
Credit Documents; (b) all costs and expenses of the Lenders, the Facing Bank and
the Agent (including reasonable counsels' fees) in connection with (i) any
Unmatured Default and any enforcement or collection proceedings resulting
therefrom and (ii) the enforcement of this Section 13.3.; and (c) all transfer,
stamp, documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any of the
other Credit Documents or any other document referred to herein or therein and
all costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any other Credit Document or any other
document referred to herein or therein.
(b) Indemnity. The Company agrees to indemnify the Agent, the Facing
Bank, each Lender and their respective directors, officers, employees and agents
for, and hold each of them harmless against, any and all losses, liabilities,
claims (including Environmental Claims), damages or expenses incurred by any of
them (including any and all losses, liabilities, claims, damages or expenses
incurred by the Agent or the Facing Bank to any Lender) arising out of or by
reason of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Company of
the proceeds of any of the extensions of credit hereunder or the past, present
or future business activities of the Company including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses that are determined pursuant to
a final, non-appealable order of a court of compe-
-89-
<PAGE> 99
tent jurisdiction to have resulted solely from the gross negligence or willful
misconduct of the Person to be indemnified).
(c) Expenses Paid On Behalf of the Company. If the Company fails to pay
when due any costs, expenses or other amounts payable by it under any Credit
Document, including, without limitation, fees and expenses of counsel,
indemnities and insurance premiums, such amount may be paid on behalf of the
Company by the Agent, in its sole discretion. Immediately upon the making of
each such payment, the Agent shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed to have purchased and received from
the Agent, in each case irrevocably and without any further action by any party,
an undivided interest and participation in such payment and the obligations of
the Company under this Agreement in respect thereof in an amount equal to the
product of (x) a fraction the numerator of which is the amount of the Revolving
Credit Commitment of such Lender and the denominator of which is the aggregate
amount of all Commitments then outstanding, multiplied by (y) the amount of such
payment. Any such payment by the Agent shall constitute for all purposes of this
Agreement the making by the Agent of a Revolving Credit Loan, which shall be a
Base Rate Loan, in the amount of such payment (but without any requirement for
compliance with the conditions set forth in Article 6.). In the event that such
payment is not reimbursed by the Company by 11:00 A.M. San Francisco time) on
the first Business Day after such payment, the Agent shall promptly notify each
other Lender. Each such Lender shall, notwithstanding the then unused amount of
its Commitment or any termination thereof, on the first Business Day following
such notification, make a Revolving Credit Loan, which shall be a Base Rate
Loan, in an amount equal to the amount of its participation in such payment
(pursuant to Section 4.4.) to reimburse the Agent (but without any requirement
for compliance with the applicable conditions set forth in Article 6.) and shall
make available for the account of its Applicable Lending Office to the Agent for
its own account, by deposit to the Agent's Account, in same day funds, the
amount of such Base Rate Loan. If and to the extent that any Lender shall not
have so made the amount of such Base Rate Loan available to the Agent, such
Lender and the Company severally agree to pay to the Agent forthwith on demand
such amount together with interest thereon, for each day from the date such
payment is made by the Agent until the date such amount is paid to the Agent, at
(i) in the case of the Company, the Default Rate with respect to Base Rate Loans
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Agent such amount, such amount so paid shall constitute such
Lender's Base Rate Loan for purposes of this Agreement.
13.4. AMENDMENTS. ETC.
Except as otherwise expressly provided in this Agreement, any provision
of this Agreement (including, without limitation, any of the Schedules hereto)
may be amended or modified only by an instrument in writing signed by the
Company and the Agent acting with the consent of the Required Lenders, and any
provision of this Agreement may be waived by the Required Lenders or by the
Agent acting with the consent of the Required Lenders; provided, however, that
no amendment, modification or waiver shall, unless by
-90-
<PAGE> 100
an instrument signed by all of the Lenders or by the Agent acting with the
consent of all of the Lenders: (i) increase or extend the term, or extend the
time or waive any requirement for the reduction or termination, of any of the
Commitments, (ii) extend the date fixed for the payment of principal of or
interest on any Loan, Fee, Letter of Credit, or any Reimbursement Obligation
hereunder, (iii) reduce the amount of any such payment of principal, (iv) reduce
the rate at which interest is payable thereon or any Fee or other obligation of
the Company or any of its Subsidiaries is payable hereunder (except that the
Required Lenders may waive application of the Default Rate), (v) alter the
rights or obligations of the Company to prepay Revolving Credit Loans (except
that the Required Lenders may waive the application of any of the provisions of
Section 2.13.(e)), (vi) alter the terms of this Section 13.4. or Section
13.6.(a), (vii) waive any of the conditions precedent set forth in Article 6.;
(viii) amend the definition of the term "Required Lenders"; (ix) extend the
Maturity Date pursuant to Section 4.2. or (x) release a Subsidiary from the
Subsidiary Guaranty or terminate the Subsidiary Guaranty prior to the
termination of this Agreement; and provided further, that any amendment of
Article 12. shall require the consent of the Agent.
13.5. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
13.6. ASSIGNMENTS AND PARTICIPATIONS
(a) The Company may not assign its rights or obligations hereunder or
under the other Credit Documents without the prior consent of all of the
Lenders.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it and the Notes
held by it, which assignment may be of a varying percentage of such the Lender's
rights and obligations, it being understood that such the Lender may assign to
any assignee any portion of any or all of its Revolving Credit Loans or
Revolving Credit Commitment) upon payment to the Agent of an assignment fee of
$3,500 provided, however, that (i) such assignment is in a minimum amount of
$5,000,000; (ii) except in the case of an assignment to a Lender or an Affiliate
of a Lender, the Agent and, if no Event of Default exists, the Company must
consent to such assignment (which consent of the Agent and the Company, if
applicable shall not be unreasonably withheld), and (iii) the parties to each
such assignment shall execute and deliver to the Agent (with a copy to the
Company) an assignment and acceptance agreement evidencing such assignment,
substantially in the form of Exhibit I hereto (an "Assignment and Acceptance").
Upon acceptance pursuant to Section 13.6.(d), 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 provided in such Assignment and Acceptance,
shall have the rights and obligations of a Lender under this Agreement
-91-
<PAGE> 101
and (B) the assigning Lender thereunder shall, to the extent provided in such
assignment, 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).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, 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,
any other Credit Document or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or any Subsidiary or the performance or observance by the Company of any of its
obligations under this Agreement, any other Credit Document 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 most
recent financial statements delivered pursuant to Section 8.1. 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 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 under this Agreement as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment and the assignment fee referred to in paragraph (b)
above, the Agent shall (subject to the consent of the Agent and the Company to
such assignment, if required) (i) accept such Assignment and Acceptance, and
(ii) give prompt notice thereof to the Company. Within five Business Days after
receipt of such notice, the Company, 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 assignee in a principal amount equal to the
applicable Loans and/or Commitments assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained Loans and/or
Commitments, a new Note or Notes to the order of such assigning Lender in a
principal amount equal to the applicable Loan and/or Commitments retained by it.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes; such new Notes shall be
dated the date of the surrendered Notes which they
-92-
<PAGE> 102
replace and shall otherwise be in substantially the form of Exhibit B hereto.
Canceled Notes shall be returned to the Company.
(e) A Lender may sell or agree to sell to one or more other Persons (a
"Participant") a participation in all or any part of any Loans held by it, in
which event the Participant's rights in respect of such participation shall be
those set forth in the agreements executed by such Lender in favor of the
Participant; provided, however, that such participation is in a minimum amount
of $5,000,000. Such Participant shall have no direct right under the Credit
Documents. All amounts payable by the Company to any Lender under Article 5. in
respect of Loans held by it shall be determined as if such Lender had not sold
or agreed to sell any participations in such Loans and as if such Lender were
funding each of such Loans in the same way that it is funding the portion of
such Loan in which no participations had been sold. In no event shall a Lender
that sells a participation agree with the Participant to take or refrain from
taking any action hereunder or under any other Credit Document, except that such
Lender may agree with the Participant that it will not, without the consent of
the Participant, agree to (i) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Lender's related
Commitments, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan(s) or the portion of any fee hereunder payable to
the Participant, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon, or any fee hereunder
payable to the Participant, to a level below the rate at which the Participant
is entitled to receive such interest or fee (v) extend the Maturity Date
pursuant to Section 4.2., or (vi) release a Subsidiary from the Subsidiary
Guaranty or terminate the Subsidiary Guaranty prior to the termination of this
Agreement.
(f) In addition to the assignments and participations permitted under
the foregoing provisions of this Section, any Lender may assign and pledge all
or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Company or any
Subsidiary in the possession of such Lender from time to time to assignees and
Participants (including prospective assignees and Participants) in accordance
with Section 13.8.
13.7. REPLACEMENT OF LENDERS
If the Company is obligated to pay to any Lender (other than the Agent
or the Facing Bank) any amount under Sections 5.1., 5.5., or 5.6. or if such
Lender requests that its Eurodollar Loans be converted into Base Rate Loans
pursuant to Section 5.3., or if such Lender refuses to extend the Maturity Date
following a request to do so by the Company pursuant to Section 4.2., the
Company may, so long as no Unmatured Default
-93-
<PAGE> 103
or Event of Default then exists, replace such Lender with another lender
acceptable to the Agent and the Facing Bank, and such Lender hereby agrees to be
so replaced subject to the following:
(a) The obligations of the Company hereunder to such Lender to be
replaced (including such increased or additional costs incurred from the date of
notice to the Company through the date such Lender is replaced hereunder) shall
be paid in full to such Lender concurrently with such replacement.
(b) The replacement Lender (i) shall be a bank or other financial
institution that is not subject to the increased or additional costs arising
under such Sections which may have effectuated the Company's election to replace
any Lender hereunder or (ii) shall approve the extension of the Maturity Date
requested by the Company. Each such replacement Lender shall execute and deliver
to the Agent an Assignment and Assumption Agreement executed by all parties
pursuant to which such replacement Lender is to become a party hereto with a
Revolving Credit Commitment equal to that of the Lender being replaced and shall
make a Loan or Loans in the aggregate principal amount equal to the aggregate
outstanding principal amount of the Loan or Loans of the Lender being replaced
and shall purchase a participation in all outstanding Letters of Credit as
provided in Section 4.9. hereof.
(c) Upon the execution of such documents referred to in subsection (b)
and repayment of the amounts referred to in subsection (a), the replacement
Lender shall be a "Lender" with a Revolving Credit Commitment as specified
hereinabove and the Lender being replaced shall cease to be a "Lender"
hereunder, except with respect to indemnification provisions under this Credit
Agreement, which shall survive as to such replaced Lender.
(d) The Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this Section 13.7., but at no time shall the
Agent be obligated to initiate any such replacement.
(e) Upon payment of a fee of $3,500 to the Agent by the Company, any
Lender replaced under this Section 13.7. shall be replaced at the Company's sole
cost and expense and at no cost or expense to the Agent or the Facing Bank.
13.8. CONFIDENTIALITY OF INFORMATION
The Agent and each Lender, severally and not jointly, agree to use
their respective best efforts to hold in confidence and not disclose any written
information (other than information (i) which was publicly known or otherwise
known to it, at the time of disclosure (except pursuant to disclosure in
connection with this Agreement), (ii) which subsequently becomes publicly known
through no act or omission by them, or (iii) which otherwise becomes known to
it, other than through disclosure by the Company or a Subsidiary) delivered or
made available by or on behalf of the Company or any Subsidiary to it (including
-94-
<PAGE> 104
without limitation any non-public information obtained pursuant to Section 8.1.)
in connection with or pursuant to this Agreement which is proprietary in nature
and clearly marked or labeled as being confidential information, provided that
nothing herein shall prevent the Agent or any Lender from delivering copies of
any financial statements and other documents delivered to the Agent or such
Lender, and disclosing any other information disclosed to the Agent or such
Lender, by or on behalf of the Company or any Subsidiary to (i) the Agent's or
such Lender's Affiliates, directors, officers, employees, agents and
professional consultants, (ii) any other Lender, (iii) any Person to which such
Lender offers to assign its Note or Commitment or any part thereof (which Person
agrees to be bound by the provisions of this Section 13.8.), (iv) any Person to
which such Lender sells or offers to sell a Participation in all or any part of
its Note or Commitment (which Person agrees to be bound by the provisions of
this Section 13.8.), (v) any federal or state regulatory authority having
jurisdiction over the Agent or such Lender, and (vi) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) to effect
compliance with any law, rule, regulation or order applicable to the Agent or
such Lender, (b) in response to any subpoena or other legal process, (c) in
connection with any litigation to which the Agent or such Lender is a party or
(d) in order to protect such Lender's investment in its Note.
13.9. SURVIVAL
(a) The obligations of the Company and its Subsidiaries under Sections
5.1., 5.5., 5.6. and 13.3. and the obligations of the Lenders under Section
12.5. shall survive the repayment of the Loans and the termination of the
Commitments. No Lender shall be deemed to have waived, by reason of making any
extension of credit hereunder, any Unmatured Default which may arise by reason
of any representation or warranty made or deemed made herein proving to have
been false or misleading, notwithstanding that such Lender or the Agent may have
had notice or knowledge or reason to know that such representation or warranty
was false or misleading at the time such extension of credit was made.
(b) All representations and warranties made under this Agreement shall
be deemed to be made, and shall be true and correct, at and as of the Closing
Date and at and as of the date of each Loan, except to the extent (a) previously
fulfilled in accordance with the terms hereof, (b) subsequently inapplicable, or
(c) modified as a result of activities of the Company or its Subsidiaries or
changes in circumstances, in any case as permitted hereunder or consented to in
accordance with the provisions hereof. All representations and warranties made
under this Agreement shall survive, and not be waived by, the execution hereof
by the Agent or the Lenders, any investigation or inquiry by the Agent or the
Lenders, or by the making of any Loan under this Agreement.
-95-
<PAGE> 105
13.10. TABLE OF CONTENTS; DESCRIPTIVE HEADINGS
The table of contents and captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
13.11. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which need not contain the signature of more than one party and all of which
taken together shall constitute one and the same original instrument.
13.12. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE DOMESTIC LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA. IN FURTHERANCE OF
THE FOREGOING, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA SHALL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN THOUGH UNDER THAT
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
13.13. CONSENT TO JURISDICTION
Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of California or
of the United States for the Northern District or Central District of
California, and by execution and delivery of this Agreement, each of the
Company, the Agent, the Facing Bank and the Lenders consents, for itself and in
respect of its Property, to the non-exclusive jurisdiction of those courts. Each
of the Company, the Agent, the Facing Bank 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 this
Agreement or any document related hereto. The Company, the Agent, the Facing
Bank and the Lenders each waive personal service of any summons, complaint or
other process which may be made by any other means permitted by California law.
13.14. WAIVER OF JURY TRIAL
EACH OF THE COMPANY, THE ARRANGER, THE AGENT, THE FACING BANK AND THE
LENDERS HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY
IN
-96-
<PAGE> 106
ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT
OF THIS AGREEMENT, ANY NOTE, OR ANY OTHER CREDIT DOCUMENT OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; AND THE COMPANY
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE
ANY SETOFF OR COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH
LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR
CROSS-CLAIM EXCEPT TO THE EXTENT THAT THE FAILURE SO TO ASSERT ANY SUCH SETOFF,
COUNTERCLAIM OR CROSS-CLAIM WOULD PERMANENTLY PRECLUDE THE PROSECUTION OF OR
RECOVERY UPON THE SAME. NOTWITHSTANDING ANYTHING CONTAINED IN THE AGREEMENT TO
THE CONTRARY, NO CLAIM MAY BE MADE BY THE COMPANY AGAINST THE AGENT, THE FACING
BANK OR ANY LENDER FOR ANY LOST PROFITS OR ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (OTHER THAN
WILLFUL MISCONDUCT CONSTITUTING ACTUAL FRAUD) IN CONNECTION WITH, ARISING OUT OF
OR IN ANYWAY RELATED TO THE TRANSACTIONS CONTEMPLATED HEREUNDER, THE NOTES OR
UNDER THE OTHER CREDIT DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT TO
SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES. THE COMPANY AGREES THAT THIS
SECTION 13.14. IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND
ACKNOWLEDGES THAT THE LENDERS WOULD NOT EXTEND TO THE COMPANY ANY LOAN AND THE
FACING BANK WOULD NOT ISSUE ANY LETTER OF CREDIT ON BEHALF OF THE COMPANY
HEREUNDER IF THIS SECTION 13.14. WERE NOT PART OF THIS AGREEMENT.
13.15. ACKNOWLEDGMENTS
The Company hereby acknowledges that: (a) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the
other Credit Documents to which it is a party; (b) except as expressly provided
in this Agreement or any of the Credit Documents, neither the Agent, the Facing
Bank nor any Lender has any fiduciary relationship with or duty to the Company,
and the relationship between the Agent, the Facing Bank and the Lenders on one
hand, and the Company on the other hand, is solely that of debtor and creditor;
and (c) no joint venture exists between the Agent, the Facing Bank and the
Lenders on one hand, and the Company on the other hand.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
-97-
<PAGE> 107
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AMERICAN HEALTH PROPERTIES, INC.
By: /s/ Michael J. McGee
----------------------------------
Name: Michael J. McGee
Title: Senior Vice President and
Chief Financial Officer
[Signatures continued on following page]
-98-
<PAGE> 108
[Continuation of the signature pages to the Credit Agreement]
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Arranger, Agent, Lender and Facing Bank
By: /s/ Jack Haye
--------------------------------------
Name: Jack Haye
---------------------------------
Title: Vice President
-------------------------------
Revolving Credit Commitment: $36,000,000 of
which $2,160,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Wells Fargo Bank, National Association
633 Seventeenth Street, 3rd Floor
MAC 4931-031
Denver, Colorado 80202
Attention: Jim Edwards
Telecopy No. (303) 293-5163
(Base Rate, Eurodollar and Bid Rate Loans):
Wells Fargo Bank, National Association, as Agent
Commercial Bank Loan Center
Agency Department, 2840
201 3rd Street, 8th Floor
San Francisco, California 94103
Attention: Manager
Telecopy No. (415) 512-9408
[Signature pages continued on following page]
-99-
<PAGE> 109
[Continuation of the signature pages to the Credit Agreement]
BANQUE PARIBAS, as Co-Agent and Lender
By: /s/ Don L. Unruh
--------------------------------------
Name: Don L. Unruh
---------------------------------
Title: Assistant Vice President
-------------------------------
By: /s/ Clare Bailhe
--------------------------------------
Name: Clare Bailhe
---------------------------------
Title: Director
-------------------------------
Revolving Credit Commitment: $25,000,000 of
which $1,500,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Banque Paribas
2029 Century Park East, Suite 3900
Los Angeles, California 90067
Attention: Ms. Claire O'Donnell Bailhe
Telecopy No. (310) 556-3157
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-100-
<PAGE> 110
[Continuation of the signature pages to the Credit Agreement]
FIRST UNION NATIONAL BANK, as Co-Agent and
Lender
By: /s/ Joseph H. Towell
--------------------------------------
Name: Joseph H. Towell
---------------------------------
Title: Senior Vice President
-------------------------------
Revolving Credit Commitment: $30,000,000 of
which $1,800,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
First Union National Bank
301 South College Street
One First Union Center
NC0735
Charlotte, North Carolina 28288
Attention: Mr David Straut
Telecopy No. (704) 383-9144
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-101-
<PAGE> 111
[Continuation of the signature pages to the Credit Agreement]
NATIONSBANK OF TEXAS, N.A., as Co-Agent and
Lender
By: /s/ F. Scott Singhoff
--------------------------------------
Name: F. Scott Singhoff
---------------------------------
Title: Senior Vice President
-------------------------------
Revolving Credit Commitment: $30,000,000 of
which $1,800,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
NationsBank of Texas, N.A.
901 Main Street, 14th Floor
Dallas, Texas 75202
Attention: Mr. Chris Bertel
Telecopy No. (214) 508-1215
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-102-
<PAGE> 112
[Continuation of the signature pages to the Credit Agreement]
THE BANK OF NEW YORK, as Lender
By: /s/ Robert Louk
--------------------------------------
Name: Robert Louk
---------------------------------
Title: Vice President
-------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
The Bank Of New York
One Wall Street, 22nd Floor
New York, New York 10286
Attention: Sandra Morgan/Dawn Hertling
Telecopy No. 212-635-6877 or 6399
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-103-
<PAGE> 113
[Continuation of the signature pages to the Credit Agreement]
BANQUE NATIONALE DE PARIS, as Lender
By: /s/ Clive Bettles
---------------------------------------
Name: Clive Bettles
----------------------------------
Title: Senior Vice President & Manager
--------------------------------
By: /s/ Mitchell M. Ozawa
---------------------------------------
Name: Mitchell M. Ozawa
----------------------------------
Title: Vice President
--------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Mr. Don Hart
Telecopy No. (415) 989-9041
with a copy to:
Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, California 90017
Attention: Mr. Mitchell Ozawa
Telecopy No. (213) 488-9602
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-104-
<PAGE> 114
[Continuation of the signature pages to the Credit Agreement]
COLORADO NATIONAL BANK, as Lender
By: /s/ Joni M. Fish
--------------------------------------
Name: Joni M. Fish
---------------------------------
Title: Vice President
-------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Colorado National Bank
918 Seventeenth Street, Suite 200
MSCNBB-0211
Denver, Colorado 80202
Attention: Ms. Joni Fish
Telecopy No. (303) 585-4242
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-105-
<PAGE> 115
[Continuation of the signature pages to the Credit Agreement]
FLEET NATIONAL BANK, as Lender
By: /s/ Ginger Stolzenthaler
--------------------------------------
Name: Ginger Stolzenthaler
---------------------------------
Title: Senior Vice President
-------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Fleet National Bank
75 State Street
MA BOFO4A
Boston, Massachusetts 02109-1810
Attention: Ms. Ginger Stolzenthaler
Telecopy No. (617) 346-1634
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
[Signature pages continued on following page]
-106-
<PAGE> 116
[Continuation of the signature pages to the Credit Agreement]
DRESDNER BANK AG, NEW YORK BRANCH AND GRAND
CAYMAN BRANCH, as Lender
By: /s/ Andrew P. Nesi
--------------------------------------
Name: Andrew P. Nesi
---------------------------------
Title: Vice President
-------------------------------
By: /s/ Felix K. Camacho
--------------------------------------
Name: Felix K. Camacho
---------------------------------
Title: Assistant Treasurer
-------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
Dresdner Bank AG
75 Wall Street
New York, New York 10005
Attention: Lara Lam
Telecopy: 212-429-2130
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
-107-
<PAGE> 117
[Continuation of the signature pages to the Credit Agreement]
AMSOUTH BANK, as Lender
By: /s/ Shannon O. Clark
--------------------------------------
Name: Shannon O. Clark
---------------------------------
Title: Assistant Vice President
-------------------------------
Revolving Credit Commitment: $21,500,000 of
which $1,290,000 shall be the initial Pro
Rata Share of the Letter of Credit
Subcommitment
Applicable Lending Office:
AmSouth Bank
1900 Fifth Avenue North, AST-7th Floor
Birmingham. Alabama 35203
Attention: Shannon Clark, Asst. Vice President
Telecopy: (205) 326-4790
(Base Rate, Eurodollar and Bid Rate Loans):
same as above
-108-
<PAGE> 1
EXHIBIT 10.2
AMERICAN HEALTH PROPERTIES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
WITH
STEVEN A. ROSEMAN
This Executive Employment Agreement (the "Agreement") is entered into
as of July 7, 1997, between AMERICAN HEALTH PROPERTIES, INC., a Delaware
corporation (the "Company") and STEVEN A. ROSEMAN, an individual ("Executive").
1. EMPLOYMENT AND TERM
The Company agrees to employ Executive for the period commencing on the
day and the year first written above and ending on the earlier of: (a) the date
of termination of Executive's employment in accordance with Section 4(a)-(c)
below or (b) the date that is two (2) years from the date the Company provides
Executive with written notice of termination of Executive's employment. The
Board of Directors of the Company (the "Board") shall review the terms of
Executive's employment on an annual basis and shall make such modifications to
the terms as the Board in its discretion shall deem appropriate and as Executive
shall consent.
2. DUTIES
(a) Executive shall serve in the capacity of Senior Vice President,
General Counsel and Corporate Secretary. Executive shall perform such services
and duties as are usually associated with such positions as well as those
decided upon by the President and the Board.
(b) Executive shall devote his full business time and energy to the
business and affairs of the Company and shall use his best efforts and abilities
faithfully and diligently to promote the business interests of the Company and
its subsidiaries as directed by and to the reasonable satisfaction of the
President and the Board.
(c) Executive's services shall be rendered in accordance with such
policies as the Company may establish for the conduct of its officers and
employees.
(d) Provided such services or investments do not violate any applicable
law, regulation or order or interfere in any way with the faithful and diligent
performance by Executive of services to the Company otherwise required or
contemplated by this Agreement or requested by the Board, Executive may:
(i) Serve as a director, trustee, or in any other similar
capacity of any business enterprise or any civic, educational,
charitable or trade organization if the Board has been informed of such
service and the Board has not expressly requested Executive to refuse,
or to discontinue, such service, and
<PAGE> 2
(ii) Make and manage personal business investments of
Executive's choice that are consistent with the conflict-of-interest
policies of the Company.
3. COMPENSATION
Commencing as of July 7, 1997, the Company shall compensate Executive
as follows:
(a) Base Salary. Executive shall receive a Base Salary at the rate of
One Hundred Seventy-five Thousand Dollars ($175,000) per annum which shall be
payable in semi-monthly installments in conformity with the Company's policy
relating to its employees generally as in effect from time to time. Executive's
Base Salary shall be reviewed periodically by the Board and may be increased by
action of the Board upon such review, but Executive's salary shall not be
decreased except as provided in Sections 4 and 5.
(b) Incentive Compensation. The Board may, in its discretion, award an
annual bonus in addition to base compensation. Such bonus, if any, shall be paid
in such amount and based upon such criteria as are from time to time adopted by
the Board.
(c) Additional Benefits. Executive also shall be entitled to receive
all benefits for which he is eligible under the terms of any stock incentive
plan, pension plan, SERP, life, medical, dental, vision and disability insurance
and reimbursement programs, and any other plans or arrangements, which the
Company may provide for executive officers from time to time ("Additional
Benefits"). Additional Benefits shall in all respects be paid in accordance with
the then-existing plans, or policies, programs, or arrangements establishing or
governing such Additional Benefits. The Company reserves the right to add,
terminate, or amend any existing plans, policies, programs, or arrangements
during the term of this Agreement and at all other times.
(d) Vacation. Vacation, at full pay, of four (4) weeks per calendar
year. Vacation not used during any calendar year may not be carried over to the
following year.
All compensation paid to Executive shall be subject to withholding for
taxes and subject to payroll and other taxes as required by applicable law and
in conformity with the Company's policies relating thereto as in effect from
time to time.
4. TERMINATION OF EMPLOYMENT BY THE COMPANY
The compensation provided for in Section 3 of this Agreement and
Executive's employment by the Company may be terminated by the Company prior to
expiration of the term set forth in Section 1(b) as provided for below:
(a) Disability. If Executive becomes either partially or totally unable
to perform his duties after the making of reasonable accommodations because of
any physical or mental disability during the term of his employment hereunder
for three (3) consecutive calendar months or for shorter periods aggregating 90
or more business days in any 12-month period, Executive's employment may be
2
<PAGE> 3
terminated by the Company at any time during the continuance of such disability.
Upon termination as described in this Section 4(a), Executive shall be entitled
to receive the Base Salary provided for in Section 3(a) of this Agreement for a
period of 90 days after such termination. The Company shall offset against such
Base Salary payments any payments received by Executive as a result of such
illness or injury pursuant to any federal or state program or any salary
continuation or similar program or disability insurance established by the
Company.
Upon termination as described in this Section 4(a), Executive shall
resign from his offices as an officer of the Company and its subsidiaries and
the Company shall continue Executive's coverage under any and all life, medical,
dental, vision and disability insurance plans for a period of 120 days after
such termination at the expense of the Company. Other Additional Benefits shall
be made available to Executive as required by applicable laws, including the
health coverage continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act, 29 U.S.C. ss.ss. 1161-1168 ("COBRA"), and by the terms of
the Additional Benefit plans, policies, programs, and arrangements in effect at
the time of termination. Executive's period of coverage under COBRA (29 U.S.C.
ss. 1162(2)), shall begin on the date of the termination of his employment under
this Section 4(a). Executive agrees to execute such documents as may be
requested by the Company in order to comply with its obligations under this
Section 4(a) and under COBRA and other applicable laws. The Company shall
provide Executive with the health coverage continuation benefits specified by
COBRA whether or not the Company is obligated under COBRA to do so.
(b) Death. If Executive dies during the term of this Agreement,
Executive's Beneficiary or Beneficiaries, as defined in Section 7 of this
Agreement, shall be entitled to receive the Base Salary provided for in Section
3(a) of this Agreement for a period of 90 days after the date such death occurs.
Additional Benefits shall be made available to the Beneficiaries of Executive
under the life, medical, dental, vision and other Additional Benefit plans,
policies, programs, and arrangements, as required by applicable laws, including
COBRA, and by the terms of the Additional Benefit plans, policies, programs, and
arrangements in effect at the time of Executive's death. The Company shall
provide Executive's Beneficiaries with the health coverage continuation benefits
specified by COBRA whether or not the Company is obligated under COBRA to do so.
(c) For Cause. The Company may upon 14 days' notice to Executive
terminate this Agreement and all of its obligations hereunder to Executive
accruing after the date of such termination if the termination is for "cause." A
termination for cause is a termination effected by the Board on one or more of
the following grounds: (i) that Executive has been declared of unsound mind by a
court, (ii) that Executive has been convicted of a felony, (iii) that Executive
has been convicted of a misdemeanor involving moral turpitude, (iv) that
Executive has repeatedly committed a material breach of this Agreement (provided
that Executive has been notified of the prior breach), or (v) that Executive has
not permanently relocated his principal residence to a location which is within
80 miles of the Company's principal executive offices by September 1, 1998.
Except as expressly required by applicable laws, including COBRA if
applicable, and by the terms of the Additional Benefits plans, policies,
programs, and arrangements then in effect, upon such termination, Executive's
rights under Section 3 of this Agreement shall terminate on the date of the
termination of his employment under this Section 4(c). Executive's period of
coverage under COBRA
3
<PAGE> 4
(29 U.S.C. ss. 1162(2)), if any, shall begin on the date of the termination of
his employment under this Section 4(c). Upon termination as described in this
Section 4(c), Executive shall resign from his offices as an officer of the
Company and its subsidiaries. Executive agrees to execute all documents as may
be requested by the Company in order to comply with its obligations under this
Section 4(c) and under COBRA, if applicable, and any other applicable laws.
(d) Other Termination. The Company may by notice to Executive terminate
Executive's employment for reasons other than those specified in Sections 4(a)
through (c) above. In the event notice of termination of Executive's employment
is given by the Company for reasons other than those specified in Sections 4(a)
through (c), from the date of such notice of termination Executive shall be
entitled to receive only the compensation specifically provided below:
(i) The Executive's annual Base Salary in effect at the time
of termination until the expiration of the employment period as
provided in Section 1(b) of this Agreement.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of stock options and
acceleration of the lapse of restrictions of any restricted stock
awards held by Executive that would have vested or lapsed during the
period between notice of termination of Executive's employment and the
expiration of Executive's employment period as provided in Section
1(b).
Upon termination of Executive's employment as described in this Section
4(d), Executive shall resign from his offices as an officer of the Company and
its subsidiaries and the Company shall, at the option of Executive, (i) continue
installment payments to Executive on the periodic basis described in Section
3(a) at the rate and for the duration of the employment period specified in
Section 4(d)(i); or (ii) make a lump sum payment to Executive equal to
seventy-five percent (75%) of the amounts due Executive under Section 4(d)(i)
for the duration of the employment period specified therein. A lump sum payment
in accordance with this paragraph shall be made within ten (10) working days of
Executive's election.
Upon termination of Executive's employment as described in this Section
4(d), Additional Benefits shall be made available to Executive as required by
applicable laws, including COBRA. Executive's period of coverage under COBRA (29
U.S.C. ss. 1162(2)), for purposes of this Section 4(d) shall begin on the date
of the termination of the benefits to which Executive is entitled pursuant to
Section 4(d)(ii). Executive agrees to execute such documents as may be requested
by the Company in order to comply with its obligations under this Section 4(d)
and under COBRA and any other
4
<PAGE> 5
applicable laws. The Company shall provide Executive with the health coverage
continuation benefits specified by COBRA whether or not the Company is obligated
under COBRA to do so.
(e) Constructive Termination. The occurrence of any of the following
events shall be deemed a termination of Executive's employment under Section
4(d) above:
(i) Failure to elect or reelect or otherwise to maintain
Executive in the office or the position, or a substantially equivalent
office or position, with the Company which Executive holds as of the
date of this agreement (or which may be increased from time to time).
(ii) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties attached
to Executive's position with the Company, a reduction in Executive's
Base Salary, as increased from time to time, or the termination or
denial of Executive's rights to a substantial amount of Additional
Benefits as herein provided, any of which is not remedied within 10
calendar days after receipt by the Company of written notice from
Executive of such change, reduction or termination, as the case may be.
(iii) The Company shall relocate its principal executive
offices, or require Executive to have his principal location of work
changed, to any location which is not within the State of California
and is in excess of 80 miles from its present location.
(iv) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
5. TERMINATION RELATING TO CHANGE OF CONTROL
(a) Any of the following events shall constitute a "Change of
Control" hereunder:
(i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement) individuals who at
the beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of Directors
or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
5
<PAGE> 6
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(b) Within 180 days of a Change of Control, Executive may terminate
employment with the Company by delivering written notice of such termination to
the Company, accompanied by Executive's resignation from his offices as an
officer of the Company and its subsidiaries. Upon Executive's termination of
employment as specified in the preceding sentence, or if the Company (or any
successor) terminates Executive's employment for any reason within 180 days of a
Change of Control, Executive shall be entitled to receive:
(i) A lump sum payment equal to two (2) times Executive's
Average Annual Compensation. "Average Annual Compensation" shall mean
the average of Executive's combined salary plus Bonus for the two
calendar years immediately preceding the date of determination. If for
either of the two calendar years in the calculation period Executive
was employed for less than a full year by the Company, Executive's
salary and Bonus for such year(s) shall be computed on an annualized
basis. "Bonus" shall mean the cash portion of any incentive
compensation paid to Executive plus an amount in cash equal to the
value of any restricted stock or stock options received by Executive as
a deferral of or in lieu of a cash bonus.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of all stock options
and immediate lapse of restrictions on all restricted stock awards held
by Executive.
(c) In connection with any termination of employment pursuant to this
Section 5, the Company shall provide Executive with outplacement services from
an outplacement firm of Executive's choice up to a maximum cost of $10,000.
(d) If any dispute arises between the Company (or any successor) and
Executive regarding Executive's rights under this Section 5, Executive shall be
entitled to recover his attorneys' fees and costs incurred in connection with
such dispute.
6
<PAGE> 7
(e) Notwithstanding any other provision of this Section 5, if the
aggregate of all amounts Executive is entitled to receive as a result of
termination of employment pursuant to this Section 5 equals or exceeds an amount
that would cause Executive to be deemed to receive an "excess parachute payment"
as defined in Internal Revenue Code Section 280G and would subject Executive to
an excise tax liability under Internal Revenue Code Section 4999, Executive may
elect to receive only those amounts that in the aggregate would not cause
Executive to be deemed to receive an "excess parachute payment" and irrevocably
waive his right to receive any other amounts he would otherwise be entitled to
under this Section 5.
(f) Any payments under Sections 5(b)-(e) shall be in lieu of any
payments under Section 4(d).
6. TERMINATION OF EMPLOYMENT BY EXECUTIVE.
(a) In addition to his rights under Section 5 hereof, Executive may
terminate employment with the Company without cause as of a specified date not
less than 30 days and not more than 90 days after delivering written notice of
such termination to the Company. Upon the effective date of such termination,
Executive's right to receive the compensation provided for in Section 3 of this
Agreement shall terminate. The Company may at any time in its sole discretion
waive all or part of the notice period and specify any day in such period that
has not yet occurred as the date of termination for purposes of this Section
6(a); in the event of such occurrence, the Company shall pay Executive the
amount of the compensation provided for in Section 3 of this Agreement for the
remainder of the notice period given by Executive.
(b) Upon termination as described in Section 6(a), Additional Benefits
will be made available to Executive as required by applicable laws, including
COBRA, if applicable, and by the terms of the Additional Benefit plans,
policies, programs, and arrangements in effect at the time of termination.
Executive's period of coverage under COBRA (29 U.S.C. ss. 1162(2)), if any,
shall begin on the date of the termination of his employment under Section 6(a).
Executive agrees to execute such documents as may be requested by the Company in
order to comply with its obligations under this Section 6(b) and under COBRA, if
applicable, and any other applicable laws.
7. DESIGNATION OF BENEFICIARY
Executive may designate one or more persons or entities (including a
trust or trusts or his estate) to receive any compensation payable to him under
Section 4(b) ("Beneficiaries"). If Executive shall designate more than one
Beneficiary, he shall set forth the proportion in which each is to receive such
compensation; any such designation which fails to set forth such proportion
shall be an invalid designation as to all those so designated. Executive also
may designate one or more successor Beneficiaries who shall succeed to the
rights of the Beneficiaries originally designated, in case the latter should die
prior to the receipt of full payment. Executive may from time to time change any
designation so made, and that last designation shall be controlling. If
Executive designates a person other than, or in addition to, his spouse, his
spouse shall specifically approve his designation and authorize the Company to
pay his compensation as designated. In the absence of a valid designation by
Executive meeting the requirements of this Section 7, or in the event of the
death of a Beneficiary for
7
<PAGE> 8
whom no successor Beneficiary has been validly designated, Executive's
compensation, or the portion of such compensation then payable to such deceased
Beneficiary, shall be paid to the administrator or executor of Executive's
estate for the benefit of Executive's estate, who shall in that event be deemed
a Beneficiary under this Section 7.
Executive's designation and his spouse's approval and authorization, if
necessary, must be in the form of a signed writing witnessed by two adult
persons (other than any designated Beneficiary) and must have been delivered to
the Company prior to Executive's death.
8. REIMBURSEMENT OF EXPENDITURES
During the term of this Agreement, the Company shall reimburse
Executive for business expenses reasonably and necessarily incurred by him on
its behalf in accordance with its business-expense reimbursement policies as in
effect from time to time and subject to Executive's furnishing such
substantiation of such expenses as the Company may require. Without limitation
on the foregoing, the Company shall reimburse Executive for bar association dues
and the costs of attendance at continuing legal education seminars.
9. CONFIDENTIAL INFORMATION
During the term of this Agreement, Executive shall not disclose to any
persons (other than another employee of the Company) any confidential
information relating to the business of the Company obtained by him while in the
employ of the Company, without the consent of the Board, except as necessary or
appropriate in the discharge of his obligations to the Company and its
shareholders.
10. NONASSIGNMENT OF EXECUTIVE'S OBLIGATIONS AND DUTIES
The obligations and duties of Executive hereunder shall be personal and
not assignable.
11. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and shall be binding upon
the Company and its respective successors and assigns, including any purchaser
of all or substantially all of its assets, and shall be binding upon Executive's
assigns, executors, administrators, Beneficiaries, or their legal
representatives.
12. NOTICES
Any notices provided for in this Agreement shall be sent to the Company
at American Health Properties, Inc., 6400 Fiddlers Green Circle, Suite 1800,
Englewood, Colorado 80111, Attention: Chairman, Compensation Committee, or at
such other address as the Company may from time to time in writing designate,
and to Executive at 6400 Fiddlers Green Circle, Suite 1800, Englewood, Colorado
80111, or at such other address as he may from time to time in writing
designate. All notices will be deemed to have been delivered (i) as of the first
to occur of actual receipt or two (2) business
8
<PAGE> 9
days after being sent by certified mail, return receipt requested, postage paid
and properly addressed to the designated address of the party to whom addressed
or (ii) if notice is given in any other manner, when actually received.
13. ENTIRE AGREEMENT
This instrument contains the entire agreement between the Company and
Executive relating to the subject of Executive's employment by the Company,
except to the extent that the terms and provisions of Additional Benefits,
expense reimbursement policies and Company policies governing executives and
employees generally are (as referred to herein) set forth in other documents.
This Agreement supersedes all prior and contemporaneous oral and written
agreements, understandings, and representations, if any, among the parties.
14. TERMINATION OF AGREEMENT
This Agreement shall terminate at the end of the period of Executive's
employment, as described in Section 1 of this Agreement (or at the end of any
different period specifically set forth herein for the termination of
Executive's employment), and may be continued thereafter only upon the execution
of a writing to that effect signed by the Company and Executive. If Executive's
employment continues after the termination of this Agreement for any period
during which no such writing is in effect, Executive shall be deemed to be
employed at the will of the Company and his employment may be terminated at any
time with or without notice and with or without cause and without obligation of
any party to any other party.
15. WAIVERS
The waiver or breach of any term or condition of this Agreement will
not be deemed to constitute the waiver of any other breach of the same or any
other term or condition.
16. GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of Colorado.
17. SEVERABILITY
If any provision or clause of any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.
9
<PAGE> 10
19. NO CONFLICT WITH PRIOR AGREEMENTS AND RIGHTS
Executive hereby represents and warrants to the Company that neither
the execution of this Agreement nor performance by Executive of his obligations
hereunder conflicts with any contractual commitment on his part to any third
party or violates or interferes with any right of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN HEALTH PROPERTIES, INC.
By /s/ JOSEPH P. SULLIVAN
------------------------------
Joseph P. Sullivan
President and
Chief Executive Officer
/s/ STEVEN A. ROSEMAN
- ------------------------------
Executive
10
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated March 24, 1997
included in American Health Properties, Inc.'s Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------
ARTHUR ANDERSEN LLP
Denver, Colorado
February 24, 1998
<PAGE> 1
EXHIBIT 99.1
AMERICAN HEALTH PROPERTIES, INC.
FINANCIAL HIGHLIGHTS - FOURTH QUARTER
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED CORE GROUP PSYCHIATRIC GROUP
---------------------------- ------------------------- -------------------------
THREE MONTHS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 18,665 $ 17,795 $ 18,310 $ 17,156 $ 355 $ 639
Mortgage interest income 1,628 1,501 105 -- 1,523 1,501
Additional rental and interest income 3,251 3,239 3,142 3,039 109 200
Other property income 80 -- 80 -- -- --
Other interest income 787 203 707 116 80 87
Interest on loans to Psychiatric Group -- -- 377 407 -- --
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
24,411 22,738 22,721 20,718 2,067 2,427
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Depreciation and amortization 4,277 3,812 4,088 3,626 189 186
Property operating 232 11 142 11 90 --
Interest expense 4,541 5,278 4,541 5,278 -- --
Interest on loans from Core Group -- -- -- -- 377 407
General and administrative 2,185 1,782 1,942 1,583 243 199
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
11,235 10,883 10,713 10,498 899 792
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Minority Interest 47 47 47 47 -- --
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME $ 13,129 $ 11,808 $ 11,961 $ 10,173 $ 1,168 $ 1,635
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
FUNDS FROM OPERATIONS $ 17,380 $ 15,589 $ 16,023 $ 13,768 $ 1,357 $ 1,821
- ----------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
BASIC PER SHARE AMOUNTS (1)
- -----------------------------------------
NET INCOME $ 0.44(2) $ 0.43 $ 0.56 $ 0.78
FUNDS FROM OPERATIONS $ 0.61(2) $ 0.59 $ 0.65 $ 0.87
BASIC AVERAGE SHARES OUTSTANDING 23,560 23,462 2,084 2,084
DILUTED PER SHARE AMOUNTS (1)
- -----------------------------------------
NET INCOME $ 0.44(2) $ 0.43 $ 0.56 $ 0.78
FUNDS FROM OPERATIONS $ 0.61(2) $ 0.58 $ 0.65 $ 0.87
DILUTED AVERAGE SHARES OUTSTANDING 23,778 23,582 2,100 2,095
DIVIDENDS DECLARED PER SHARE $ 0.545 $ 0.525 $ 0.62 $ 0.80
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
-------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION 1997 1996 1997 1996 1997 1996
- ------------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
TOTAL ASSETS $ 690,572 $ 577,882 $ 652,132 $ 527,979 $ 50,994 $ 63,261
TOTAL DEBT $ 243,813 $ 207,101 $ 243,813 $ 207,101 $ 12,554 $ 13,358
TOTAL SHAREHOLDERS' EQUITY $ 414,961 $ 345,139 $ 378,268 $ 297,176 $ 36,693 $ 47,963
</TABLE>
(1) The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", as required by generally accepted accounting
principles. Prior year per share amounts have been restated.
(2) Per share amount is based on amount available to Core Group common
shareholders which represents amount after deduction of preferred
dividends of $1,553,000 for the three and twelve months ended December
31, 1997.
7
<PAGE> 2
AMERICAN HEALTH PROPERTIES, INC.
FINANCIAL HIGHLIGHTS - YEAR TO DATE
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED CORE GROUP PSYCHIATRIC GROUP
------------------------- ------------------------- ----------------------
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 72,237 $ 69,488 $ 70,604 $ 67,499 $ 1,633 $ 1,989
Mortgage interest income 6,289 5,980 217 -- 6,072 5,980
Additional rental and interest income 12,498 12,342 11,833 11,530 665 812
Other property income 187 -- 187 -- -- --
Other interest income 2,254 1,114 1,908 721 346 393
Interest on loans to Psychiatric Group -- -- 1,553 1,679 -- --
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
93,465 88,924 86,302 81,429 8,716 9,174
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
EXPENSES
Depreciation and amortization 15,904 15,016 15,153 14,272 751 744
Property operating 524 44 334 44 190 --
Interest expense 19,659 21,842 19,659 21,842 -- --
Interest on loans from Core Group -- -- -- -- 1,553 1,679
General and administrative 8,000 7,427 6,860 6,255 1,140 1,172
Impairment loss on real estate
investments and other notes receivable 11,000 -- -- -- 11,000 --
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
55,087 44,329 42,006 42,413 14,634 3,595
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
Minority Interest 189 216 189 216 -- --
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 38,189 44,379 44,107 38,800 (5,918) 5,579
EXTRAORDINARY LOSS ON DEBT PREPAYMENT (11,427) -- (11,427) -- -- --
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
NET INCOME (LOSS) $ 26,762 $ 44,379 $ 32,680 $ 38,800 $ (5,918) $ 5,579
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
FUNDS FROM OPERATIONS $ 64,982 $ 59,268 $ 59,149 $ 52,945 $ 5,833 $ 6,323
- --------------------------------------------------- --------- --------- --------- --------- --------- ---------
BASIC PER SHARE AMOUNTS (1)
- ---------------------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 1.81(2) $ 1.65 $ (2.84) $ 2.68
EXTRAORDINARY LOSS ON DEBT PREPAYMENT $ (0.49) $ -- $ -- $ --
NET INCOME (LOSS) $ 1.32(2) $ 1.65 $ (2.84) $ 2.68
FUNDS FROM OPERATIONS $ 2.45(2) $ 2.26 $ 2.80 $ 3.03
BASIC AVERAGE SHARES OUTSTANDING 23,505 23,453 2,084 2,084
DILUTED PER SHARE AMOUNTS (1)
- -----------------------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ 1.80(2) $ 1.65 $ (2.84(3) $ 2.67
EXTRAORDINARY LOSS ON DEBT PREPAYMENT $ (0.49) $ -- $ -- $ --
NET INCOME (LOSS) $ 1.31(2) $ 1.65 $ (2.84(3) $ 2.67
FUNDS FROM OPERATIONS $ 2.43(2) $ 2.25 $ 2.78 $ 3.02
DILUTED AVERAGE SHARES OUTSTANDING 23,703 23,558 2,098 2,093
DIVIDENDS DECLARED PER SHARE $ 2.12 $ 2.04 $ 2.62 $ 2.80
</TABLE>
(1) The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", as required by generally accepted accounting
principles. Prior year per share amounts have been restated.
(2) Per share amount is based on amount available to Core Group common
shareholders which represents amount after deduction of preferred
dividends of $1,553,000 for the three and twelve months ended December
31, 1997.
(3) Per share amount is based on Basic Average Shares Outstanding.
8
