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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 1-11666
GENESIS HEALTH VENTURES, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
148 West State Street
Pennsylvania Kennett Square, PA 19348 06-1132947
(State or other jurisdiction of (Address of principal executive (I.R.S. Employer
incorporation or organization) offices including zip code) Identification Number)
- ------------------------------------------ ---------------------------------------- ----------------------------------------
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(610) 444-6350
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Common Stock, par value $.02 per share New York Stock Exchange
6% Convertible Senior Subordinated Debentures due 2003 New York Stock Exchange
9 3/4% Senior Subordinated Debentures due 2005 New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days. YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
The aggregate market value of voting stock held by non-affiliates of
the Registrant is $626,558,991 (1). As of December 13, 1996, 32,002,486 shares
of Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(Specific sections incorporated are identified under applicable items herein)
Certain portions of the Company's Proxy Statement to be filed in connection with
its 1997 Annual Meeting are incorporated by reference in Part III of this
Report. Certain exhibits to the Company's Current Report on Forms 8-K and 8-K/A
dated July 11, 1996, May 3, 1996, April 21, 1996, November 30, 1995, August 18,
1995, November 30, 1993, September 19, 1993, Registration Statement on Form S-1
(File No. 33-4007), Registration Statement on Form S-1 (File No. 33-51670),
Registration Statement on Form S-3 (File No. 33-9350) and Registration Statement
on Form S-4 (File No. 333-15267) Annual Reports on Form 10-K for the fiscal
years ended September 30, 1995, 1994, 1993 and 1992, and Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1996 and March 31, 1994, Form
S-8 dated May 15, 1995, and Form 8-A dated May 11, 1995 are incorporated by
reference as Exhibits in Part IV of this Report.
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(1) The aggregate dollar amount of the voting stock set forth equals the number
of shares of the Company's Common Stock outstanding, reduced by the amount of
Common Stock held by officers, directors and shareholders owning in excess of
10% of the Company's Common Stock, multiplied by the last reported sale price
for the Company's Common Stock on December 13, 1996. The information provided
shall in no way be construed as an admission that any officer, director or 10%
shareholder in the Company may or may not be deemed an affiliate of the Company
or that he/it is the beneficial owner of the shares reported as being held by
him/it, and any such inference is hereby disclaimed. The information provided
herein is included solely for recordkeeping purposes of the Securities and
Exchange Commission.
<PAGE>
INDEX
PAGE
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS................... 1
ITEM 1: BUSINESS
General ........................................................... 4
Basic Healthcare Services.......................................... 5
Specialty Medical Services......................................... 5
Management Services and Other...................................... 7
Managed Care Initiatives........................................... 7
Recent Transactions................................................ 8
Revenue Sources.................................................... 8
Marketing........................................................... 9
Personnel...........................................................10
Employee Training and Development...................................10
Governmental Regulation.............................................11
Competition.........................................................12
Insurance.......................................................... 13
ITEM 2: PROPERTIES......................................................... 14
ITEM 3: LEGAL PROCEEDINGS.................................................. 14
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 14
ITEM 4.1: EXECUTIVE OFFICERS............................................... 15
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS................................ 17
ITEM 6: SELECTED FINANCIAL DATA............................................ 18
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................... 20
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................ 26
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................... 45
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................ 46
ITEM 11: EXECUTIVE COMPENSATION............................................ 46
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.... 46
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 46
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.... 46
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Cautionary Statement Regarding Forward Looking Statements
Certain oral statements made by management from time to time and certain
statements contained herein, including certain statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" such
as statements concerning Medicare and Medicaid programs and the Company's
ability to meet its liquidity needs and control costs; certain statements
contained in "Business" such as statements concerning strategy, government
regulation, Medicare and Medicaid programs, managed care initiatives, and recent
transactions and competition; certain statements in "Legal Proceedings" and
certain statements in the Notes to Consolidated Financial Information, such as
certain of the Pro Forma Adjustments; and other statements contained herein
regarding matters that are not historical facts are forward looking statements
(as such term is defined in the Securities Act of 1933) and because such
statements involve risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward looking statements. Factors that
could cause actual results to differ materially include, but are not limited to,
those discussed below.
Certain Financial Considerations. The Company has substantial indebtedness
and, as a result, significant debt service obligations. As of September 30,
1996, after giving pro forma effect to the GMC Transaction and the 1996 Note
Offering (as such items are defined in "Management's Discussion and Analysis of
Financial Conditions and Results of Operations -- Certain Transactions") and the
use of proceeds therefrom, the Company would have had approximately $594,000,000
of long-term indebtedness which would have represented approximately 54% of its
total capitalization. The degree to which the Company is leveraged could have
important consequences, including the following: (i) the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii) a
substantial portion of the Company's cash flow from operations may be dedicated
to the payment of principal and interest on its indebtedness, thereby reducing
the funds available to the Company for its operations; (iii) certain of the
Company's borrowings are and will continue to be at variable rates of interest,
which causes the Company to be vulnerable to increases in interest rates; and
(iv) certain of the Company's indebtedness contains financial and other
restrictive covenants, including those restricting the incurrence of additional
indebtedness, the creation of liens, the payment of dividends, sales of assets
and minimum net worth requirements. Failure by the Company to comply with such
covenants may result in an event of default which, if not cured or waived, could
have a material adverse effect on the Company.
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness depends on its financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and to financial, business and other factors beyond its control.
Although the Company's cash flow from its operations has been sufficient to meet
its debt service obligations in the past, there can be no assurance that the
Company's operating results will continue to be sufficient for payment of the
Company's indebtedness. The Company also has significant long-term operating
lease obligations with respect to certain of its eldercare centers.
Risk of Adverse Effect of Healthcare Reform. In addition to extensive
existing government healthcare regulation, there are numerous initiatives on the
federal and state levels for comprehensive reforms affecting the payment for and
availability of healthcare services. It is not clear at this time what
proposals, if any, will be adopted, or what effect such proposals would have on
the Company's business. Aspects of certain of these healthcare proposals, such
as reductions in funding of the Medicare and Medicaid programs, potential
changes in reimbursement regulations by the Health Care Financing Administration
("HCFA"), enhanced pressure to contain healthcare costs by Medicare, Medicaid
and other payors and permitting greater state flexibility in the administration
of Medicaid, could adversely affect the Company. There can be no assurance that
currently proposed or future healthcare legislation or other changes in the
administration or interpretation of governmental healthcare programs or
regulations will not have a material adverse effect on the Company. Concern
about the potential effects of the proposed reform measures has contributed to
the volatility of prices of securities of companies in healthcare and related
industries, including the Company, and may similarly affect the price of the
Company's securities in the future. See "Business -- Governmental Regulation."
1
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Regulation. The federal government and all states in which the Company
operates regulate various aspects of the Company's business. In particular, the
development and operation of eldercare centers and the provision of healthcare
services are subject to federal, state and local laws relating to the delivery
and adequacy of medical care, distribution of pharmaceuticals, equipment,
personnel, operating policies, fire prevention, rate-setting and compliance with
building codes and environmental laws. Eldercare centers are subject to periodic
inspection by governmental and other authorities to assure continued compliance
with various standards, their continued licensing under state law, certification
under the Medicare and Medicaid programs and continued participation in the
Veterans Administration program and the ability to participate in other third
party programs. The Company is also subject to inspection regarding record
keeping and inventory control. Possible sanctions for failing to comply with
various standards include monetary fines, ban on admissions, suspension of
payments and loss of license. The failure to obtain or renew any required
regulatory approvals or licenses could adversely affect the continued expansion
of the Company and could prevent it from offering its existing services.
Many states have adopted Certificate of Need or similar laws which generally
require that the appropriate state agency approve certain acquisitions and
determine that a need exists for certain bed additions, new services and capital
expenditures or other changes prior to beds and/or new services being added or
capital expenditures being undertaken. To the extent that Certificates of Need
or other similar approvals are required for expansion of Company operations,
either through center acquisitions or expansion or provision of new services or
other changes, such expansion could be adversely affected by the failure or
inability to obtain the necessary approvals, changes in the standards applicable
to such approvals and possible delays and expenses associated with obtaining
such approvals.
The Company is also subject to federal and state laws which govern financial
and other arrangements between healthcare providers. These laws often prohibit
certain direct and indirect payments or fee-splitting arrangements between
healthcare providers that are designed to induce or encourage the referral of
patients to, or the recommendation of, a particular provider for medical
products and services. These laws include the federal "Stark legislations" which
prohibit, with limited exceptions, the referral of patients for certain
services, including home health services, physical therapy and occupational
therapy, by a physician to an entity in which the physician has an ownership
interest and the federal "anti-kickback law" which prohibits, among other
things, the offer, payment, solicitation or receipt of any form of remuneration
in return for the referral of Medicare and Medicaid patients or the purchasing,
leasing, ordering or arranging for any goods, facility services or items for
which payment can be made under Medicare and Medicaid. The federal government,
private insurers and various state enforcement agencies have increased their
scrutiny of providers, business practices and claims in an effort to identify
and prosecute fraudulent and abusive practices. In addition, the federal
government has issued recent fraud alerts concerning nursing services, double
billing, home health services and the provision of medical supplies to nursing
facilities; accordingly, these areas may come under closer scrutiny by the
government. See "Business -- Governmental Regulation." Furthermore, some states
restrict certain business relationships between physicians and other providers
of healthcare services. Many states prohibit business corporations from
providing, or holding themselves out as a provider of, medical care. Possible
sanctions for violation of any of these restrictions or prohibitions include
loss of licensure or eligibility to participate in reimbursement programs and
civil and criminal penalties. These laws vary from state to state, are often
vague and have seldom been interpreted by the courts or regulatory agencies.
From time to time, the Company has sought guidance as to the interpretation of
these laws; however, there can be no assurance that such laws will ultimately be
interpreted in a manner consistent with the practices of the Company.
2
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Payment by Third Party Payors. For the years ended September 30, 1996, 1995,
and 1994, respectively, the Company derived approximately 39%, 38% and 41% of
its patient service revenue from private pay sources, 25%, 21% and 16% from
Medicare and 36%, 41% and 43% from various state Medicaid agencies. Both
governmental and private third party payors have employed cost containment
measures designed to limit payments made to healthcare providers such as the
Company. Those measures include the adoption of initial and continuing recipient
eligibility criteria which may limit payment for services, the adoption of
coverage and duration criteria which limit the services which will be reimbursed
and the establishment of payment ceilings which set the maximum reimbursement
that a provider may receive for services. Furthermore, government payment
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all of
which may materially increase or decrease the rate of program payments to the
Company for its services. There can be no assurance that payments under
governmental and private third party payor programs will remain at levels
comparable to present levels or will, in the future, be sufficient to cover the
costs allocable to patients eligible for reimbursement pursuant to such
programs. In addition, there can be no assurance that centers owned, leased or
managed by the Company, or the provision of services and supplies by the
Company, now or in the future will initially meet or continue to meet the
requirements for participation in such programs. The Company could be adversely
affected by the continuing efforts of governmental and private third party
payors to contain the amount of reimbursement for healthcare services. In an
attempt to limit the federal budget deficit, there have been, and the Company
expects that there will continue to be, a number of proposals to limit Medicare
and Medicaid reimbursement for healthcare services. In certain states there have
been proposals to eliminate the distinction in Medicaid payment for skilled
versus intermediate care services and to establish a case mix prospective
payment system pursuant to which the payment to a facility for a patient is
based upon the patient's condition and need for services. The Company cannot at
this time predict whether any of these proposals will be adopted or, if adopted
and implemented, what effect, if any, such proposals will have on the Company.
In addition, private payors, including managed care payors, increasingly are
demanding discounted fee structures or the assumption by healthcare providers of
all or a portion of the financial risk through prepaid capitation arrangements.
Efforts to impose reduced allowances, greater discounts and more stringent cost
controls by government and other payors are expected to continue. See "Business
- -- Revenue Sources."
Competition. The healthcare industry is highly competitive. The Company
competes with a variety of other companies in providing eldercare services.
Certain competing companies have greater financial and other resources and may
be more established in their respective communities than the Company. Competing
companies may offer newer or different centers or services than the Company and
may thereby attract the Company's customers who are either presently residents
of its eldercare centers or are otherwise receiving its eldercare services. See
"Business -- Competition."
Risks Associated with Proposed Acquisitions and Acquisition Strategy. The
Company has recently completed several acquisitions of eldercare businesses. The
Company also intends to pursue additional acquisitions in the future. There can
be no assurance that the Company will be able to realize expected operating and
economic efficiencies from its recent acquisitions or from any future
acquisitions or that such acquisitions will not adversely affect the Company's
results of operations or financial condition. In addition, there can be no
assurance that the Company will be able to locate suitable acquisition
candidates in the future, consummate acquisitions on favorable terms or
successfully integrate newly acquired businesses with the Company's operations.
The consummation of acquisitions likely will result in the incurrence or
assumption by the Company of additional indebtedness.
3
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PART I
BUSINESS
General
Genesis Health Ventures, Inc. was incorporated in May 1985 as a Pennsylvania
corporation. As used herein, unless the context otherwise requires, "Genesis" or
the "Company" refers to Genesis Health Ventures, Inc. and subsidiaries.
Genesis is a leading provider of healthcare and support services to the
elderly. The Company has developed the Genesis ElderCare(SM) delivery model of
integrated healthcare networks to provide cost-effective, outcome-oriented
services to the elderly. Through these integrated healthcare networks, Genesis
provides basic healthcare and specialty medical services to more than 75,000
customers in four regional markets in the Eastern United States in which over
3,000,000 people over the age of 65 reside. The networks include 148 eldercare
centers with approximately 20,000 beds; 18 primary care physician clinics;
approximately 93 physicians, physician assistants and nurse practitioners; 12
institutional pharmacies and four medical supply distribution centers serving
over 46,000 beds; 21 community based pharmacies; certified rehabilitation
agencies providing services through over 326 contracts; and seven home
healthcare agencies. Genesis has concentrated its eldercare networks in four
geographic regions in order to achieve operating efficiencies, economies of
scale and significant market share. The four geographic markets that Genesis
principally serves are: New England Region (Massachusetts/Connecticut/New
Hampshire); Midatlantic Region (Greater Philadelphia/Delaware Valley);
Chesapeake Region (Southern Delaware/Eastern Shore of Maryland; Baltimore,
Maryland/Washington D.C./Virginia); and Southern Region (Central Florida).
Genesis eldercare services focus on the central medical and physical issues
facing the more medically demanding elderly. By integrating the talents of
physicians with case management, comprehensive discharge planning and, where
necessary, home support services, the Company provides cost-effective care
management to achieve superior outcomes and return customers to the community.
The Company believes that its orientation toward achieving improved customer
outcomes through its eldercare networks has resulted in increased utilization of
specialty medical services, high occupancy of available beds, enhanced quality
payor mix and a broader base of repeat customers. Specialty medical services
revenues have increased at a compound annual rate of 53% from the fiscal year
ended September 30, 1992 to the fiscal year ended September 30, 1996 and
comprise 43% of the Company's revenues for the fiscal year ended September 30,
1996. Specialty medical services typically generate higher profit margins than
basic healthcare services and are less capital intensive.
The Company's growth strategy is to enhance its existing eldercare networks,
establish new eldercare networks in markets it deems attractive and broaden its
array of high margin specialty medical services through internal development and
selected acquisitions. Consistent with its strategy, the Company has made
selected acquisitions of eldercare centers and rehabilitation, pharmacy,
physician services and home healthcare companies.
The Company's long-term strategy is to provide comprehensive eldercare
services, in collaboration with other providers, on a prepaid basis in a managed
care environment. The Company has undertaken several initiatives to position
itself to compete in a managed care environment. These initiatives include: (i)
establishing a managed care division to pursue and administer contracts with
managed care organizations, develop clinical care protocols and monitor the
delivery and utilization of medical care; (ii) developing a clinical
administration and healthcare management information system to monitor and
measure clinical and patient-outcome data; (iii) establishing the Genesis
ElderCare(SM) brand name to increase awareness of the Company's eldercare
services in the healthcare market; (iv) seeking strategic alliances with other
healthcare providers to broaden the Company's continuum of care; and (v)
creating an independent eldercare advisory board to formulate new and innovative
approaches in the delivery of care.
4
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Basic Healthcare Services
Genesis operates 148 eldercare centers (75 wholly-owned, three jointly-owned,
34 leased and 36 managed) located in 12 states. The centers offer three levels
of care for their customers: skilled, intermediate and personal. Skilled care
provides 24-hour per day professional services of a registered nurse;
intermediate care provides less intensive nursing care; and personal care
provides for the needs of customers requiring minimal supervision and
assistance. Each eldercare center is supervised by a licensed healthcare
administrator and employs a Medical Director to supervise the delivery of
healthcare services to residents and a Director of Nursing to supervise the
nursing staff. The Company maintains a corporate quality assurance program to
monitor regulatory compliance and to enhance the standard of care provided in
each center.
In addition to programs to meet the healthcare needs of its customers, all
Genesis eldercare centers offer a variety of quality of life programs. These
include the Intergenerational Learning Program that enables residents to
function both as students and as instructors in programs with community schools,
as well as The Magic Mix Program that provides a supervised setting in which
children of working parents can interact with residents of the centers after
school. These programs have received recognition at both local and national
levels.
In eight of its eldercare centers, the Company operates Genesis ElderCare
Focus programs which are dedicated to meeting the special medical, emotional and
psychological needs of Alzheimer's patients. The Focus programs were developed
in conjunction with the Dementia Research Clinic at the Johns Hopkins University
School of Medicine. These units provide an environment that is designed or
modified to assist those with cognitive loss. Clinical experts have experienced
significant success and produced benefits to customers served in both
Alzheimer's day services and dedicated residential units.
The following table sets forth, for the periods indicated, information
regarding the Company's average number of beds in service and the average
occupancy levels at its eldercare centers.
1996 1995 1994
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Average Beds in Service (1)(2)
Owned and Leased Facilities 9,429 8,268 7,530
Managed and Jointly-Owned Facilities 5,030 5,158 4,532
Occupancy Based on Average Beds in Service
Owned and Leased Facilities 93% 92% 92%
Managed and Jointly-Owned Facilities 93% 95% 93%
(1) Excludes beds in facilities which were unavailable for occupancy due
to renovations.
(2) Does not include 24 facilities acquired in the October 1996 GMC
Transaction. See "Business - Recent Transactions"
Specialty Medical Services
The Company emphasizes the delivery of specialty medical services which
typically requires smaller capital investment and generates higher profit
margins than providing basic healthcare services. The Company provides the
specialty medical services described below.
5
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Institutional Pharmacy and Medical Supply Services. The Company provides
pharmacy and other services including infusion therapy and medical supplies and
equipment to eldercare centers it operates, as well as to independent healthcare
providers by contract. The pharmacy services provided in these settings are
tailored to meet the needs of the institutional customer. These services include
highly specialized packaging and dispensing systems, computerized medical
records processing and 24-hour emergency services. The Company's institutional
pharmacy and medical supply services were developed to provide the products and
support services required in the healthcare market. Institutional pharmacy
services are designed to help assure quality of care and to control costs at the
facilities served. Medical supply services are designed to assure availability
and control through maintenance of a comprehensive inventory, extensive delivery
services and special ordering and tracking systems. The Company also provides
pharmacy consulting services to assure proper and effective drug therapy. The
Company provides these services through 12 pharmacies (of which three are
jointly-owned) and four distribution centers located in its various market
areas. Approximately 81% of the sales attributable to pharmacy operations in
Fiscal 1996 were generated through external contracts with independent
healthcare providers with the balance attributable to centers operated by the
Company.
Rehabilitation Therapy. The Company provides an extensive range of
rehabilitation therapy services, including speech pathology, physical therapy
and occupational therapy through seven certified rehabilitation agencies in all
four of its regional market concentrations. These services are provided by over
1,000 licensed rehabilitation therapists and assistants employed by Genesis to
substantially all of the eldercare centers the Company operates, as well as by
contract to healthcare facilities operated by others.
Subacute Care Programs. The Company has established and actively markets
programs for elderly and other customers who require subacute levels of medical
care. These programs include ventilator care, intravenous therapy, post-surgical
recovery, respiratory management, orthopedic or neurological rehabilitation,
terminal care and various forms of coma, pain and wound management. Private
insurance companies and other third party payors, including certain state
Medicaid programs, have recognized that treating customers requiring subacute
medical care in centers such as those operated by Genesis is a cost-effective
alternative to treatment in an acute care hospital. The Company provides such
care at rates that the Company believes are substantially below the rates
typically charged by acute care hospitals for comparable services.
Physician Services. The Company employs or has consulting arrangements with
approximately 93 physicians, physician assistants and nurse practitioners to
provide physician services at certain of its eldercare centers. These
physicians, physician assistants and nurse practitioners provide a range of
services, including direct patient care, the design and administration of
clinical programs, such as the Company's subacute care program, as well as
traditional medical director and utilization review services. The Company
compensates these employees and consultants for services rendered and, where
appropriate, bills directly for such services. The Company believes that the
involvement of these physicians in the Company's eldercare centers provides a
significant competitive advantage. These physicians direct the operations of 18
free-standing physician clinics, as well as Functional Evaluation and Treatment
Units in 17 of its eldercare centers. The purpose of each of these units is to
provide a comprehensive assessment and treatment plan for all new admissions to
the center. The process is directed by a physician specializing in gerontology
and involves an intensive evaluation in which social service professionals,
clinical staff and the customer and the customer's family participate. The
Company believes that this program reduces average lengths of stay and increases
discharge-to-home rates. The Company also believes the Functional Evaluation and
Treatment Units enhance its reputation for providing quality care and result in
improved occupancy rates, as well as improve its ability to attract subacute and
other high acuity customers.
Home Healthcare Services. The Company provides home healthcare services to
customers in its markets through seven certified home health agencies owned by
the Company. The Company currently provides these services in all of its
geographic markets other than Central Florida and has been granted Certificates
of Need to begin providing services in Central Florida. The services offered
include skilled nursing care, physical, occupational and speech therapy, medical
social services and home health aide services. The Company's focus is on
providing infusion therapy, total parenteral nutrition, ventilator care and
peritoneal dialysis. The Company owns a one-sixth interest in the Visiting
Nurses Association in Maryland ("VNA"), an organization which is one of the
largest providers of home healthcare services in Maryland. Excluding VNA, the
Company provided approximately 79,200 home healthcare visits in Fiscal 1996.
6
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Management Services and Other
Management Services. The Company provides management services to 41 eldercare
centers (including its three jointly-owned centers) pursuant to management
agreements that provide generally for the Company's day-to-day responsibility
for the operation and management of the centers. In turn, Genesis receives
management fees, depending on the agreement, computed as either an overall fixed
fee, a fixed fee per customer, a percentage of net revenues of the center plus
an incentive fee, or a percentage of gross revenues of the center with some
incentive clauses. The various management agreements, including option periods,
terminate between 1997 and 2012.
In March 1996, the Company entered into a strategic alliance with Doctors
Community Hospital, a 250-bed acute hospital in Maryland. As part of this
transaction, the Company entered into a long-term agreement to manage the
hospital's subacute care center and a jointly-owned eldercare center.
Prior to January 1, 1996, the Company also provided management, development
and marketing services to 15 life care communities operated by Adult Community
Total Services, Inc. ("ACTS"), a Pennsylvania non-profit corporation pursuant to
a management agreement which was to expire in April 1998. Effective January 1,
1996, Genesis restructured its relationship with ACTS. Under the revised
arrangement, Genesis earned a $2,000,000 restructuring fee and will no longer
manage the ACTS life care communities. Genesis will continue to provide
development services for a fee in an amount equal to five percent of the total
cost of developing and completing facilities developed by ACTS. The development
portion of the contract has been extended to December 2002 and Genesis is
guaranteed a minimum annual development fee of $1,500,000. Genesis also
continues to provide certain ancillary services to the ACTS communities.
Group Purchasing. The Company's subsidiary, The Tidewater Healthcare Shared
Services Group, Inc. ("Tidewater"), is one of the largest group purchasing
companies in the mid-Atlantic region. Tidewater provides purchasing and shared
service programs specially designed to meet the needs of eldercare centers and
other long-term care facilities. Tidewater's services are contracted to
approximately 1,350 members with over 150,000 beds in 31 states and the District
of Columbia.
Managed Care Initiatives
The Company has undertaken several initiatives to position itself to compete
effectively on a prepaid basis in a managed care environment. In January 1995,
the Company established a Managed Care division which currently consists of 55
employees. The Managed Care division is responsible for pursuing and
administering contracts with managed care organizations, developing clinical
care protocol and monitoring the delivery and utilization of medical care. The
Company has begun to develop a clinical administration and healthcare management
information system to monitor and measure clinical and patient outcome data for
use by healthcare providers and the Company. The Company is also seeking
strategic alliances with selected providers in order to further the continuum of
care, increase market share and customer acceptance and create strategic
affiliations for negotiating with payors in a managed care environment. In
addition to these initiatives, the Company has consolidated its core business
under the Genesis ElderCare(SM) brand name in an effort to increase the
Company's visibility among current and potential customers, payors and other
healthcare providers. The Company has also created an independent eldercare
advisory board composed of individuals with distinguished credentials in
geriatric care to formulate new and innovative approaches in the delivery of
care. See "Cautionary Statements Regarding Forward Looking Statements."
7
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Recent Transactions
GMC Transaction. The following describes the businesses of Geriatric and
Medical Companies, Inc. ("GMC") which were acquired by the Company effective
October 1, 1996. The GMC entities are now wholly-owned subsidiaries of the
Company.
GMC provides care to the eldercare population through its pharmacy,
rehabilitative therapies, ambulance transportation, contract management,
diagnostic services and home care businesses located in Pennsylvania and New
Jersey. GMC operates 19 eldercare and five residential care facilities with a
total of approximately 3,300 beds. In 1996, GMC employed approximately 6,000
full and part-time employees, of which approximately 2,000 are covered by
collective bargaining agreements. In 1996, the allocation of GMC customer
revenues was approximately 67% Medicaid, 14% Medicare and 19% private pay and
other sources. The average occupancy of GMC owned beds in service was
approximately 92%.
Presbyterian Agreement. In November 1996, the Company signed a letter
agreement, subject to additional documentation, to provide management services
for, and enter into an affiliation agreement with, NewCourtland, Inc.
("NewCourtland"), a wholly owned subsidiary of the Presbyterian Foundation of
Philadelphia (the "Foundation"), a non-profit organization. Under the terms of
the agreement, Genesis will become the exclusive third-party manager of eight
eldercare facilities with 1,687 beds located in Philadelphia and throughout the
Delaware Valley. Genesis will provide specialty medical services, including
pharmacy and rehabilitation therapy to the NewCourtland facilities. The
agreement provides that Genesis will enter into management agreements with the
facilities to commence no later than February 1, 1997. The historical annual
revenues of the facilities were in excess of $80 million for the fiscal year
ended June 30, 1996. Additionally, NewCourtland will enter into an affiliation
arrangement with Genesis ElderCare(SM) Network. Genesis will receive the
exclusive right to manage any facility that may be acquired or developed by
NewCourtland. Currently, NewCourtland retains a purchase option for four
additional facilities with 514 beds and annual revenues in excess of $20
million.
In addition to the management and affiliation agreements, Genesis and the
Foundation have agreed to commit equally to guarantees to facilitate the
refinancing of certain long-term care facilities; capital improvements; and
working capital. See "Cautionary Statements Regarding Forward Looking
Statements."
Revenue Sources
The Company derives its basic healthcare and specialty medical revenue from
private pay sources, state Medicaid programs and Medicare. The Company
classifies payments from persons or entities other than the government as
private pay and other revenue. The private pay and other classification also
includes revenues from commercial insurers, health maintenance organizations and
other charge-based payment sources. Blue Cross and Veterans Administration
payments are included in private pay and other revenues and are made pursuant to
renewable contracts negotiated with these payors.
Medicare is a federally funded and administered health insurance program that
consists of Parts A and B. Participation in Part B is voluntary and is funded in
part through the payment of premiums. Benefits under Part A include inpatient
hospital services, skilled nursing in an eldercare center and medical services
such as physical, speech and occupational therapy, certain pharmaceuticals and
medical supplies. Part B provides coverage for physician services. Part B also
reimburses for medical services with the exception of pharmaceutical services.
Medicare benefits are not available for intermediate and custodial levels of
care; however, medical and physician services furnished to such patients may be
reimbursable under Part B. Under the Part A reimbursement methodology, each
eldercare center receives an interim payment during the year which is adjusted
to reflect actual allowable direct and indirect costs of services based on the
submission of a cost report at the end of each year. For services not billed
through each eldercare center, the Company's specialty medical operations bill
Medicare directly for nutritional support services, infusion therapy, certain
medical supplies and equipment, physician services and certain therapy services
as provided. Medicare payments for these services may be based on reasonable
cost charges or a fixed-fee schedule determined by Medicare.
8
<PAGE>
Medicaid is the state administered reimbursement program that covers both
skilled and intermediate long-term care. Although Medicaid programs vary from
state to state, typically they provide for payment for services including
nursing facility services, physician's services, therapy services and
prescription drugs, up to established ceilings, at rates based upon cost
reimbursement principles. Reimbursement rates are typically determined by the
state from cost reports filed annually by each center, on a prospective or
retrospective basis. In a prospective system, a rate is calculated from
historical data and updated using an inflation index. The resulting prospective
rate is final, but in some cases may be adjusted pursuant to an audit. In this
type of payment system, center cost increases during the rate year do not affect
payment levels in that year. In a retrospective system, final rates are based on
reimbursable costs for that year. An interim rate is calculated from previously
filed cost reports, and may include an inflation factor to account for the time
lag between the final cost report settlement and the rate period. Consequently,
center cost increases during any year may affect revenues in that year. Certain
states are scheduled to convert, or have recently converted, from a
retrospective system, which generally recognizes only two or three levels of
care, to a case mix prospective pricing system, pursuant to which payment to a
center for patient services directly considers the individual patient's
condition and need for services. The effect, if any, of such a payment system on
the Company is unclear. The Company employs specialists in reimbursement at the
corporate level to monitor both Medicaid and Medicare regulatory developments to
comply with all reporting requirements and to insure appropriate payments.
The following table reflects the allocation of customer service revenues
among these sources of revenue.
1996 1995 1994 1993 1992
----- ---- ---- ---- ----
Private pay and other 39% 38% 41% 42% 41%
Medicaid 36 41 43 44 47
Medicare 25 21 16 14 12
-- -- -- -- --
Total 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
See "Cautionary Statements Regarding Forward Looking Statements."
Marketing
Marketing for eldercare centers is focused at the local level and is
conducted primarily by the center administrator and its admissions director who
call on referral sources such as doctors, hospitals, hospital discharge
planners, churches and various community organizations. Besides actively
soliciting admissions from these sources, the Company's marketing objective is
to maintain public awareness of the eldercare center and its capabilities. The
Company takes advantage of its regional concentrations in its marketing efforts,
where appropriate, through consolidated marketing programs which benefit more
than one center.
Genesis markets specialty medical services to its managed eldercare centers,
as well as to independent healthcare providers, in addition to providing such
services to its owned and leased eldercare centers. The Company markets its
rehabilitation therapy and institutional pharmacy and medical supply services
through a direct sales force which primarily calls on eldercare centers,
hospitals, clinics and home health agencies. The corporate business development
department, through regional managers, markets the Company's subacute program
directly to insurance companies, managed care organizations and other third
party payors. In addition, the marketing department supports the eldercare
centers in developing promotional materials and literature focusing on the
Company's philosophy of care, services provided and quality clinical standards.
See "Governmental Regulation" below for a discussion of the federal and state
laws which limit financial and other arrangements between healthcare providers.
9
<PAGE>
In February 1996, the Company announced a consolidation of its core business
under the name Genesis ElderCareSM. The Genesis ElderCare logo and trademark
have been featured in a series of print advertisements in publications serving
the regional markets in which the Company operates. The Company's marketing of
Genesis ElderCare is aimed at increasing awareness among decision makers in key
professional and business audiences. The Company is using advertising to promote
its brand name in trade, professional and business publications and to promote
services directly to consumers.
Personnel
At November 30, 1996, Genesis employed over 28,000 people, including
approximately 19,200 full-time and 8,800 part-time employees. Approximately 22%
of these employees are physicians and nursing and professional staff.
The Company currently has collective bargaining agreements which relate to 34
facilities including eight managed eldercare centers. The agreements expire at
various dates from 1997 through 2000 and cover approximately 3,000 employees.
The Company believes that its relationship with its employees is generally good.
Employee Training and Developmentg
Genesis believes that nursing and professional staff retention and
development has been and continues to be a critical factor in the successful
operation of the Company. In response to this challenge, a compensation program
which provides for annual merit reviews as well as financial and quality of care
incentives has been implemented to promote center staff motivation and
productivity and to reduce turnover rates. Management believes that the
Company's wage rates for professional nursing staff are commensurate with market
rates. The Company also provides employee benefit programs which management
believes, as a package, exceed industry standards. The Company has not
experienced any significant difficulty in attracting or retaining qualified
personnel.
In addition, Genesis has established an internal training and development
program for both nurse assistants and nurses. Employee training is emphasized by
the Company through a variety of in-house programs as well as a tuition
reimbursement program. The Company has established, company-wide, the Genesis
Nursing Assistant Specialist Program. This program is offered on a joint basis
with community colleges. Classes are held on the employees' time, last for
approximately six months and provide advanced instruction in nursing care. The
Company pays the tuition. When all of the requirements for class participation
have been met through attendance, discussion and examinations, the nurse aide
graduates and is awarded the title of Nursing Assistant Specialist and receives
a salary adjustment. The Company has maintained a retention rate of 75% since
1988 of the nurses aide graduates. Over 1,300 nurse aides have graduated from
the Genesis Nursing Assistant Specialist Program and received an increase in
salary. As the nurse aide continues through the career ladder, the Company
continues to provide incentives. At the next level, Senior Nursing Assistant
Specialist, the employee receives another increase in salary and additional
tuition reimbursement of up to $2,250 toward becoming a Licensed Practical Nurse
("LPN") or Registered Nurse ("RN") and at the Senior Nursing Assistant
Specialist Coordinator level, tuition reimbursement increases to a maximum of
$3,000 per year towards a nursing degree.
The Company began a junior level management and leadership training program
in 1990 referred to as the Pilot Light Program. The target audience for this
training is RN's and LPN's occupying charge nurse positions within the Company's
nursing centers as well as junior level managers throughout the Genesis
networks. Over 475 participants have graduated from this program.
In addition, a flexible RN associate degree program has been established to
meet the needs of those employees who cannot attend nursing school on a
full-time basis. The program is conducted jointly with local community colleges
and Regents College in New York. The program combines self-study, flexible class
scheduling, mentoring and tutoring by Genesis professional nursing staff. This
format allows for a self-paced RN degree. Currently, there are approximately 18
Genesis employees enrolled in this program, which the Company believes is the
first of its kind in the United States.
10
<PAGE>
Governmental Regulation
The federal government and all states in which the Company operates regulate
various aspects of the Company's business. The Company's eldercare centers are
subject to certain federal statutes and regulations and to statutory and
regulatory licensing requirements by state and local authorities. All Genesis
eldercare centers are currently so licensed. In addition, eldercare centers are
subject to various local building codes and other ordinances.
All of the Company's eldercare centers and healthcare services, to the extent
required, are licensed under applicable law. All eldercare centers and
healthcare services, or practitioners providing the services therein, are
certified or approved as providers under one or more of the Medicaid, Medicare
or Veterans Administration programs. Licensing, certification and other
applicable standards vary from jurisdiction to jurisdiction and are revised
periodically. State and local agencies survey all eldercare centers on a regular
basis to determine whether such centers are in compliance with governmental
operating and health standards and conditions for participation in government
sponsored third party payor programs. The Company believes that its centers are
in substantial compliance with the various Medicare and Medicaid regulatory
requirements applicable to them. However, in the ordinary course of its
business, the Company receives notices of deficiencies for failure to comply
with various regulatory requirements. Genesis reviews such notices and takes
appropriate corrective action. In most cases, Genesis and the reviewing agency
will agree upon the measures to be taken to bring the center into compliance
with regulatory requirements. In some cases or upon repeat violations, the
reviewing agency may take various adverse actions against a center, including
the imposition of fines, temporary suspension of admission of new patients to
the center, suspension or decertification from participation in the Medicare or
Medicaid programs and, in extreme circumstances, revocation of a center's
license. These actions may adversely affect the eldercare centers' ability to
continue to operate, the ability of the Company to provide certain services, and
eligibility to participate in the Medicare, Medicaid or Veterans Administration
programs or to receive payments from other payors. Additionally, actions taken
against one center may subject other centers under common control or ownership
to adverse measures, including loss of licensure or eligibility to participate
in Medicare and Medicaid programs. Certain of the Company's centers have
received notices in the past from state agencies that, as a result of certain
alleged deficiencies, the agency was taking steps to decertify the centers from
participation in Medicare and Medicaid programs. In all cases, such deficiencies
were remedied before any centers were decertified.
All but nine of the Genesis eldercare centers provide skilled nursing
services and are currently certified to receive benefits provided under Medicare
for these services. Additionally, all Genesis eldercare centers are currently
certified to receive benefits under Medicaid. Both initial and continuing
qualifications of an eldercare center to participate in such programs depend
upon many factors including accommodations, equipment, services, patient care,
safety, personnel, physical environment, and adequate policies, procedures and
controls.
Under the various Medicaid programs, the federal government supplements funds
provided by the participating states for medical assistance to "medically
indigent" persons. The programs are administered by the applicable state welfare
or social service agencies. Although Medicaid programs vary from state to state,
traditionally they have provided for the payment of certain expenses, up to
established limits, at rates based generally on cost reimbursement principles.
Most states in which Genesis operates have adopted Certificate of Need or
similar laws which generally require that a state agency approve certain
acquisitions and determine that the need for certain bed additions, new
services, and capital expenditures or other changes exist prior to the
acquisition or addition of beds or services, the implementation of other
changes, or the expenditure of capital. State approvals are generally issued for
a specified maximum expenditure and require implementation of the proposal
within a specified period of time. Failure to obtain the necessary state
approval can result in the inability to provide the service, to operate the
centers, to complete the acquisition, addition or other change, and can also
result in the imposition of sanctions or adverse action on the center's license
and adverse reimbursement action.
11
<PAGE>
The Company is also subject to federal and state laws which govern financial
and other arrangements between healthcare providers. These laws often prohibit
certain direct and indirect payments or fee-splitting arrangements between
healthcare providers that are designed to induce or encourage the referral of
patients to, or the recommendation of, a particular provider for medical
products and services. These laws include the "anti-kickback" provisions of the
federal Medicare and Medicaid programs, which prohibit, among other things,
knowingly and willfully soliciting, receiving, offering or paying any
remuneration (including any kickback, bribe or rebate) directly or indirectly in
return for or to induce the referral of an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part under Medicare or Medicaid. These laws
also include the "Stark legislations" which prohibit, with limited exceptions,
the referral of patients by physicians for certain services, including home
health services, physical therapy and occupational therapy, to an entity in
which the physician has an ownership interest. In addition, some states restrict
certain business relationships between physicians and other providers of
healthcare services. Many states prohibit business corporations from providing,
or holding themselves out as a provider of medical care. Possible sanctions for
violation of any of these restrictions or prohibitions include loss of licensure
or eligibility to participate in reimbursement programs and civil and criminal
penalties. These laws vary from state to state, are often vague and have seldom
been interpreted by the courts or regulatory agencies. From time to time, the
Company has sought guidance as to the interpretation of these laws; however,
there can be no assurance that such laws will ultimately be interpreted in a
manner consistent with the practices of the Company. Although the Company has
contractual arrangements with some healthcare providers to which the Company
pays fees for services rendered or products provided, the Company believes that
its practices are not in violation of these laws. The Company cannot accurately
predict whether enforcement activities will increase or the effect of any such
increase on its business. There have also been a number of recent federal and
state legislative and regulatory initiatives concerning reimbursement under the
Medicare and Medicaid programs. In particular, the federal government has issued
recent fraud alerts concerning double billing, homehealth services and the
provisions of medical suppliers. Accordingly, it is anticipated that these areas
may come under closer scrutiny by the government. The Company cannot accurately
predict the impact of any such initiatives. See "Cautionary Statements
Regarding Forward Looking Statements."
Competition
The Company competes with a variety of other companies in providing
healthcare services. Certain competing companies have greater financial and
other resources and may be more established in their respective communities than
the Company. Competing companies may offer newer or different centers or
services than the Company and may thereby attract the Company's customers who
are either presently residents of its eldercare centers or are otherwise
receiving its healthcare services.
The Company operates eldercare centers in 12 states. In each market, the
Company's eldercare centers may compete for customers with rehabilitation
hospitals, subacute units of hospitals, skilled or intermediate nursing centers
and personal care or residential centers which offer comparable services to
those offered by the Company's centers. Certain of these providers are operated
by not-for-profit organizations and similar businesses which can finance capital
expenditures on a tax-exempt basis or receive charitable contributions
unavailable to the Company. In competing for customers, a center's local
reputation is of paramount importance. Referrals typically come from acute care
hospitals, physicians, religious groups, other community organizations, health
maintenance organizations and the customer's families and friends. Members of a
customer's family generally actively participate in selecting an eldercare
center. Competition for subacute patients is intense among hospitals with
long-term care capability, rehabilitation hospitals and other specialty
providers and is expected to remain so in the future. Important competitive
factors include the reputation in the community, services offered, the
appearance of a center and the cost of services. See "Cautionary Statements
Regarding Forward Looking Statements."
12
<PAGE>
Genesis competes in providing specialty medical services with a variety of
different companies. Generally, this competition is national, regional and local
in nature. The primary competitive factors in the specialty medical services
business are similar to those in the eldercare center business and include
reputation, the quality of clinical services, responsiveness to patient needs,
and the ability to provide support in other areas such as third party
reimbursement, information management and patient record-keeping. See
"Cautionary Statements Regarding Forward Looking Statements."
Insurance
Genesis carries property and general liability insurance, professional
liability insurance, and medical malpractice insurance coverage in amounts
deemed adequate by management. However, there can be no assurance that any
current or future claims will not exceed applicable insurance coverage. Genesis
also requires that physicians practicing at its eldercare centers carry medical
malpractice insurance to cover their individual practice.
13
<PAGE>
ITEM 2: PROPERTIES
Facilities
The following table provides information by state regarding the eldercare
centers owned, leased and managed by the Company as of November 30, 1996.
<TABLE>
<CAPTION>
Wholly-Owned Jointly-Owned Leased Managed
Centers Centers Centers Centers Total
--------------- --------------- --------------- --------------- ---------------
Centers Beds Centers Beds Centers Beds Centers Beds Centers Beds
------- ---- ------- ---- -------- ---- -------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maryland ..... 12 1,958 2 206 9 1,326 4 706 27 4,196
Pennsylvania . 18 2,542 1 105 -- -- 7 802 26 3,449
Florida ...... 4 598 -- -- 10 1,231 13 1,404 27 3,233
New Jersey ... 14 1,836 -- -- 2 404 4 676 20 2,916
Massachusetts 8 1,092 -- -- -- -- 5 606 13 1,698
New Hampshire 7 650 -- -- 6 608 -- -- 13 1,258
Virginia ..... 2 421 -- -- 4 670 -- -- 6 1,091
Connecticut .. 4 615 -- -- 1 120 -- -- 5 735
Delaware ..... 4 504 -- -- -- -- 1 158 5 662
North Carolina -- -- -- -- -- -- 2 340 2 340
Vermont ...... 2 256 -- -- -- -- -- -- 2 256
West Virginia -- -- -- -- 2 180 -- -- 2 180
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Totals .. 75 10,472 3 311 34 4,539 36 4,692 148 20,014
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Excludes beds in facilities which were unavailable for occupancy due to
renovations. The above table excludes 4 eldercare centers in Colorado with 283
beds which the Company is providing management services until December 31, 1996.
ITEM 3: LEGAL PROCEEDINGS
Genesis is a party to litigation arising in the ordinary course of business.
Genesis does not believe the results of such litigation, even if the outcome is
unfavorable to the Company, would have a material adverse effect on its
financial position. See "Cautionary Statements Regarding Forward Looking
Statements."
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
14
<PAGE>
ITEM 4.1: EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael R. Walker 48 Chairman and Chief Executive Officer
Richard R. Howard 47 President, Chief Operating Officer and Director
David C. Barr 46 Executive Vice President
John F. DePodesta 52 Senior Vice President- Law and Public Policy
George V. Hager, Jr. 40 Senior Vice President and Chief Financial Officer
Edward B. Romanov, Jr. 45 Senior Vice President- Development
Maryann Timon 43 Senior Vice President - Managed Care
Edward J. Boeggeman 49 Vice President and Controller
Kenneth R. Kuhnle 41 Vice President and Treasurer
Marc D. Rubinger 47 Vice President and Chief Information Officer
</TABLE>
Michael R. Walker is the founder of the Company and has served as Chairman
and Chief Executive Officer of the Company since its inception. In 1981, Mr.
Walker co-founded Health Group Care Centers ("HGCC"). At HGCC, he served as
Chief Financial Officer and, later, as President and Chief Operating Officer.
Prior to its sale in 1985, HGCC operated nursing homes with 4,500 nursing beds
in 12 states. From 1978 to 1981, Mr. Walker was the Vice President and Treasurer
of AID Healthcare Centers, Inc. ("AID"). AID, which owned and operated 20
nursing centers, was co-founded in 1977 by Mr. Walker as the nursing home
division of Hospital Affiliates International. Mr. Walker holds a Master of
Business Administration degree from Temple University and a Bachelor of Arts in
Business Administration from Franklin and Marshall College. Mr. Walker serves on
the Board of Directors of Renal Treatment Centers, Inc. and the Board of
Trustees of Universal Health Realty & Income Trust.
Richard R. Howard has served as a director of the Company since its inception
and as Chief Operating Officer since June 1986. He joined the Company in
September 1985 as Vice President of Development. Mr. Howard's background in
healthcare includes two years as the Chief Financial Officer of HGCC. Mr.
Howard's experience also includes over ten years with Fidelity Bank,
Philadelphia, Pennsylvania and one year with Equibank, Pittsburgh, Pennsylvania.
Mr. Howard is a graduate of the Wharton School, University of Pennsylvania,
where he received a Bachelor of Science degree in Economics in 1971.
David C. Barr has served as Executive Vice President of the Company since
October 1988. Prior to joining Genesis, Mr. Barr was a principal of a private
consulting firm, Kane Maiwurm Barr, Inc., which provided management consulting
for small and medium-sized firms. Prior to forming this firm, he served as
Executive Vice President of Allegheny Beverage Corporation, a service
conglomerate. During 1984 and 1985, Mr. Barr served withEquibank, Pittsburgh,
Pennsylvania, where he held several positions including Executive Vice President
of Corporate Banking. Mr. Barr graduated in 1972 from the University of Miami
with a Bachelor of Science degree in Accounting.
John F. DePodesta joined the Company as Senior Vice President, Law and Public
Policy in January 1996. Mr. DePodesta was previously a partner and currently is
of-counsel in the law firm of Pepper, Hamilton & Scheetz. In addition to his
position with the Company, Mr. DePodesta currently serves as the Executive Vice
President, Law and Regulatory Affairs, and Director of Primus
Telecommunications, Inc., and the Chairman of the Board of Iron Road Railways,
Incorporated, both of which he co-founded in 1994. Mr. DePodesta received a
Bachelor of Arts degree from Harvard College in 1966 and his Juris Doctor from
the University of Pennsylvania Law School in 1969. Pepper, Hamilton & Scheetz
performs outside legal services for the Company.
15
<PAGE>
George V. Hager, Jr. has served the Company as Senior Vice President and
Chief Financial Officer since February 1994. Mr. Hager joined the Company in
July 1992 as Vice President and Chief Financial Officer. Mr. Hager was
previously partner in charge of the healthcare practice for KPMG Peat Marwick
LLP in the Philadelphia office. Mr. Hager began his career at KPMG Peat Marwick
LLP in 1979 and has over 15 years of experience in the healthcare industry. Mr.
Hager received a Bachelor of Arts degree in Economics from Dickinson College in
1978 and a Master of Business Administration degree from Rutgers Graduate School
of Management. He is a certified public accountant and a member of the AICPA and
PICPA.
Edward B. Romanov, Jr. has served as Senior Vice President, Development since
May 1992. From June 1990 through April 1, 1995, Mr. Romanov served as a
financial consultant to the Company pursuant to a Consulting and Services
Agreement between the Company and American Community Environments Corporation of
which he is an employee. Mr. Romanov was founder and President of WesTerra
Construction, WesTerra Capital Company and WesTerra Development, through which
Mr. Romanov developed and financed real estate projects. Mr. Romanov holds both
a Master of Business Administration and a Bachelor of Science degree from Lehigh
University.
Maryann Timon has served as Senior Vice President for Managed Care since May
1996. From January 1995 through May 1996 she served as Corporate Vice President
of the Managed Care Division. Ms. Timon joined the Company in December 1990 to
form and serve as President of a wholly-owned subsidiary, Healthcare Services
Network. Ms. Timon was previously President of Mercy Ventures, Inc., a
five-company healthcare specialty group owned by Mercy Medical Center in
Baltimore, Maryland. Ms. Timon has 25 years of experience providing eldercare
healthcare services. Ms. Timon received an Associate Degree in Applied Science
in Nursing in 1973 from the State University of New York at Canton, a Bachelor
of Science Degree in Nursing in 1976 from the State University of New York at
Utica/Rome and a Master of Gerontological Nursing Degree in 1978 from the
University of Rochester.
Edward J. Boeggeman has served as Vice President and Corporate Controller of
the Company since December 1993. He joined Genesis in January 1993 as Controller
of Genesis Health Centers. Mr. Boeggeman has over twenty years of experience in
the healthcare industry, including four years with KPMG Peat Marwick LLP from
1979 to 1983. Prior to joining Genesis, he served in various accounting
positions including Assistant Controller, Controller and Vice President of
Financial Affairs at a teaching hospital, academic medical center and community
hospital, all within the Greater Philadelphia area. Mr. Boeggeman received a
Bachelor of Arts degree in Accounting from Villanova University in 1973 and is a
certified public accountant.
Kenneth R. Kuhnle has served as Vice President and Treasurer of the Company
since February 1990. He joined Genesis in October 1988 as Reimbursement
Director, which includes responsibility for monitoring government programs as
well as third party reimbursement planning and maximization. Mr. Kuhnle served
as Reimbursement Manager for Beverly Enterprises, owners and operators of
long-term care centers, from January 1986 to October 1988 and as Medicare
Auditor for Aetna Life Insurance Company from November 1982 to December 1985. He
received a Bachelor of Science degree in Business Administration from Temple
University in 1979. Mr. Kuhnle serves as President of the Delaware Healthcare
Facilities Association and President of the Worcester chapter of the
Massachusetts Federation of Nursing Homes.
Marc D. Rubinger has served as Vice President and Chief Information Officer
since November 1995. Prior to joining the Company, Mr. Rubinger served as
General Manager-Decision Support Systems of Shared Medical Systems. From 1975
through 1986, Mr. Rubinger was with Ernst & Young in their national healthcare
consulting practice, most recently as a partner. Mr. Rubinger received a
Bachelor of Arts degree in Bioscience from Binghamton University in 1971 and a
Masters of Health Administration and Planning from The George Washington
University in 1973.
16
<PAGE>
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The following table indicates the high and low sale prices per share, as
reported on the New York Stock Exchange.
Calendar Year High Low
------------- ------- -----
1996
First Quarter.................... $30.12 $23.50
Second Quarter................... $33.75 $27.12
Third Quarter.................... $31.12 $21.25
Fourth Quarter *................. $30.37 $22.00
1995
First Quarter.................... $21.67 $ 19.00
Second Quarter................... $21.33 $ 17.33
Third Quarter.................... $24.83 $ 18.17
Fourth Quarter................... $25.00 $ 19.00
* Through December 19, 1996
As of December 19, 1996, 34,900,863 shares of Common Stock were held of
record by 589 shareholders. The Company has not paid any cash dividends on its
Common Stock since its inception and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. Certain of the
Company's outstanding loans contain covenants which limit the Company's ability
to declare dividends. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
On June 5, 1996, the Company issued 312,744 shares of its common stock to
Michael and Jessica Bronfein and Stanton and Renee Ades, in consideration of the
Company's purchase of Professional Pharmacies, Inc. as part of the NeighborCare
Transaction. The shares were not registered under the Securities Act. The
Company believes that the shares were exempt from registration under Section 402
of the Securities Act.
17
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
September 30,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------
Statement of Operations Data
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net revenues $671,469 $486,393 $388,616 $219,809 $196,253
Operating income before capital costs* 128,269 93,253 69,373 38,129 35,597
Earnings before income taxes, extraordinary
items, cumulative effect of an accounting
change and debenture conversion expense 59,331 40,296 27,710 18,903 12,443
Earnings before extraordinary items,
cumulative effect of an accounting
change and debenture conversion expense 37,966 25,531 17,691 11,909 7,710
Net income 37,169 23,608 17,673 11,909 7,433
Per common share data (fully diluted): **
Earnings before extraordinary items
cumulative effect of an accounting
change and debenture conversion expense $1.31 $ 1.03 $ 0.84 $ 0.67 $ 0.53
Net income 1.29 0.97 0.84 0.67 0.51
Weighted average shares of common stock
and equivalents 31,130 28,452 24,820 17,929 14,495
- -------------------------------------------------------------------------------------------------------------------------
Financial Measurements
Operating income before capital costs*
as a percent of revenue 19.1% 19.2% 17.8% 17.3% 18.1%
Earnings before income taxes, extraordinary
items, cumulative effect of an accounting
change and debenture conversion expense
as a percent of revenue 8.8% 8.3% 7.1% 8.6% 6.3%
Return*** (before interest)
on average assets employed 8.2% 7.0% 6.2% 7.6% 7.2%
Return*** on average shareholders' equity 11.6% 12.3% 11.6% 11.4% 11.4%
Long-term debt to equity ratio .66 1.4 1.3 .67 .97
Operating Data
Payor mix (as a percent of patient service revenue):
Private and other 39% 38% 41% 42% 41%
Medicare 25% 21% 16% 14% 12%
Medicaid 36% 41% 43% 44% 47%
Average owned/leased health center beds 9,429 8,268 7,530 4,686 4,871
Occupancy percentage 92.6% 91.9% 91.9% 94.6% 96.0%
Specialty medical revenue per patient day-
health centers division $ 29.94 $ 25.06 $ 17.80 $ 16.79 $ 14.35
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Specialty medical revenues-health
services division
(in thousands) $254,663 $154,833 $109,452 $ 63,790 $ 40,210
Average managed life care units and
health center beds 5,030 10,374 9,922 6,203 5,680
Average full-time equivalent personnel 16,325 12,180 8,623 3,810 3,782
Balance Sheet Data (in thousands)
Working capital $155,491 $132,274 $ 66,854 $ 50,081 $ 31,986
Total assets $950,669 600,389 511,698 236,978 188,677
Long-term debt $338,933 308,052 250,807 83,842 80,170
Shareholders' equity $514,608 221,548 195,466 125,348 82,703
</TABLE>
- -------------------------------------------------------------------------------
* Capital costs include depreciation and amortization, lease expense , interest
expense and debenture conversion expense.
** Reflects a three for two stock dividend on the common stock effective March
29, 1996.
*** Before extraordinary items, cumulative effect of an accounting change and
debenture conversion expense.
Please refer to Management's Discussion and Analysis of Financial Condition for
a description of significant transactions.
- -------------------------------------------------------------------------------
19
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Since the Company began operations in July 1985, it has focused its efforts on
providing an expanding array of specialty medical services to geriatric
patients. The delivery of these services was originally concentrated in the
eldercare centers owned and leased by the Company, but now also includes
managed eldercare centers, independent healthcare facilities, outpatient clinics
and home health care.
The Company generates revenues from three sources: basic healthcare services,
specialty medical services and management services and other. The Company
includes in basic healthcare services revenues all room and board charges for
its eldercare customers at its owned and leased eldercare centers. Specialty
medical services include all revenues from providing rehabilitation therapies,
institutional pharmacy and medical supply services, subacute care programs, home
health care, physician services, and other specialized services. Management
services and other include fees earned for management of eldercare centers,
other service related businesses and transactional revenues.
Genesis delivers its services principally through three divisions. The largest,
in terms of revenues, is Genesis ElderCare Centers (formerly Genesis Health
Centers), which at September 30, 1996 included 85 owned and leased eldercare
centers. The second, Genesis ElderCare Services (formerly Genesis Health
Services), provides specialty medical services to all centers owned, leased or
managed by Genesis as well as to over 500 independent healthcare providers, The
third, Genesis ElderCare Network Services (formerly Genesis Management
Resources), manages 39 eldercare centers.
Certain Transactions
Effective October 1, 1996, subsequent to the fiscal year end, Geriatric &
Medical Companies, Inc. ("GMC") merged with a wholly-owned subsidiary of Genesis
(The "GMC Transaction"). Under the terms of the merger agreement, GMC
shareholders received $5.75 per share in cash for each share of GMC stock. The
total consideration paid, including assumed indebtedness of approximately
$132,000,000, is approximately $223,000,000. The merger was financed in part
with approximately $121,250,000 in net proceeds from an offering of 9 1/4%
Senior Subordinated Notes issued in October 1996. The remaining consideration
was financed through borrowings under the Company's bank credit facility. The
GMC Transaction added to Genesis 24 owned eldercare centers with approximately
3,300 beds. GMC also operates businesses which provide a number of ancillary
healthcare services including ambulance services; respiratory therapy, infusion
therapy and enteral therapy; distribution of durable medical equipment and home
medical supplies; and information management services.
In September 1996, the Company acquired $7,500,000 of convertible preferred
stock of Doctors Health System, Inc. ("Doctors Health"), an independent
physician owned and controlled integrated delivery system and practice
management company. An additional $2,500,000 of convertible preferred stock may
be purchased before December 31, 1996. The convertible preferred stock carries
an 8% cumulative dividend and is convertible into common stock, and if converted
would represent an approximate 10% ownership interest in Doctors Health. Also,
the Company is committed to purchase an additional $10,000,000 of convertible
preferred stock upon Doctors Health's achievement of certain operational and
financial benchmarks. The additional investment, if made and converted to common
stock, would raise the Company's ownership interest to approximately 20%.
20
<PAGE>
In July 1996, the Company acquired the outstanding stock of National Health Care
Affiliates, Inc., Oak Hill Center, Inc., Derby Nursing Center Corporation,
Eidos, Inc. and Versalink, Inc. (collectively "National Health"). Prior to the
closing of the stock acquisitions, an affiliate of a financial institution
purchased nine of the eldercare centers for $67,700,000 and subsequently leased
the centers to a subsidiary of Genesis under operating lease agreements and an
$85,000,000 lease financing facility. The balance of the total consideration
paid to National Health was funded with available cash of $51,800,000 and
assumed indebtedness of $7,900,000. National Health added 16 eldercare centers
in Florida , Virginia and Connecticut with approximately 2,200 beds to Genesis.
National Health also provides enteral nutrition and rehabilitation therapy
services to the eldercare centers which it owns and leases.
In June 1996, the Company acquired the outstanding stock of NeighborCare
Pharmacies, Inc., ("NeighborCare") a privately held institutional pharmacy,
infusion therapy and retail pharmacy business based in Baltimore, Maryland.
Total consideration was approximately $57,250,000, comprised of approximately
$47,250,000 in cash and 312,744 shares of Genesis common stock.
In March 1996, the Company sold four eldercare centers and a pharmacy in Indiana
for approximately $22,250,000 (The "Indiana Transaction").
In March 1996, the Company acquired for total consideration of approximately
$31,900,000 including the payment of assumed debt, the remaining approximately
71% joint venture interests of four eldercare centers in Maryland and the
remaining 50% joint venture interest of an eldercare center in Florida (the
"Partnership Interest Purchase").
In January 1996, the Company acquired the speech therapy, occupational therapy
and physical therapy services businesses of Medical and Rehab Support Services,
Inc., Professional Rehabilitation Network, Inc. and Healthcare Rehab Services,
Inc. (collectively, "Therapy Companies") for approximately $9,300,000. The
Therapy Companies provide these services in the Company's Chesapeake region.
The acquisition was financed with borrowings under the Company's bank credit
facilities.
Prior to January 1, 1996, the Company provided management, development and
marketing services to life care communities operated by Adult Community Total
Services, Inc. ("ACTS"), a Pennsylvania non-profit corporation, pursuant to a
management agreement which was to expire in April 1998. Effective January 1,
1996, Genesis restructured its relationship with ACTS. Under the revised
arrangement, Genesis earned a $2,000,000 restructuring fee and will no longer
manage the ACTS life care communities. Genesis will continue to provide
development services for a fee in an amount equal to five percent of the total
cost of developing and completing facilities developed by ACTS. The development
portion of the contract has been extended to December 2002 and Genesis is
guaranteed a minimum annual development fee of approximately $1,500,000.
Genesis also continues to provide certain ancillary services to the ACTS
communities.
On November 30, 1995, the Company acquired McKerley Health Care Centers
("McKerley") for total consideration of approximately $68,700,000. The
transaction (the "McKerley Transaction") also provides for up to an additional
$6,000,000 of contingent consideration payable upon the achievement of certain
financial objectives through October 1997. McKerley owns or leases 15 geriatric
care facilities in New Hampshire and Vermont with a total of 1,535 beds and
operates a home healthcare company. The acquisition was financed with borrowings
under the credit facility and assumed indebtedness.
On September 30, 1995, the Company sold for $19,570,000 and simultaneously
entered into a three-year contract to manage five facilities totaling 606 beds
to the AGE Institute of Massachusetts ("AIMASS"). The Company extended
approximately $18,000,000 of financing in connection with the sale, which was
repaid in full in Fiscal 1996.
In August 1995, the Company entered into a software license agreement for a
clinical operating system with Health Data Systems, Inc. The total commitment
under the license agreement is $12,000,000. The Company has estimated the cost
to install the system and related hardware, not including amounts paid for the
software license, to be approximately $18,000,000.
21
<PAGE>
On April 1, 1995, the Company acquired TherapyCare Systems, L.P. ("Therapy
Care") for approximately $7,000,000. TherapyCare provided physical therapy,
occupational therapy and speech therapy to 73 long term care facilities
throughout Pennsylvania.
Fiscal 1996 Compared to Fiscal 1995
The Company's total net revenues for fiscal year ended September 30, 1996
("Fiscal 1996") were $671,469,000 compared to $486,393,000 for the fiscal year
ended September 30, 1995 ("Fiscal 1995"), an increase of $185,076,000 or 38%.
Basic healthcare services increased $69,895,000 or 25%, approximately
$41,652,000 of which is due to the McKerley Transaction, National Health
transaction and the Partnership Interest Purchase in March 1996 (which was
partially offset by the sale of five eldercare centers in the AIMASS transaction
in September 1995 and the Indiana Transaction in March 1996), with the remainder
due to a shift in payor mix from Medicaid to Medicare and rate increases.
Specialty medical services revenue increased $110,101,000 or 61%, of which
approximately $57,000,000 is due to acquisitions, with the remainder due to
other volume growth in the institutional pharmacy, medical supply and contract
therapy divisions and increased acuity in the health centers division. Specialty
medical service revenue per patient day in the health centers division increased
19% to $29.94 in Fiscal 1996 compared to $25.06 in Fiscal 1995 primarily due to
treatment of higher acuity patients. Management services and other income
increased $5,080,000 or 18%. This increase is primarily due to an increase in
service related business revenues (group purchasing and staff replacement
services) of approximately $3,500,000 and an increase in transactional gains of
approximately $2,600,000. Transactional and other activity in Fiscal 1996
included net gains recognized in connection with the sale of an investment, the
Indiana Transaction and the sale of a majority interest in one eldercare center
in Maryland.
The Company's operating expenses before debenture conversion expense,
depreciation, amortization, lease expense and interest expense were $543,200,000
for Fiscal 1996 compared to $393,139,000 for Fiscal 1995, an increase of
$150,061,000 or 38%, of which approximately $84,335,000 was due to the McKerley
Transaction, Neighbor Care transaction and National Health transaction, and
the remaining $65,726,000 is attributed to an increase in cost of goods sold
related to increased specialty medical service revenues, and inflationary wage
and benefit increases.
During Fiscal 1996, the Company converted approximately $42,500,000 of its 6%
Senior Subordinated Convertible Debentures due 2003 ("the Debentures"). In
connection with the early conversion of a portion of the Debentures, the Company
paid approximately $1,245,000 representing the prepayment of interest to
converting debenture holders. The non-recurring cash payment is presented as
debenture conversion expense in the results of operations.
Depreciation and amortization expense increased to $25,374,000 in Fiscal 1996
from $18,793,000 in Fiscal 1995 as a result of Fiscal 1996 acquisitions and
capital expenditures.
Lease expense increased to $18,638,000 in Fiscal 1996 from $13,798,000 in Fiscal
1995 of which approximately $2,000,000 is related to the McKerley Transaction
and $1,600,000 is related to the National Health transaction.
Interest expense increased $4,560,000 or 22%. This increase reflects increased
debt levels used to fund acquisitions and a higher average prevailing interest
rate due to the June 1995 issuance of $120,000,000 of 9 3/4% Notes.
Fiscal 1995 Compared to Fiscal 1994
The Company's total net revenues for Fiscal 1995 were $486,393,000 compared to
$388,616,000 for the fiscal year ended September 30, 1994 ("Fiscal 1994"), an
increase of $97,777,000 or 25%. Basic healthcare services increased $37,857,000
or 16% of which approximately $20,500,000 is due to the Meridian transaction
included in the entire period in Fiscal 1995 as compared to ten months in Fiscal
1994, approximately $3,400,000 is due to two facilities which were leased in
Fiscal 1995 that were managed for a part of Fiscal 1994 and the remaining
increase is due to providing care to higher acuity patients and to rate
increases. Specialty medical services revenue increased $54,609,000 or 43% of
which approximately $6,000,000 is due to the Meridian transaction, approximately
$13,000,000 is due to acquisitions during Fiscal 1995 and the remainder is due
to other volume growth in the institutional pharmacy, medical supply and
contract therapy divisions and increased acuity in the health centers division.
Specialty medical service revenue per patient day in the health centers division
increased 41% to $25.06 in Fiscal 1995 compared to $17.80 in Fiscal 1994
primarily due to treatment of higher acuity patients. Management services and
other income increased $5,311,000 or 23%. This increase is primarily due to the
management contracts and other unrelated businesses acquired in the Meridian
transaction as well as inflationary rate increases. The number of geriatric care
facilities under management contracts increased from 31 at September 30, 1994 to
35 at September 30, 1995.
22
<PAGE>
The Company's operating expenses before depreciation, amortization, lease
expense and interest expense were $393,139,000 for Fiscal 1995 compared to
$319,243,000 for Fiscal 1994, an increase of $73,896,000 or 23%. Salaries, wages
and benefits increased $45,076,000 or 23% of which approximately $14,500,000
relates to the Meridian transaction, approximately $2,100,000 related to two
facilities leased in Fiscal 1995 that were managed for a part of Fiscal 1994 and
the remainder is due to the impact of acquisitions and growth in the
institutional pharmacy, medical supply and contract therapy divisions.
Other operating expenses increased $28,885,000 or 26% of which approximately
$8,500,000 is due to the Meridian transaction and the remainder is due to
increased sales in the pharmacy and medical supply divisions.
Depreciation and amortization expense increased from $14,982,000 in Fiscal 1994
to $18,793,000 in Fiscal 1995 primarily due to the Meridian transaction.
Lease expense increased from $11,376,000 in Fiscal 1994 to $13,798,000 in Fiscal
1995 of which $1,000,000 is related to the Meridian transaction, $500,000 is due
to two facilities that were leased in Fiscal 1995 that were managed for a part
of Fiscal 1994 and the remainder is due to new leases as a result of growth of
the health services division and inflationary rate increases
Interest expense increased $5,061,000 or 33%. This increase in interest expense
was due to increased debt used to finance the Meridian transaction outstanding
for the entire period in Fiscal 1995 compared to ten months in the prior year,
borrowings under the revolving credit agreement and a higher average interest
rate due to the issuance of $120,000,000 9 3/4% Senior Subordinated Notes in
June 1995.
In connection with the early repayment of debt and the restructuring and
amendment of its bank credit facility, the Company recorded an extraordinary
loss of approximately $1,923,000 to write off unamortized, deferred financing
fees.
Liquidity and Capital Resources
Working capital increased to $155,491,000 at September 30, 1996 from
$132,274,000 at September 30, 1995. Accounts receivable increased to
$141,716,000 at September 30, 1996 from $101,123,000 at September 30, 1995.
Approximately $35,100,000 of this increase relates to accounts receivables
purchased as part of the fiscal 1996 acquisitions, including the National Health
transaction, NeighborCare transaction, McKerley transaction, the January 1996
acquisition of Therapy Companies, and the Partnership Interest Purchase. The
remaining increase of $5,493,000 relates primarily to the continuing shift in
business mix to specialty medical services including the specialty medical
business acquired during Fiscal 1995. Days of revenue in accounts receivable
decreased from 70 to 62 during this period as a result of improved collections
and collection processes. Cost report receivables increased approximately
$15,304,000 primarily due to an increase in Medicare revenues which are
reimbursed on a retrospective cost basis. Included in this increase is
approximately $8,311,000 related to estimated Medicare reimbursement for costs
that exceeded routine cost limitations. The Company's cash flow from operations
for Fiscal 1996 was $36,232,000 compared to $11,188,000 for Fiscal 1995,
primarily as a result of improved receivable collections and collection
processes. Investing activities for the year ended September 30, 1996 include
$38,645,000 of capital expenditures primarily related to betterments and
expansion of eldercare centers, construction of pharmacy and medical supply
distribution sites and investment in data processing hardware and software. The
decrease in the balance of current portion of notes receivable from $18,493,000
at September 30, 1995 to $419,000 at September 30, 1996 relates to cash received
of approximately $18,000,000 related to financing extended by the Company in
Fiscal 1995 in connection with the sale of five facilities in Massachusetts to
AIMASS. The Company used the proceeds to repay a portion of its Credit Facility.
The increase in the non-current portion of notes receivable and other
investments from $29,879,000 at September 30, 1995 to $92,574,000 at September
30, 1996 is primarily due to the Company extending a 10-1/4%, $45,000,000
mortgage loan and a 13%, $10,000,000 working capital loan to refinance the bank
indebtedness of 11 managed eldercare centers in Florida and to eliminate the
Company's guarantee of $18,500,000 of such indebtedness.
23
<PAGE>
In November 1996, the Company called for redemption the then outstanding 6%
Convertible Senior Subordinated Debentures (the "Debentures") at a redemption
price equal to 104.2% of the principal amount. The Debenture holders had the
option to tender Debentures at the redemption price or to covert the Debentures
into Common Stock at a conversion price of $15.104 per share. All of the
Debentures were converted to Common Stock. In connection with the early
conversion of a portion of the Debentures during Fiscal 1996, the Company paid
approximately $1,245,000 representing the prepayment of interest to debenture
holders. The non-recurring cash payment is presented as debenture conversion
expense in the statement of operations.
In October 1996, subsequent to fiscal year end, the Company completed an
offering of $125,000,000 9 1/4% Senior Subordinated Notes due 2006. The Company
used the net proceeds of approximately $121,250,000 together with borrowings
under the Credit Facility, to pay the cash portion of the purchase price of the
GMC Transaction, to repay certain debt assumed as a result of the GMC
Transaction and to repurchase GMC accounts receivable which were previously
financed.
In October 1996, the Company entered into an agreement with the lenders of the
Credit Facility to increase the revolving credit facility to $300,000,000 and
the lease financing facility to $150,000,000 and to release liens on accounts
receivable, inventory and personal property. The revolving credit facility bears
interest at a floating rate equal, at the Company's option, to prime rate or
LIBOR plus a margin up to 1.5%. The lease financing facility bears interest at a
floating rate equal, at the Company's option, to prime rate or LIBOR plus a
margin up to 1.5%. The Company used the borrowings under the credit facility to
fund the McKerley Transaction, the Partnership Interest Purchase and the
acquisition of the Therapy Companies.
In May 1996, the Company completed an offering of 6,500,000 shares of Common
Stock at $32.50 per share (the "1996 Equity Offering"), resulting in net
proceeds of $202,280,000. The Company used the net proceeds from the offering to
repay a portion of amounts outstanding under its credit facilities and to
finance the National Health and NeighborCare transactions.
In March 1996, the Company sold four eldercare centers and a pharmacy in Indiana
for approximately $22,250,000. The Company used the net proceeds from the sale
to repay a portion of its Credit Facility.
Certain of the Company's outstanding loans contain covenants which, without the
prior consent of the lenders, limit certain activities of the Company. Such
covenants contain limitations relating to the merger or consolidation of the
Company and the Company's ability to secure indebtedness, make guarantees, grant
security interests and declare dividends. In addition, the Company must maintain
certain minimum levels of cash flow, and debt service coverage, and must
maintain certain liabilities to net worth. Under these loans, the Company is
restricted from paying cash dividends on the Common Stock, unless certain
conditions are met. The Company has not declared or paid any cash dividends on
its Common Stock since its inception.
Legislative and regulatory action has resulted in continuing change in the
Medicare and Medicaid reimbursement programs which has adversely impacted the
Company. The changes have limited, and are expected to continue to limit,
payment increases under these programs. Also, the timing of payments made under
the Medicare and Medicaid programs is subject to regulatory action and
governmental budgetary constraints; in recent years, the time period between
submission of claims and payment has increased. Implementation of the Company's
strategy to expand specialty medical services to independent providers should
reduce the impact of changes in the Medicare and Medicaid reimbursement programs
on the Company as a whole. Within the statutory framework of the Medicare and
Medicaid programs, there are substantial areas subject to administrative rulings
and interpretations which may further affect payments made under those programs.
Further, the federal and state governments may reduce the funds available under
those programs in the future or require more stringent utilization and quality
reviews of eldercare centers.
The Company believes that its liquidity needs can be met by expected operating
cash flow and availability of borrowings under its credit facilities. At
December 6, 1996, $289,350,000 was outstanding under the revolving credit
facility and the lease financing facility, and approximately $143,874,000 was
available under the credit facilities after giving effect to $16,776,000 in
outstanding letters of credit issued under the credit facilities.
24
<PAGE>
Seasonality
The Company's earnings generally fluctuate from quarter to quarter. This
seasonality is related to a combination of factors which include the timing of
Medicaid rate increases, seasonal census cycles, and the number of calendar days
in a given quarter.
Impact of Inflation
The healthcare industry is labor intensive. Wages and other labor costs are
especially sensitive to inflation and marketplace labor shortages. To date, the
Company has offset its increased operating costs by increasing charges for its
services and expanding its services. Genesis has also implemented cost control
measures to limit increases in operating costs and expenses but cannot predict
its ability to control such operating cost increases in the future. See
"Cautionary Statements Regarding Forward Looking Statements."
25
<PAGE>
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Genesis Health Ventures, Inc. and Subsidiaries
Independent Auditors' Report
The Board of Directors
Genesis Health Ventures, Inc.:
We have audited the accompanying consolidated balance sheets of Genesis Health
Ventures, Inc. and subsidiaries as of September 30, 1996 and 1995 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years in the three-year period ended September 30, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Genesis Health
Ventures, Inc. and subsidiaries as of September 30, 1996 and 1995, and the
results of their operations, and their cash flows for each of the years in the
three-year period ended September 30, 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 7 to the Consolidated Financial Statements, Genesis Health
Ventures, Inc. and subsidiaries adopted the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, in 1994.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
November 20, 1996,
26
<PAGE>
Genesis Health Ventures, Inc. and subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, September 30,
- ---------------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------------
Assets ( in thousands except share data)
<S> <C> <C>
Current assets:
Cash and equivalents $ 12,763 $ 10,388
Investments in marketable securities 5,517 3,455
Accounts receivable, net of allowance for doubtful accounts
of $11,131 in 1996 and $6,179 in 1995 141,716 101,123
Cost report receivables 41,575 26,271
Inventory 17,051 9,601
Current portion of notes receivable 419 18,493
Prepaid expenses and other current assets 13,680 19,886
- ---------------------------------------------------------------------------------------------------------------
Total current assets 232,721 189,217
- ---------------------------------------------------------------------------------------------------------------
Property, plant, and equipment, net 350,929 244,671
Notes receivable and other investments 92,574 29,879
Other long-term assets 24,595 20,825
Goodwill and other intangibles, net 249,850 115,797
- ---------------------------------------------------------------------------------------------------------------
Total assets $ 950,669 $ 600,389
- ---------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 33,781 $ 19,401
Accrued expenses 15,331 13,951
Current installments of long-term debt 3,720 2,539
Accrued Compensation 18,630 13,656
Interest 5,342 5,513
Income taxes payable 426 1,883
- ---------------------------------------------------------------------------------------------------------------
Total current liabilities 77,230 56,943
- ---------------------------------------------------------------------------------------------------------------
Long-term debt 338,933 308,052
Deferred income taxes 13,812 8,698
Deferred gain and other long-term liabilities 6,086 5,148
Shareholders' equity:
Common stock, par $.02, authorized 60,000,000 shares, issued and
outstanding 31,981,393 and 31,935,792 at September 30, 1996;
22,081,267 and 22,035,666 at September 30, 1995 640 294
Additional paid-in capital 411,472 155,927
Retained earnings 102,739 65,570
Treasury stock, at cost (243) (243)
- ---------------------------------------------------------------------------------------------------------------
Total shareholders' equity 514,608 221,548
- ---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 950,669 $ 600,389
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
27
<PAGE>
Genesis Health Ventures, Inc. and subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended September 30,
- -----------------------------------------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
(In thousands, except share and per share data)
<S> <C> <C> <C>
Net revenues:
Basic healthcare services $ 348,016 $ 278,121 $ 240,264
Specialty medical services 290,428 180,327 125,718
Management services and other, net 33,025 27,945 22,634
- -----------------------------------------------------------------------------------------------------------
Total net revenues 671,469 486,393 388,616
- -----------------------------------------------------------------------------------------------------------
Operating expenses:
Salaries, wages and benefits 315,494 237,610 192,534
Other operating expenses 201,866 137,945 109,059
General corporate expense 25,840 17,585 17,650
Depreciation and amortization 25,374 18,793 14,982
Lease expense 18,638 13,798 11,376
Interest expense, net 24,926 20,366 15,305
Debenture conversion expense 1,245 - -
- -----------------------------------------------------------------------------------------------------------
Earnings before income taxes, extraordinary items and
cumulative effect of a change in accounting principle 58,086 40,296 27,710
Income taxes 20,917 14,765 10,019
- -----------------------------------------------------------------------------------------------------------
Earnings before extraordinary items and cumulative
effect of a change in accounting principle 37,169 25,531 17,691
Extraordinary items, net of tax - (1,923) (553)
Cumulative effect of a change in accounting principle - - 535
- -----------------------------------------------------------------------------------------------------------
Net income $ 37,169 $ 23,608 $ 17,673
- -----------------------------------------------------------------------------------------------------------
Per common share data:
Primary:
Earnings before extraordinary items and cumulative
effect of a change in accounting principle $ 1.35 $ 1.13 $ 0.89
Net income $ 1.35 $ 1.05 $ 0.89
Weighted average shares of common stock and
equivalents 27,491,765 22,587,037 19,930,828
- -----------------------------------------------------------------------------------------------------------
Fully diluted:
Earnings before extraordinary items and cumulative
effect of a change in accounting principle $ 1.29 $ 1.03 $ 0.84
Net income $ 1.29 $ 0.97 $ 0.84
Weighted average shares of common stock and
equivalents 31,130,045 28,452,436 24,819,711
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
28
<PAGE>
Genesis Health Ventures, Inc. and subsidiaries
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Additional
(Dollars in thousands) Common paid-in Retained Treasury
stock capital earnings stock Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1993 $ 247 $101,273 $ 24,289 $ (460) 125,349
Issuance of additional common stock,
net of issuance costs 43 51,572 - - 51,615
Issuance of shares from Treasury - - - 100 100
Exercise of common stock options 1 728 - - 729
1994 net earnings - - 17,673 - 17,673
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1994 291 153,573 41,962 (360) 195,466
- -------------------------------------------------------------------------------------------------------------------
Issuance of additional common stock - 621 - - 621
Issuance of shares from Treasury - - - 117 117
Exercise of common stock options and
issuance of stock bonus awards 3 1,733 - - 1,736
1995 net earnings - - 23,608 - 23,608
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 294 155,927 65,570 (243) 221,548
- -------------------------------------------------------------------------------------------------------------------
Issuance of additional common stock,
net of issuance costs 136 211,529 - - 211,665
Conversion of Debentures 42 41,676 - - 41,718
Exercise of common stock options 5 2,503 - - 2,508
Effect of stock dividend 163 (163) - - -
1996 net earnings - - 37,169 - 37,169
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 $ 640 $411,472 $102,739 $ (243) $514,608
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
29
<PAGE>
Genesis Health Ventures, Inc. and subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended September 30,
- ----------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 37,169 $ 23,608 $ 17,673
Adjustments to reconcile net income to
net cash provided by operating activities:
Charges (credits) included in operations not requiring funds:
Provision for deferred taxes 5,114 (1,270) 4,483
Depreciation and amortization 25,374 18,793 14,982
Amortization of deferred gain (460) (460) (319)
Debenture conversion expense 1,245 - -
Extraordinary loss - 1,923 553
Cumulative effect of a change in accounting principle - - (535)
Changes in assets and liabilities excluding the effects of acquisitions
Accounts receivable (6,256) (25,564) (15,485)
Cost reports receivable (15,647) (15,065) (1,770)
Inventory (2,061) (3,176) (937)
Prepaid expenses and other current assets 1,955 3,035 (6,705)
Accounts payable and accrued expenses (7,758) 7,235 4,419
Accrued compensation and interest (949) 1,258 4,558
Income taxes payable (1,494) 871 (354)
- ----------------------------------------------------------------------------------------------------------------------------
Total adjustments (937) (12,420) 2,890
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operations 36,232 11,188 20,563
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Investments in marketable securities (2,062) (3,455) -
Capital expenditures (38,645) (24,719) (18,784)
Payments for acquisitions, net of cash acquired (215,874) (8,194) (214,306)
Proceeds from dispositions of facilities 21,521 - -
Notes receivable and other investment additions, net (42,113) (23,074) -
Other long term asset (additions) dispositions (7,872) 9,971 (9,274)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (285,045) (49,471) (242,364)
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings (repayments) under working
capital revolving credit 50,799 30,100 (10,200)
Repayment of long term debt (2,539) (102,451) (26,060)
Proceeds from issuance of long-term debt - 119,700 125,000
Proceeds from issuance of convertible debentures - - 86,250
Debt issuance costs - (4,331) (5,051)
Proceeds from issuance of common stock 211,250 100 52,048
Stock issuance costs (9,585) - (433)
Debenture conversion expense (1,245) - -
Stock options exercised 2,508 1,736 523
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 251,188 44,854 222,077
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in cash and equivalents 2,375 6,571 276
Cash and equivalents
Beginning of year 10,388 3,817 3,541
End of year $ 12,763 $ 10,388 $ 3,817
- ----------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information
Interest paid $ 24,926 $ 18,175 $ 12,085
Income taxes paid $ 22,374 $ 13,037 $ 5,159
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
30
<PAGE>
Genesis Health Ventures, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Genesis Health
Ventures, Inc. and its wholly-owned subsidiaries (the Company or Genesis). All
significant intercompany accounts and transactions have been eliminated in
consolidation. All dollars, except per share amounts, and shares are expressed
in thousands. All other amounts are expressed in whole numbers. Certain prior
year balances have been reclassified to conform with current year presentation.
Business
The Company provides a broad range of healthcare services to the geriatric
population, principally within four geographic markets in the eastern United
States. These services include basic healthcare services traditionally provided
in eldercare centers; specialty medical services, such as rehabilitation
therapy, institutional pharmacy and medical supply services, community-based
pharmacies and subacute care; and management services to independent geriatric
care providers.
Property, Plant and Equipment
Land, land improvements, buildings, and equipment are stated at cost. Subsequent
additions are recorded at cost. Depreciation of land improvements, buildings and
equipment is calculated on the straight-line method over their estimated useful
lives that range from three years to 35 years.
Expenditures for maintenance and repairs necessary to maintain property and
equipment in efficient operating condition are charged to operations. Costs of
additions and betterments are capitalized. Interest costs associated with
construction or renovation are capitalized in the period in which they are
incurred.
Inventories
Inventories, consisting of drugs and supplies, are stated at the lower of cost
or market. Cost is determined primarily on the first-in, first-out (FIFO)
method.
Contractual Adjustments
Patient revenues are recorded based on standard charges applicable to all
patients. Under Medicare, Medicaid, and other cost-based reimbursement programs,
each facility is reimbursed for services rendered to covered program patients as
determined by reimbursement formulas. The differences between established
billing rates and the amounts reimbursable by the programs and patient payments
are recorded as contractual adjustments and deducted from revenues.
Retroactively calculated third-party contractual adjustments are accrued on an
estimated basis in the period the related services are rendered. Revisions to
estimated contractual adjustments are recorded based upon audits by third-party
payors, as well as other communications with third-party payors such as desk
reviews, regulation changes and policy statements. These revisions are made in
the year such amounts are determined.
31
<PAGE>
Cash Equivalents
Short-term investments which have a maturity of ninety days or less at
acquisition are considered cash equivalents.
Investments in Marketable Securities
Investments in marketable securities available for sale are recorded at their
fair market value, with any unrealized gains or losses recognized as a component
of shareholders' equity, until realized.
Deferred Financing Costs
Financing costs have been deferred and are being amortized on a straight-line
basis over the term of the related debt. Deferred financing costs, net of
accumulated amortization of $3,009 and $1,313, and included in other long term
assets were $8,056 and $8,584 at September 30, 1996 and 1995, respectively.
Goodwill
Goodwill represents the excess of the purchase price over the fair market value
of net assets acquired and is amortized on a straight-line basis from ten to
forty years. Goodwill, net of accumulated amortization of $11,900 and $6,200,
was $254,000 and $119,000 at September 30, 1996 and 1995, respectively. Goodwill
is reviewed for impairment whenever events or circumstances provide evidence
that suggest that the carrying amount of goodwill may not be recoverable. The
Company assesses the recoverability of goodwill by determining whether the
amortization of the goodwill balance can be recovered through projected
undiscounted future cash flows.
Income Taxes
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (Statement 109) was adopted by the Company in 1994. Under Statement 109,
deferred income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Provision is made for deferred income taxes applicable to temporary differences
between financial statement and taxable income.
Earnings Per Share
Primary earnings per share is based on the average number of shares of common
stock outstanding during the period and the dilutive effect of stock options and
other common stock equivalents. Fully diluted earnings per share reflect the
conversion of the Convertible Senior Subordinated Debentures due 2003 as if such
conversion had occurred on the date of issuance and the related interest expense
had not been incurred.
Effective March 29, 1996, the Company issued a three for two stock dividend on
its common stock. Share and per share information in the accompanying
consolidated financial statements have been adjusted accordingly.
Use of Estimates
Management of the Company has made a number of estimates relating to the
reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these consolidated financial statements in conformity
with generally accepted accounting principles. Actual results could differ from
those estimates.
32
<PAGE>
New Accounting Pronouncements
In March, 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (Statement) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
Statement 121 provides guidance for recognition and measurement of impairment of
long-lived assets, certain identifiable intangibles and goodwill related both to
assets to be held and used and assets to be disposed of. The Company is required
to adopt Statement 121 for the year ending September 30, 1997. The Company
believes the adoption of Statement 121 will not have a material impact on its
consolidated financial statements.
In October, 1995, the FASB issued Statement 123, "Accounting for Stock-Based
Compensation". Statement 123 allows companies the option to retain the current
accounting approach for recognizing stock-based expense in the financial
statements or to adopt a new accounting method based on the estimated fair value
of employee stock options. Companies that do not follow the new fair value based
method will be required to provide expanded disclosures in the footnotes. The
Company is required to adopt Statement 123 for the year ending September 30,
1997. The Company expects to continue applying its current accounting approach
and upon adoption will present the required footnote disclosures.
(2) Acquisitions/Dispositions
Effective October 1, 1996, subsequent to the fiscal year end, Geriatric &
Medical Companies, Inc. ("GMC") merged with a wholly-owned subsidiary of Genesis
(The "GMC Transaction"). Under the terms of the merger agreement, GMC
shareholders received $5.75 per share in cash for each share of GMC stock. The
total consideration paid, including assumed indebtedness of approximately
$132,000, is approximately $223,000. The merger was financed in part with
approximately $121,250 in net proceeds from an offering of 9 1/4% Senior
Subordinated Notes issued in October of 1996. The remaining consideration was
financed through borrowings under the Company's bank credit facility. The GMC
Transaction, will add to Genesis 24 owned eldercare centers with approximately
3,300 beds. GMC also operates businesses which provide a number of ancillary
healthcare services including ambulance services; respiratory therapy, infusion
therapy and enteral therapy; distribution of durable medical equipment and home
medical supplies; and information management services.
In July 1996, the Company acquired the outstanding stock of National Health Care
Affiliates, Inc., Oak Hill Center, Inc., Derby Nursing Center Corporation,
Eidos, Inc. and Versalink, Inc. (collectively "National Health"). Prior to the
closing of the stock acquisitions, an affiliate of a financial institution
purchased nine of the eldercare centers for $67,700 and subsequently leased the
centers to a subsidiary of Genesis under operating lease agreements and an
$85,000 lease financing facility. The balance of the total consideration paid to
National Health was funded with available cash of $51,800 and assumed
indebtedness of $7,900. National Health added 16 eldercare centers in Florida,
Virginia and Connecticut with approximately 2,200 beds to Genesis. National
Health also provides enteral nutrition and rehabilitation therapy services to
the eldercare centers which it owns and leases
In June 1996, the Company acquired the outstanding stock of NeighborCare
Pharmacies, Inc. ("NeighborCare") a privately held institutional pharmacy,
infusion therapy and retail pharmacy business based in Baltimore, Maryland.
Total consideration was approximately $57,250, comprised of approximately
$47,250 in cash and 312,744 shares of Genesis common stock.
In March 1996, the Company sold four eldercare centers and a pharmacy in Indiana
for approximately $22,250. The net sale proceeds were used to repay indebtedness
under the Company's credit facility.
In March 1996, the Company acquired for total consideration of approximately
$31,900, including the payment of assumed debt, the remaining approximately 71%
joint venture interests of four eldercare centers in Maryland and the remaining
50% joint venture interest of an eldercare center in Florida.
In January 1996, the Company acquired the speech therapy, occupational therapy
and physical therapy services businesses of Medical and Rehab Support Services,
Inc., Professional Rehabilitation Network, Inc. and Healthcare Rehab Services,
Inc. (collectively, "Therapy Companies") for approximately $9,300. The Therapy
Companies provide these services in the Company's Chesapeake region. The
acquisition was financed with borrowings under the Company's bank credit
facilities.
33
<PAGE>
Prior to January 1, 1996, the Company provided management, development and
marketing services to life care communities operated by Adult Community Total
Services, Inc. (ACTS), a Pennsylvania non-profit corporation, pursuant to a
management agreement which was to expire in April 1998. Effective January 1,
1996, Genesis restructured its relationship with ACTS. Under the revised
arrangement, Genesis earned a $2,000 restructuring fee and will no longer manage
the ACTS life care communities. Genesis will continue to provide development
services for a fee in an amount equal to five percent of the total cost of
developing and completing facilities developed by ACTS. The development portion
of the contract has been extended to December 2002 and Genesis is guaranteed a
minimum annual development fee of approximately $1,500. Genesis also continues
to provide certain ancillary services to the ACTS communities.
On November 30, 1995, the Company acquired McKerley Health Care Centers
("McKerley") for total consideration of approximately $68,700. The transaction
also provides for up to an additional $6,000 of contingent consideration payable
upon the achievement of certain financial objectives through October 1997.
McKerley owns or leases 15 geriatric care facilities in New Hampshire and
Vermont with a total of 1,535 beds and operates a home healthcare company. The
acquisition was financed with long term debt.
On September 30, 1995, the Company sold, and simultaneously entered into a
three-year management contract to manage , five facilities totaling 606 beds to
the AGE Institute of Massachusetts ("AIMASS") for $19,570. The Company extended
approximately $18,000 of financing in connection with the sale, which was
repaid in full in Fiscal 1996.
On April 1, 1995, the Company acquired TherapyCare Systems, L.P. ("Therapy
Care") for approximately $7,000. TherapyCare provided physical therapy,
occupational therapy and speech therapy to 73 long term care facilities
throughout Pennsylvania.
The following unaudited pro forma statement of operations information gives
effect to the National Health, NeighborCare and McKerley transactions described
above as though they had occurred on October 1, 1994, after giving effect to
certain adjustments, including amortization of goodwill, additional depreciation
expense, increased interest expense on debt related to the acquisition and
related income tax effects. In addition, the following pro forma information
entitled "1996 Including GMC" incorporates the pro forma effect of the GMC
Transaction had it, and the previously described transactions, occurred on
October 1, 1995. The pro forma financial information does not necessarily
reflect the results of operations that would have occurred had the acquisitions
occurred at the beginning of the respective fiscal years.
Year Ended
September 30,
1996
Including
GMC 1996 1995
- --------------------------------------------------------------------------------
Pro Forma Statement of Operations Information:
Total net revenues $983,633 $788,437 $682,360
Earnings before debenture conversion
expense and extraordinary item 46,993 44,591 33,894
Net income 46,196 43,794 31,971
Primary earnings per share before
debenture conversion expense and
extraordinary item 1.48 1.40 1.15
Fully diluted earnings per share before
debenture conversion expense and
extraordinary item 1.40 1.33 1.07
- --------------------------------------------------------------------------------
34
<PAGE>
(3) Property, Plant and Equipment
Property, plant and equipment at September 30, 1996 and 1995 consist of the
following:
September 30,
1996 1995
- --------------------------------------------------------------------------------
Land $ 23,517 $ 17,606
Land improvements 4,565 3,193
Buildings 301,216 219,637
Equipment 67,124 46,196
Construction in progress 20,344 9,147
- --------------------------------------------------------------------------------
416,766 295,779
Less accumulated depreciation 65,837 51,108
- --------------------------------------------------------------------------------
Net property, plant and equipment $350,929 $244,671
- --------------------------------------------------------------------------------
(4) Long-term Debt
Long-term debt at September 30, 1996 and 1995 was as follows:
September 30,
1996 1995
- -------------------------------------------------------------------------------
Secured-due 1997 to 2034;
6.75% to 10.00% (weighted average interest
rate 1996-7.43%; 1995-8.22%) $147,359 $101,138
Unsecured-due 1997 to 2008;
5.50%% to 11.00% (weighted average interest
rate 1996-9.71%; 1995-9.6%) 151,815 123,524
Convertible Senior Subordinated
Debentures due 2003-6% 43,762 86,250
- --------------------------------------------------------------------------------
342,936 310,912
Less:
-Debt discount, net of amortization 283 321
-Current installments and short-term borrowings 3,720 2,539
- --------------------------------------------------------------------------------
$338,933 $308,052
- --------------------------------------------------------------------------------
At September 30, 1996 and 1995, the Company's long-term debt consisted of
approximately $120,350 and $66,500 of floating rate debt based on prime or LIBOR
with weighted average interest rates of 6.87% and 7.19%, respectively. At
September 30, 1996 and 1995, the Company's long-term debt consisted of
approximately $222,586 and $244,412 of fixed rate debt with weighted average
interest rates of 8.62% and 8.30%, respectively.
In October 1996, the Company entered into an agreement with the lenders of the
bank credit facility to increase the revolving credit facility to $300,000 and
the lease financing facility to $150,000 and to release liens on accounts
receivable, inventory and personal property. The revolving credit facility bears
interest at a floating rate equal, at the Company's option, to prime rate or
LIBOR plus a margin up to 1.5%. The lease financing facility bears interest at a
floating rate equal, at the Company's option, to prime rate or LIBOR plus a
margin up to 1.5%. The revolving credit facility is secured by the stock of the
Company's subsidiaries.
In October 1996, subsequent to fiscal year end, the Company completed an
offering of $125,000 9 1/4% Senior Subordinated Notes due 2006. The Company used
the net proceeds of approximately $121,250, together with borrowings under the
bank credit facility, to pay the cash portion of the purchase price of the GMC
Transaction, to repay certain debt assumed as a result of the GMC Transaction
and to repurchase GMC accounts receivable which were previously financed.
35
<PAGE>
In November 1996, subsequent to the fiscal year end, the Company called for
redemption the then outstanding 6% Convertible Senior Subordinated Debentures
(the Debentures) at a redemption price equal to 104.2% of the principal amount.
The Debenture holders had the option to tender Debentures at the redemption
price or to convert the Debentures into common stock at a conversion price of
$15.104 per share. In connection with the early conversion of a portion of the
Debentures converted during fiscal 1996, the Company paid approximately $1,245
representing the prepayment of interest to converting debenture holders. The
non-recurring cash payment is presented as debenture conversion expense in the
statement of operations.
In June 1995, the Company completed an offering of $120,000 of 9 3/4 % Senior
Subordinated Notes due 2005 (the Notes). Interest is payable on the Notes on
June 15 and December 15 of each year commencing December 15, 1995. The Notes are
redeemable at the option of the Company in whole or in part, at any time, on or
after June 15, 2000 at a redemption price initially equal to 104.05% of the
principal amount and decreasing annually thereafter. The Company used the net
proceeds from the Notes offering to repay a portion of the bank credit facility.
At September 30, 1996, sinking fund requirements and installments of long-term
debt, excluding the Debentures, are as follows:
Year ending Principal
September 30, Amount
- --------------------------------------------------------------------------------
1997 $ 3,720
1998 4,313
1999 3,468
2000 2,772
2001 2,498
Thereafter $ 282,403
- --------------------------------------------------------------------------------
In June 1996, the Company entered into an interest rate swap agreement with a
financial institution. The agreement is for a term of five years and a notional
amount of $20,000 whereby the Company will make quarterly payments at a floating
rate based on six month LIBOR (5.75% at September 30, 1996) and receive
quarterly payments at a fixed rate of 6.86%.
Interest of $1,191 in 1996, $457 in 1995 and $405 in 1994, was capitalized in
connection with facility construction and renovations.
During fiscal 1995 and 1994, the Company recorded extraordinary losses, net of
tax, of $1,923 and $553, respectively related to the early retirement of debt.
The Company is restricted from declaring any dividends or authorizing any other
distribution on account of ownership of its capital stock unless certain
conditions are met.
(5) Leases and Lease Commitments
The Company leases certain facilities and equipment under operating leases.
Future minimum payments for the next five years under operating leases at
September 30, 1996 were as follows:
Year ending Minimum
September 30, payments
- --------------------------------------------------------------------------------
1997 $ 25,891
1998 21,751
1999 20,544
2000 17,566
2001 16,980
- --------------------------------------------------------------------------------
36
<PAGE>
Excluded from the future minimum lease payments above in the year 2001 is
approximately $67,000 related to a residual value guarantee due under the lease
financing facility in connection with the National Health transaction.
The Company has an option to purchase seven leased eldercare care facilities at
the end of their ten year lease term in 2003 for $59,000.
(6) Patient Service Revenue
The distribution of net patient service revenue by class of payor for the years
ended September 30, 1996, 1995 and 1994 was as follows:
Year ended September 30,
Class of payor 1996 1995 1994
- --------------------------------------------------------------------------------
Private pay and other $251,244 $175,206 $148,946
Medicaid 229,838 185,612 156,894
Medicare 157,362 97,630 60,142
- --------------------------------------------------------------------------------
$638,444 $458,448 $365,982
The above revenue amounts are net of third-party contractual allowances of
$122,136, $98,495, and $81,545 in 1996, 1995 and 1994, respectively.
The Company has recorded cost report receivables from third-party payors (i.e.,
Medicare and Medicaid) of $41,575 and $26,271 at September 30, 1996 and 1995,
respectively. These amounts at September 30, 1996 are due primarily from
Massachusetts ($8,579), Pennsylvania ($5,710) and Medicare ($28,576) for the
1994 through 1996 cost reporting periods.
37
<PAGE>
(7) Income Taxes
As discussed in Note 1, the Company adopted Statement 109 as of October 1, 1993.
The cumulative effect of this change in accounting for income taxes of $535 is
determined as of October 1, 1993 and is reported separately in the consolidated
statement of operations for the year ended September 30, 1994. As a result of
applying Statement 109, earnings before income taxes for the years ended
September 30, 1996, 1995 and 1994 were decreased $390 due to the effects of
adjustments for prior purchase business combinations. Prior years financial
statements have not been restated to apply the provisions of Statement 109.
Total income tax expense for the years ended September 30, 1996 1995 and 1994
was as follows:
Year ended September 30,
1996 1995 1994
- ------------------------------------------------------------------------------
Income from continuing operations $20,917 $14,765 $10,019
Extraordinary item - (1,130) (325)
- ------------------------------------------------------------------------------
Total $20,917 $13,635 $ 9,694
- ------------------------------------------------------------------------------
The components of the provision for income taxes for the years ended September
30, 1996, 1995 and 1994 were as follows:
Year ended September 30,
1996 1995 1994
- ------------------------------------------------------------------------------
Current:
Federal $14,508 $13,484 $ 4,769
State 1,295 2,551 767
- ------------------------------------------------------------------------------
15,803 16,035 5,536
- ------------------------------------------------------------------------------
Deferred:
Federal 4,595 (650) 3,973
State 519 (620) 510
- ------------------------------------------------------------------------------
5,114 (1,270) 4,483
- ------------------------------------------------------------------------------
Total $20,917 $14,765 $10,019
- ------------------------------------------------------------------------------
38
<PAGE>
Total income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 35% to net income before income taxes and
extraordinary items as a result of the following:
<TABLE>
<CAPTION>
Year ended September 30,
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected"
tax expense $ 20,330 $ 14,104 $ 9,699
-Increase (reduction) in income taxes
resulting from:
-State and local income-taxes, net of federal
tax benefit 1,179 1,255 830
Amortization of goodwill 235 197 154
Targeted jobs credits - (528) (600)
Tax exempt interest (770) - -
Other, net (57) (263) (64)
- --------------------------------------------------------------------------------------
Total income tax expense $ 20,917 $ 14,765 $ 10,019
- --------------------------------------------------------------------------------------
</TABLE>
The sources of the differences between consolidated earnings for financial
statement purposes and tax purposes and the tax effects are as follows:
<TABLE>
<CAPTION>
Year ended September 30,
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Excess tax depreciation expense versus book
depreciation $ 1,157 $ 1,064 $ 1,007
Excess tax gain versus
book gain (895) (2,879) (302)
Amortization of deferred
-gain on sale and leaseback 49 103 128
Utilization of net operating loss
- carryforward (600) - -
Targeted jobs credit
carryforward - - 446
Accrued liabilities
and reserves 676 (501) (1,713)
Goodwill 3,661 920 3,790
Alternative minimum
tax credit - - 1,192
Prepaid Rent 1,146 - -
Other (80) 23 (65)
- --------------------------------------------------------------------------------------
Net deferred tax
provision $ 5,114 $(1,270) $ 4,483
- --------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at September 30, 1996
and 1995 are presented below:
- ---------------------------------------------------------------------------
Deferred Tax Assets September 30,
1996 1995
- --------------------------------------------------------------------------
Accounts receivable $ 1,411 $ 1,303
Accrued compensation 601 532
Amortization of deferred gain 247 297
Goodwill 414 4,075
Net operating loss carryforwards 4,000 2,600
Other, net 13 24
- --------------------------------------------------------------------------
Deferred tax assets 6,686 8,831
Valuation allowance (3,400) (2,600)
- --------------------------------------------------------------------------
Net deferred tax assets 3,286 6,231
- --------------------------------------------------------------------------
Deferred Tax Liabilities
- --------------------------------------------------------------------------
Goodwill and other intangibles (6,590) (6,590)
Depreciation (8,535) (8,272)
Accrued liabilities and reserves (828) -
Prepaid rent (1,146) -
Other, net - (67)
- --------------------------------------------------------------------------
Total deferred tax liability (17,099) (14,929)
- --------------------------------------------------------------------------
Net deferred liability $(13,813) $ (8,698)
- --------------------------------------------------------------------------
At September 30, 1996 and 1995, the Company has state net operating loss
carryforwards (net of federal tax benefit) of $4,000 and $2,600, respectively.
The related deferred tax assets are available to reduce future state income
taxes payable, subject to applicable carryforward rules and limitations. Due to
these limitations, the Company has established valuation allowances of $3,400
and $2,600 at September 30, 1996 and 1995, respectively. The net operating loss
carryforwards expire in years 1997 through 2002. Management believes that by
using prudent and feasible tax planning strategies it would realize
approximately $600 of the state net operating losses prior to expiration.
(8) Notes Receivable and Other Investments
Notes receivable and other investments at September 30, 1996 and 1995 consist of
the following:
September 30,
1996 1995
- --------------------------------------------------------------------------
Mortgage notes and other notes receivable $76,092 $17,823
Investments in non marketable securities 14,050 5,000
Investments in unconsolidated
partnerships and joint ventures 2,432 7,056
- --------------------------------------------------------------------------
$92,574 $29,879
- --------------------------------------------------------------------------
Mortgage notes and other notes receivable at September 30, 1996 bear interest at
rates ranging from 7 1/2% to 13% and mature at various times ranging from 1997
to 2006. Approximately $64,525 of the mortgage notes and other notes are secured
by first or second mortgage liens on underlying facilities and personal
property, accounts receivable, inventory and or gross facility receipts, as
defined.
40
<PAGE>
In 1996, the Company extended a 10 1/4%, $45,000 mortgage loan and a 13%,
$10,000 working capital loan to refinance the bank indebtedness of 11 managed
eldercare centers in Florida and to eliminate the Company's guarantee of $18,500
of such indebtedness. The Company extended its existing management agreement
for these Florida eldercare centers through 2006.
In addition to the $10,000 working capital loan described above, the Company has
agreed to provide third parties with $6,900 of working capital lines of credit.
The unused portion of working capital lines of credit was $2,216 at September
30, 1996.
In September, 1996 the Company acquired $7,500 of convertible preferred stock of
Doctors Health System, Inc. ("Doctors Health"), an independent physician owned
and controlled integrated delivery system and practice management company. An
additional $2,500 of convertible preferred stock may be purchased before
December 31, 1996. The preferred stock carries an 8% cumulative dividend and is
convertible into common stock, and if converted would represent an approximate
10% ownership interest in Doctors Health. Also, the Company is committed to
purchase an additional $10,000 of convertible preferred stock upon Doctors
Health's achievement of certain operational and financial benchmarks. The
additional investment, if made and converted to common stock would raise the
Company's ownership interest to approximately 20%. Investments in such non
marketable securities are carried at cost.
Investments in unconsolidated partnerships and joint ventures are accounted for
under the equity method.
(9) Other Long-Term Assets
Other long-term assets at September 30, 1996 and 1995 consist of the following:
September 30,
1996 1995
- ----------------------------------------------------------------------------
Deferred financing fees, net $ 8,056 $ 8,584
Property deposits and funds held in escrow 6,765 3,488
Funds held by trustee 1,692 1,121
Other 8,082 7,632
- ----------------------------------------------------------------------------
$24,595 $ 20,825
- ----------------------------------------------------------------------------
(10) Management Services and Other Income, Net
Included in management services and other income, net were the following:
Year ended September 30,
1996 1995 1994
- ----------------------------------------------------------------------------
Fees earned in connection
with management agreements $18,227 $19,214 $15,564
Service related businesses 9,023 5,523 4,836
Transactional items, net 5,775 3,208 2,234
- ----------------------------------------------------------------------------
$33,025 $27,945 $22,634
- ----------------------------------------------------------------------------
41
<PAGE>
(11) Stock Option Plans
The Company has two stock option plans (the "Employee Plan" and the "Directors
Plan"). Under the Employee Plan, 3,750,000 shares of common stock were reserved
for issuance to employees including officers and directors. Generally, the
options granted in the Employee Plan become exercisable over a 5 year period and
expire 10 years from the date of grant. All options granted under the Employee
Plan have been at the fair market value of the common stock on the date of
grant.
<TABLE>
<CAPTION>
Option Price Available
per Share Outstanding Exercisable for Grant
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at
-September 30, 1994 $2.22-$17.00 1,610,103 730,605 76,467
- ---------------------------------------------------------------------------------------------
Authorized - - - 1,050,000
Granted 19.67-20.25 740,625 - (740,625)
Became
Exercisable - - 400,692 -
Exercised 5.33-16.83 (204,585) (204,585) -
Cancelled - (51,975) - 51,975
- ---------------------------------------------------------------------------------------------
Balance at
-September 30, 1995 2.22-20.25 2,094,168 926,712 437,817
- ---------------------------------------------------------------------------------------------
Authorized - - - 750,000
Granted 19.50-31.87 1,010,998 (1,010,998)
Became
Exercisable - - 509,070 -
Exercised 5.33-20.25 (275,455) (275,455) -
Cancelled - (136,269) - 136,269
- ---------------------------------------------------------------------------------------------
Balance at
-September 30, 1996 2.22-31.87 2,693,442 1,160,327 313,088
- ---------------------------------------------------------------------------------------------
</TABLE>
(12) Retirement Plan
The Company has a defined contribution plan covering all employees having 1,000
hours or more of service and one year of service in a plan year. Employees'
contributions to the plan may be matched by the Company based on years of
service. During the plan years ended December 31, 1996 and 1995, the Company
accrued a match of 50% of employee contributions up to 3% of the employee's
annual gross salary. During the plan year ended December 31, 1994 the Company
match was 50% of employee contributions up to 2% of employee's annual gross
salary.
Additionally, the Plan provides for discretionary employer contributions, in the
form of Company common stock and/or cash, based on profits of the Company. The
Company recorded retirement plan expense for the 401(k) match and the
discretionary contribution of approximately $1,877, $1,128, and $959 for the
years ended September 30, 1996, 1995 and 1994, respectively.
Certain employees of NeighborCare and National Health participate in separate
plans qualified under Section 401(k) of the Internal Revenue Code. Beginning
January 1, 1997, these plans will be merged into the Genesis Health Ventures,
Inc. Retirement Plan.
(13) Commitments and Contingencies
The Company has guaranteed $10,614 of indebtedness of others.
42
<PAGE>
In August 1995, the Company entered into a software license agreement for a
clinical operating system. The total commitment under the license agreement is
$12,000 of which the Company has paid $3,500. The license agreement provides for
a refund of amounts paid in the event the software does not meet the acceptance
requirements as defined in the license agreement. The Company has estimated the
cost to install the system and related hardware, not including amounts paid for
the software license, to be approximately $18,000 over the next three years, of
which approximately $5,900 has been expended through September 30, 1996
The Company is self insured for the majority of its workers' compensation and
health insurance claims. The Company's maximum exposure is $500 per occurrence
for workers' compensation and $75 per year, per participant for health
insurance. The Company has elected to reinsure $490 in excess of the first $10
per occurrence for workers' compensation claims, through its wholly-owned
captive insurance company, Liberty Health Corp., LTD. The Company carries excess
insurance with commercial carriers for losses above $500 per workers'
compensation claim, and $75 per participant for health insurance. The provision
for estimated workers' compensation and health insurance claims includes
estimates of the ultimate costs for both reported claims and claims incurred but
not reported.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for guarantees, loan commitments and
letters of credit is represented by the dollar amount of those instruments. The
Company uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet financial instruments. The Company
does not anticipate any material losses as a result of these commitments.
Genesis is a party to litigation arising in the ordinary course of business.
Genesis does not believe the results of such litigation, even if the outcome is
unfavorable to the Company, would have a material adverse effect on its
consolidated financial position or results of operations.
(14) Fair Value of Financial Instruments
The Company believes the carrying amount of cash and equivalents, accounts
receivable (net of allowance for doubtful accounts), cost report receivables,
prepaid expenses and other current assets, accounts payable, accrued expenses,
accrued compensation, accrued interest and income taxes payable approximates
fair value because of the short-term maturity of these instruments.
The Company also believes the carrying value of mortgage notes and other notes
receivable, and non marketable debt securities approximate fair value based upon
the discounted value of expected future cash flows using interest rates at which
similar investments would be made to borrowers with similar credit quality and
for the same remaining maturities.
It was not practicable to estimate the fair value of investments in non
marketable equity securities, or unconsolidated partnerships and joint ventures.
The fair value of interest rate swap agreements is the estimated amount the
Company would receive or pay to terminate the swap agreement at the reporting
date, taking into account current interest rates. The estimated amount the
Company would pay to terminate it's interest rate swap agreement outstanding at
September 30, 1996 is $94.
The fair value of the Company's commitments to provide working capital lines of
credit and certain financial guarantees is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the counterparties.
Since the Company has not charged fees for currently outstanding commitments
there is no fair value of such financial instruments.
43
<PAGE>
The fair value of the Company's fixed rate long-term debt is estimated based on
the quoted market prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturities. At September
30, 1996 and 1995, the carrying value of fixed rate debt of $222,586 and
$244,412, respectively approximates market value.
The fair value of the Company's floating rate debt approximates its fair value.
(15) Quarterly Financial Data (Unaudited)
The Company's unaudited quarterly financial information is as follows:
<TABLE>
<CAPTION>
Fully-diluted
Earnings Earnings Per
Before Share before
Debenture Debenture
Conversion Conversion
Expense Expense
and and Fully-diluted
Total Net Extraordinary Net Extraordinary Earnings
Revenues Item Income Item Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Quarter ended:
December 31, 1995 $132,778 $6,556 $5,858 $.25 $.23
March 31, 1996 154,739 7,810 7,810 .30 .30
June 30, 1996 172,836 10,190 10,091 .35 .35
September 30, 1996 211,115 13,410 13,410 .40 .40
- -------------------------------------------------------------------------------------------------------------------
$671,469 $37,966 $37,169 $1.31 $1.29
- -------------------------------------------------------------------------------------------------------------------
Quarter ended:
- -------------------------------------------------------------------------------------------------------------------
December 31, 1994 $111,553 $ 4,810 $ 4,810 $ .21 $ .21
March 31, 1995 116,953 5,813 5,813 .24 .24
June 30, 1995 125,959 6,885 4,962 .28 .21
September 30, 1995 131,928 8,023 8,023 .31 .31
- -------------------------------------------------------------------------------------------------------------------
$486,393 $25,531 $23,608 $1.03 $0.97
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
45
<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Company's 1997 proxy statement to be filed
pursuant to General Instruction G(3) to the Form 10-K, except information
concerning certain Executive Officers of the Company which is set forth in Item
4.1 of this Report.
ITEM 11: EXECUTIVE COMPENSATION
Incorporated by reference from the Company's 1997 proxy statement to be filed
pursuant to General Instruction G(3) to the Form 10-K.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGMENT
Incorporated by reference from the Company's 1997 proxy statement to be filed
pursuant to General Instruction G(3) to the Form 10-K.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Company's 1997 proxy statement to be filed
pursuant to General Instruction G(3) to the Form 10-K.
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets as of September 30, 1996 and 1995
Consolidated Statements of Operations for the years ended
September 30, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the years
ended September 30, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
September 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(a)(2) Schedule
Schedule II - Valuation and Qualifying Accounts for the years
ended September 30, 1996, 1995, and 1994
All other schedules not listed have been omitted since the
required information included in the financial statements or the notes thereto,
or is not applicable or required.
46
<PAGE>
(a)(3) Exhibits
No. Description
2.1(1) Agreement and Plan of Reorganization, dated September 19, 1993, by
and among Genesis Health Ventures, Inc., a Pennsylvania corporation
("Genesis"), MI Acquisition Corporation, a Pennsylvania corporation
and a wholly-owned subsidiary of Genesis, MHC Acquisition
Corporation, a Pennsylvania corporation and a wholly-owned subsidiary
of Genesis, PEI Acquisition Corporation, a Pennsylvania corporation
and a wholly-owned subsidiary of Genesis, TW Acquisition Corporation,
a Pennsylvania corporation and a wholly-owned subsidiary of Genesis,
SRS Acquisition, a Pennsylvania corporation and a wholly-owned
subsidiary of Genesis, Meridian Healthcare, Inc., a Maryland
corporation, Meridian Inc., a Maryland corporation ("MI"), Pharmacy
Equities, Inc., a Maryland corporation, The Tidewater Healthcare
Shared Services Group, Inc., a Maryland corporation, Staff
Replacement Services, Inc., a Maryland corporation, Michael J. Batza,
Jr., Edward A. Burchell, Earl L. Linehan, Roger C. Lipitz and Arnold
I. Richman (collectively the "Reorganization Agreement").
2.2(2) Amended and Restated Amendment to Reorganization Agreement dated
November 23, 1993.
2.3(3) Agreement made as of the 18th day of August, 1995 by and among
Genesis Health Ventures, Inc., a Pennsylvania corporation, and
Accumed, Inc., a New Hampshire corporation, McKerley Health Care
Centers, Inc., a New Hampshire corporation, McKerley Health Care
Center-Concord, Inc., a New Hampshire corporation, McKerley Health
Facilities, a New Hampshire general partnership and McKerley Health
Care Center-Concord, L.P., a New Hampshire limited partnership
(collectively, the "Purchase Agreement").
2.4(4) Amendment Number One to Purchase Agreement dated November 30, 1995.
2.5(15) Stock Purchase Agreement, dated April 21, 1996, by and among Genesis
Health Ventures, Inc., a Pennsylvania corporation, and NeighborCare
Pharmacies, Inc., a Maryland corporation, Professional Pharmacy
Services, Inc., a Maryland corporation, Medical Services Group, Inc.,
a Maryland corporation, CareCard, Inc., a Maryland corporation,
Transport Services, Inc., a Maryland corporation, Michael G.
Bronfein, Jessica Bronfein, Stanton G. Ades, Renee Ades, The Chase
Manhattan Bank, N.A. and PPS Acquisition Corp., a Maryland
corporation and a wholly-owned subsidiary of Genesis Health Ventures,
Inc.
2.6(15) Merger Agreement, dated April 21, 1996, by and among Professional
Pharmacies, Inc., Genesis Health Ventures, Inc. and PPS Acquisition
Corp.
2.7(16) Purchase Agreement, dated May 3, 1996, by and among Mark E. Hamister,
Oliver C. Hamister, George E. Hamister, Julia L. Hamister, The George
E. Hamister Trust, The Oliver C. Hamister Trust, National health Care
Affiliates, Inc., Oak Hill Health Care Center, Inc., Derby Nursing
Center Corporation, Delaware Avenue Partnership, EIDOS, Inc.,
VersaLink Inc., certain other individuals and Genesis Health
Ventures, Inc.
2.8(16) Purchase Agreement Addendum, dated July 24, 1996, by and among Mark
E. Hamister, Oliver C. Hamister, George E. Hamister, Julia L.
Hamister, The George E. Hamister Trust, The Oliver C. Hamister Trust,
National Health Care Affiliates, Inc., Oak Hill Health Care Center,
Inc., Derby Nursing Center Corporation, Delaware Avenue Partnership,
EIDOS, Inc., VersaLink Inc., certain other individuals and Genesis
Health Ventures, Inc.
2.9(18) Agreement and Plan of Merger, dated as of July 11, 1996, by and among
Genesis Health Ventures, Inc., a Pennsylvania corporation, G
Acquisition Corporation, a Delaware corporation, and Geriatric &
Medical Companies, Inc., a Delaware corporation.
3.1(5) The Company's Amended and Restated Articles of Incorporation.
3.2(5) The Company's Amended and Restated Bylaws.
3.3(10) Amendment to the Company's Articles of Incorporation, as filed on
March 11, 1994, with the Department of State, Commonwealth of
Pennsylvania.
4.1(2) Indenture dated as of November 30, 1993, between the Company and
First Fidelity Bank, N.A., Pennsylvania.
4.2(5) Specimen of Common Stock Certificate.
4.3(6) Specimen of the Company's First Mortgage Bonds (Series A) due 2007.
4.4(7) Indenture of Mortgage and Deed of Trust, dated as of September 1,
1992, by and among the Company, Delaware Trust Company and
Richard N. Smith.
4.5(8) Specimen of the Company's 6% Convertible Senior Subordinated
Debentures due 2003.
4.6(2) Indenture dated as of November 30, 1993, between the Company and
First Fidelity Bank, N.A., Pennsylvania.
4.7(13) Rights Agreement between Genesis Health Ventures, Inc. and Mellon
Securities Trust Company.
4.8(17) Indenture dated as of June 15, 1995 between the Company and
Delaware Trust Company.
4.9(17) Specimen of the Company's 9-3/4% Senior Subordinated Debentures
due 2005.
4.10(19) Indenture dated as of October 7, 1996 between the Company and First
Union National Bank
4.11(19) Specimen of the Company's 9-1/4% Senior Subordinated Notes due 2006.
47
<PAGE>
+10.1(5) The Company's Employee Retirement Plan, adopted January 1, 1989,
as amended and related Retirement Plan Trust Agreement,
+10.2(12) The Company's 1985 Amended and Restated Stock Option Plan.
+10.3(9) Amended and Restated Employment Agreement between the Company and
Michael R. Walker dated April 1, 1994.
+10.4(5) Employment Agreement between the Company and Richard R. Howard dated
April 1, 1991.
+10.5(9) Letter Amendment to Employment Agreement of Richard R. Howard, dated
April 6, 1994.
+10.6(5) Employment Agreement between the Company and David C. Barr, Dated
April 1, 1991.
+10.7(9) Letter Amendment to Employment Agreement of David C. Barr, dated
April 6, 1994.
+10.8(5) Lease Agreement, dated October 1, 1990, between Salisbury Medical
Office Building General Partnership ("SMOBGP") and Team
Rehabilitation, Inc.
+10.9(5) Lease Agreement, dated October 1, 1989, between SMOBGP and Genesis
Immediate Med Center, Inc.
+10.10(5) Purchase Agreement, dated October 1, 1987, among SMOBGP, Genesis
Pharmacy, Inc. and Genesis Immediate Med Center, Inc. relating to the
purchase of the assets, property and business of Salisbury Pharmacy
and Salisbury Immediate Med Center.
+10.11(5) Lease, dated October 1, 1989, between SMOBGP and ASCO, relating to
the Salisbury Regional Health Center.
+10.12(11) Ground Lease Agreement dated as of June 26, 1993, by and between GHV
Associates and the Company.
+10.13(11) Lease, dated January 1, 1995, between GHV Associates and the Company,
Team Rehabilitation, Inc. and Genesis Physician Services, Inc.
10.14(5) Guaranty, dated August 31, 1988, by the Company of Genesis Properties
Limited Partnership Letter of Credit obligations.
10.15(5) Second Amended and Restated Registration Agreement, dated April 1,
1991, among the Company, the holders of the Company's Series A
Convertible Preferred Stock, the holders of the Company's Series C
Convertible Preferred Stock, the holders of the Company's Series D
Convertible Preferred Stock, holders of the Company's Series F
Convertible Preferred Stock, and certain holders of the Company's
common stock.
48
<PAGE>
10.16(5) Agreement and Plan of Merger, dated March 29, 1991, among the
Company, Genesis Acquisition Company and Concord Healthcare
Corporation.
+10.17(5) Agreement, dated April 19, 1991, between Nazem & Company, III, L.P.
and the Company.
+10.18(6) The Company's 1992 Stock Option Plan for Non-Employee Directors.
+10.19(6) The Company's Incentive Compensation Program.
+10.20(6) The Company's Execuflex Plan, dated as of January 1, 1992, and
related Trust Agreement, dated December 10, 1991.
+10.21(6) Agreements, dated June 16, 1990, February 6, 1991 and August 15,
1991, by and among the Company, Edward Romanov, Jr., American
Community Environments Corporation and Total Care Systems, Inc.
+10.22(7) Agreement, dated August 19, 1992, by and among the Company, American
Community Environments Corporation and Edward B. Romanov, Jr.
49
<PAGE>
+10.23(9) Promissory Note dated September 6, 1994, from Samuel H. Howard to the
Company.
+10.24(2) Lease Agreement, dated as of November 30, 1993, by and between
Charlesmead Associates Limited Partnership, a Maryland limited
partnership, and MHC Acquisition Corporation, now known as Meridian
Healthcare, Inc., a Pennsylvania corporation.
+10.25(2) Option Agreement, dated November 30, 1993, by and among the Sellers
identified therein, Charlesmead Associates Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.26(2) Lease Agreement, dated as of November 30, 1993, by and between Cherry
Hill Meridian Limited Partnership, a Maryland limited partnership,
and MHC Acquisition Corporation, now known as Meridian Healthcare,
Inc., a Pennsylvania corporation.
+10.27(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as indicated therein, Cherry Hill Meridian Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.28(2) Lease Agreement, dated as of November 30, 1993, by and between
Corsica Hills Associates Limited Partnership and MHC Acquisition
Corporation, now known as Meridian Healthcare, Inc., a Pennsylvania
corporation.
+10.29(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as identified therein, Corsica Hills Associates Limited Partnership,
a Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.30(2) Lease Agreement, dated as of November 30, 1993, by and between
Heritage Associates Limited Partnership, a Maryland limited
partnership, and MHC Acquisition Corporation, now known as Meridian
Healthcare, Inc., a Pennsylvania corporation.
+10.31(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as identified therein, Heritage Associates Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.32(2) Lease Agreement, dated as of November 30, 1993, by and between
Multi-Medical Meridian Limited Partnership, a Maryland limited
partnership, and MHC Acquisition Corporation, now known as Meridian
Healthcare, Inc., a Pennsylvania corporation.
+10.33(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as identified therein, Multi-Medical Meridian Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.34(2) Lease Agreement, dated as of November 30, 1993, by and between
Severna Associates Limited Partnership, a Maryland limited
partnership, and MHC Acquisition Corporation, now known as Meridian
Healthcare, Inc., a Pennsylvania corporation.
+10.35(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as identified therein, Severna Associates Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
50
<PAGE>
+10.36(2) Lease Agreement, dated as of November 30, 1993, by and between
Westfield Meridian Limited Partnership, a Maryland limited
partnership, and MHC Acquisition Corporation, now known as Meridian
Healthcare, Inc., a Pennsylvania corporation.
+10.37(2) Option Agreement, dated November 30, 1993, by and among the Sellers,
as identified therein, Westfield Meridian Limited Partnership, a
Maryland limited partnership, and MHC Acquisition Corporation, now
known as Meridian Healthcare, Inc., a Pennsylvania corporation.
+10.38(11) Management Agreement, dated June 15, 1987, between Brendenwood MRC
Limited Partnership and Meridian Health, Inc. (f/k/a Meridian, Inc.).
+10.39(11) Lease dated January 5, 1989, as amended, by and between Towson
Building Associates Limited Partnership and Meridian Healthcare, Inc.
+10.40(11) Sublease dated November 30, 1993. By and between Meridian Healthcare,
Inc. and Fairmount Associates, Inc.
51
<PAGE>
+10.41(14) Agreement to Purchase Partnership Interests, made as of March 1,
1996, by and among Meridian Health, Inc., Fairmont Associates, Inc.
and MHC Holding Company.
10.42(14) Purchase and Sale Agreement, dated January 16, 1996, by and among
Genesis Health Ventures of Indiana, Inc. and Hallmark Healthcare
Limited Partnership, as seller, and Hunter Acquisitions, L.L.C., as
purchaser.
10.43 Guaranty and Agreement of Suretyship Regarding Obligations of Lessee
and Affiliates from Genesis Health Ventures, Inc. and its Material
Subsidiaries, Dated as of October 7, 1996
10.44 Guaranty and Agreement of Suretyship from Genesis Health Ventures,
Inc. and its Material Subsidiaries, Dated as of October 7, 1996
10.45 Amended and Restated Lease and Agreement, Dated as of October 7,
1996, between Mellon Financial Services Corporation #4, as Lessor,
and Genesis Eldercare Properties, Inc., as Lessee
10.46 Amended and Restated Participation Agreement, Dated as of October 7,
1996, among Genesis Eldercare Properties, Inc., as Lessee, Mellon
Financial Services Corporation #4, as Lessor, Persons Named on
Schedule I, as Lenders, and Mellon Bank, N.A. not in its individual
capacity except as expressly stated therein, but solely as Agent
10.47 Management and Affiliation Agreement, dated as of August 31, 1996, by
and between Genesis ElderCare Network Services, Inc., the Company and
AGE Institute of Florida, Inc.
10.48 Acquisition Loan and Security Agreement, dated as of August 31, 1996,
between Genesis Health Ventures, Inc. and AGE Institute of Florida,
Inc.
10.49 Working Capital Loan and Security Agreement, dated as of August 31,
1996, between Genesis Health Ventures, Inc. and AGE Institute of
Florida, Inc.
10.50 Second Amended and Restated Credit Agreement dated as of October 7,
1996 by and among Genesis Health Ventures, Inc. and certain of its
subsidiaries, as Borrowers of the institutions identified herein as
Lenders, Mellon Bank, N.A. as Issuer of Letters of Credit, Mellon
Bank, N.A. as Administrative Agent and Co-Syndication Agent,
Citibank, N.A. as Co-Syndication Agent and other co-agents specified
therein.
52
<PAGE>
11 Computation of Per Share Earnings.
21 Subsidiaries of the Company
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule
- ------------------------
+ Management contract or compensatory plan or arrangement
(1) Incorporated by reference to the Company's Form 8-K dated September 19,
1993.
(2) Incorporated by reference to the Company's Form 8-K dated November 30,
1993.
(3) Incorporated by reference to the Company's Form 8-K dated August 18, 1995.
(4) Incorporated by reference to the Company's Form 8-K dated November 30,
1995.
(5) Incorporated by reference to the Company's Registration Statement on Form
S-1 (Registration No. 33-40007).
(6) Incorporated by reference to the Company's Registration Statement on Form
S-1 (Registration No. 33-51670).
(7) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1992.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993.
(9) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994.
(10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1995.
(12) Incorporated by reference to the Company's Form S-8 dated May 15, 1995.
(13) Incorporated by reference to the Company's Form 8-A dated May 11, 1995.
(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
(15) Incorporated by reference to Form 8-K, as amended, dated April 21, 1996.
(16) Incorporated by reference to Form 8-K/A dated May 3, 1996.
(17) Incorporated by reference to Form S-3, dated June 20, 1995 (File No.
33-9350).
(18) Incorporated by reference to Form 8-K, as amended, dated July 11, 1996.
(19) Incorporated by reference to Form S-4, dated October 31, 1996 (File No.
333-15267).
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-KA dated July 11, 1996 reporting
the agreement by the Company to acquire Geriatric and Medical Companies which
did not include financial statements.
53
<PAGE>
The Company filed a Current Report on Form 8-K dated July 26, 1996 reporting
the agreement by the Company to acquire the outstanding stock of National
Health Care Affiliates, Inc., Oak Hill Health Center, Inc., Derby Nursing Center
Corporation, EIDOS, Inc. and Versalink, Inc. which included the following
financial statements:
National Health Care Affiliates, Inc. and Related Entities -- Audited
Combined Financial Statements for the year ended December 31, 1995
Report of Independent Auditors
Combined Balance Sheet
Combined Statement of Earnings
Combined Statement of Owners' Equity
Combined Statement of Cash Flows
Notes to Combined Financial Statements
National Health Care Affiliates, Inc. and Related Entities -- Unaudited
Combined Financial Statements for the Quarter Ended March 31, 1996
Combined Balance Sheet
Combined Statement of Earnings
Combined Statement of Cash Flows
54
<PAGE>
Independent Auditors' Report
The Board of Directors
Genesis Health Ventures, Inc.
Under date of November 20, 1996, we reported on the consolidated balance sheets
of Genesis Health Ventures, Inc. and subsidiaries as of September 30, 1996 and
1995, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the years in the three-year period ended
September 30, 1996, as contained in the annual report on Form 10-K for the year
1996. In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule in the Form
10-K. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion such schedule when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
November 20, 1996
55
<PAGE>
Schedule II
Genesis Health Ventures, Inc.
Valuation and Qualifying Accounts
Years Ended September 30, 1996, 1995 and 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance at Charged Balance at
Beginning Charged to to Other End of
Description of Period Operations Accounts (1) Deductions (2) Period
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended September 30, 1996:
Allowance for
Doubtful Accounts $6,179 4,382 4,748 4,178 $11,131
====== ====== ====== ====== =======
Year Ended September 30, 1995:
Allowance for
Doubtful Accounts $4,553 3,013 503 1,890 $ 6,179
====== ====== ====== ====== =======
Year Ended September 30, 1994:
Allowance for
Doubtful Accounts $2,089 3,440 1,662 2,638 $ 4,553
====== ====== ====== ====== =======
</TABLE>
(1) - Represents amounts related to acquisitions
(2) - Represents amounts written off as uncollectible
56
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
its behalf on December 23, 1996 by the undersigned duly authorized.
Genesis Health Ventures, Inc.
By: /S/ Michael R. Walker
------------------------------------
Michael R. Walker,
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this Report has
been signed below by the following persons on behalf of the Registrant and in
the capacities indicated on December 23, 1996.
Signature Capacity
- --------- --------
/S/ Michael R. Walker
- ------------------------------
Michael R. Walker Chairman and Chief Executive Officer
/S/ Richard R. Howard
- ------------------------------
Richard R. Howard President, Chief Operating
Officer and Director
/s/ Samuel H. Howard
- ------------------------------
Samuel H. Howard Director
/s/ Allen R. Freedman
- ------------------------------
Allen R. Freedman Director
/s/ Roger C. Lipitz
- ------------------------------
Roger C. Lipitz Director
/s/ Stephen E. Luongo
- ------------------------------
Stephen E. Luongo Director
/s/ Alan B. Miller
- ------------------------------
Alan B. Miller Director
/s/ Fred F. Nazem
- ------------------------------
Fred F. Nazem Director
/S/ George V. Hager Jr.
- ------------------------------
George V. Hager, Jr. Chief Financial Officer (Principal
Accounting Officer)
<PAGE>
Exhibit 10.43
GUARANTY
AND AGREEMENT OF SURETYSHIP
REGARDING OBLIGATIONS
OF LESSEE AND AFFILIATES
from
GENESIS HEALTH VENTURES, INC.
and its
MATERIAL SUBSIDIARIES
Dated as of July 24, 1996
<PAGE>
GUARANTY
AND AGREEMENT OF SURETYSHIP
REGARDING OBLIGATIONS
OF LESSEE AND AFFILIATES
THIS GUARANTY AND AGREEMENT OF SURETYSHIP REGARDING OBLIGATIONS OF
LESSEE AND AFFILIATES, dated as of July 24, 1996, is made by GENESIS HEALTH
VENTURES, INC., a Pennsylvania corporation ("Genesis") and the Material
Subsidiaries set forth on Schedule 1 (the "Material Subsidiaries") (Genesis and
each of the Material Subsidiaries are individually a "Guarantor" and
collectively referred to herein, in their capacity as guarantors hereunder, as
the "Guarantors") in favor of the Beneficiaries (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, Genesis Eldercare Properties, Inc.
("Lessee"), as Lessee, Mellon Financial Services Corporation #4 ("Lessor"), as
Lessor, the Persons named on Schedule 2 attached hereto, as Lenders and Mellon
Bank, N.A., as Agent have entered into that certain Participation Agreement, and
Lessee and Lessor have entered into that certain Lease and Agreement, each dated
as of July 24, 1996. The Participation Agreement and the Lease and Agreement, as
they each may be modified, amended or restated from time to time as and to the
extent permitted thereby, are hereinafter referred to as the "Participation
Agreement" and "Lease" respectively. Unless otherwise defined herein or the
context hereof otherwise requires, terms which are defined or defined by
reference in the Participation Agreement or Lease shall have the same meanings
when used herein as such terms have therein; and
WHEREAS, Lessor has entered into a Loan Agreement dated as of even date
herewith (as amended or otherwise modified from time to time, the "Loan
Agreement" by and among Lessor, Lenders and Agent, pursuant to which the Lenders
have agreed to make a loan to Lessor, as evidenced by those certain non-recourse
promissory notes (the "Notes") from Lessor to Agent and secured by those certain
Mortgages and Deeds of Trust (the "Mortgages") made by Lessor to Agent, as agent
for the Lenders and those certain Assignments of Lease from Lessor to Agent, as
agent for the Lenders (the "Assignments of Lease").
WHEREAS, Lessee is a wholly-owned subsidiary of Genesis and
each of the Material Subsidiaries are Subsidiaries of Genesis;
and
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Guaranty
WHEREAS, it is a covenant in the Participation Agreement that Lessee
shall cause the Guarantors to execute and deliver this Guaranty; and
WHEREAS, it is in the best interests of Guarantors that the
Overall Transaction and the Document Closing Date occur; and
WHEREAS, this Guaranty, and the execution, delivery and performance
hereof, have been duly authorized by all necessary corporate action of
Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantors, Guarantors hereby agree as follows:
SECTION I. Guarantee and Agreement of Suretyship. Guarantors hereby
jointly and severally, irrevocably and unconditionally guarantee to the
Beneficiaries and agree to act as surety to the Beneficiaries for (a) the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, and (b) the full and prompt performance, of all of the
Liabilities (as hereinafter defined), including interest and Yield on any such
Liabilities, whether accruing before or after any bankruptcy or insolvency case
or proceeding involving Lessee or any other Person, and, if interest or Yield on
any portion of such obligations ceases to accrue by operation of law by reason
of the commencement of such case or proceeding, including such interest and
Yield as would have accrued on any such portion of such obligations if such case
or proceeding had not commenced, and further agree to pay all expenses
(including attorneys' fees and legal expenses) paid or incurred by Lessor, Agent
or any of the Lenders (each a "Beneficiary") in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty. The term
"Liabilities", as used herein, shall mean all of the following, in each case
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due: all amounts payable by Lessee or any Affiliate (now or hereafter) of
Genesis, all obligations to be performed by Lessee or any such Affiliate and all
representations, warranties, covenants, undertakings and agreements of Lessee or
any such Affiliate, under the Lease, the Participation Agreement and any other
Operative Document (whether or not Lessee, any such Affiliate or any other
Person shall be released or relieved from any or all liability or obligation
under any thereof).
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Guaranty
In any action or proceeding involving any state corporate law, or any
state or federal bankruptcy, insolvency, reorganization or any other law
affecting the rights of creditors generally, if the obligations of Guarantor
under this Guaranty would otherwise be held or determined by a final and
non-appealable order of a court of competent jurisdiction to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Guaranty, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by Guarantor or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding pursuant to such final and
non-appealable order.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessee, or the inability or failure of Lessee to pay debts as they
become due, or an assignment by Lessee for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessee under any
bankruptcy, insolvency or similar laws, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, Guarantors will pay
to the Beneficiaries forthwith the full amount which would be payable hereunder
by Guarantors as if all Liabilities were then due and payable.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessor, or the inability or failure of Lessor to pay debts as they
become due, or an assignment by Lessor for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessor under any
bankruptcy, insolvency or similar laws, and if such event (a "Lessor Bankruptcy
Event") shall occur at a time when any of the Liabilities may not then be due
and payable, Guarantors will pay to the Beneficiaries from time to time all
Liabilities then or thereafter due under the Operative Documents pursuant to
their terms or if the provisions of the immediately preceding paragraph are
applicable, at the time specified in the immediately preceding paragraph, all as
if such Lessor Bankruptcy Event shall not have occurred.
To secure all obligations of Guarantors hereunder, each Beneficiary
shall have a lien upon and security interest in (and may, without demand or
notice of any kind, at any time and from time to time when any amount shall be
due and payable by Guarantors hereunder, appropriate and apply toward the
payment of such amount, in such order of application as the Agent may elect) any
and all balances, credits, deposits, accounts or moneys of or in the name of
Guarantors or any of its Affiliates now or
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Guaranty
hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to Lessor or any Beneficiary or any agent or bailee for Lessor
or any Beneficiary. Each Beneficiary shall provide prompt written notice to the
Agent of the exercise by such Beneficiary of its rights under this paragraph,
which notice shall set forth in reasonable detail the amount of such application
and shall remit such amount to Agent or as Agent may direct.
The obligations of the Guarantors hereunder are secured by the Joint
Stock Collateral as set forth in that certain Amended and Restated Security
Agreement dated as of September 29, 1995, as amended, among Genesis and certain
of its subsidiaries and Mellon Bank, N.A. as Collateral Agent, subject to the
terms and provisions of that certain Amended and Restated Collateral Agency
Agreement dated as of September 29, 1995, as amended, among Genesis, such
subsidiaries and Mellon Bank, N.A., as RCA Agent, ACA Agent and Collateral
Agent.
This Agreement shall constitute an agreement of suretyship as well as
of guaranty and shall constitute an absolute and unconditional guaranty of
payment and performance (and not of collection) and an absolute and
unconditional undertaking by each Guarantor with respect to the payment and
performance of the Liabilities. This Guaranty shall remain in full force and
effect (notwithstanding, without limitation, the dissolution of any of the
Guarantors). The liability of the Guarantors hereunder shall be direct, joint
and several, and may be enforced without the Beneficiaries being required to
resort to any other right, remedy or security.
Agent on behalf of itself and the other Beneficiaries, may, from time
to time at its discretion and without notice to Guarantors, but subject to the
provisions of the Participation Agreement, take or cause any of the other
Beneficiaries to take, any or all of the following actions, subject to the terms
of the Credit Agreement as in effect on the date hereof as such Credit Agreement
may be amended with the consent of Agent under the Participation Agreement (on
behalf of the Participants) and subject to the provisions of the Collateral
Agency Agreement with respect to the Joint Stock Collateral: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantors, with
respect to any of the Liabilities; (c) extend or renew for one or more periods
(regardless of whether longer than the original period), alter or exchange any
of the Liabilities, or release or compromise any obligation of Guarantors
hereunder or any obligation of any
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<PAGE>
Guaranty
nature of any other obligor with respect to any of the Liabilities; (d) release
or fail to perfect its lien upon or security interest in, or impair, surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Liabilities or any obligation hereunder, or extend
or renew for one or more periods (regardless of whether longer than the original
period) or release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property; and (e) resort to Guarantors,
or any one or more of them, for payment of any of the Liabilities, regardless of
whether Agent or any other Beneficiary shall have resorted to any other Person
any property securing any of the Liabilities or any obligation hereunder or
shall have proceeded against any other obligor primarily or secondarily
obligated with respect to any of the Liabilities (all of the actions referred to
in this paragraph being hereby expressly waived by Guarantors).
SECTION II. Guarantors' Obligations Unconditional. Guarantors'
obligations hereunder are independent in respect of any other Person, and each
Beneficiary may enforce any of its rights hereunder independently of any other
right or remedy that it may at any time hold with respect to the Liabilities or
any security or other guaranty therefor; provided that no double recovery of the
same amount shall be permitted. Such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantors with their obligations
hereunder), whether based upon any claim that Lessor, Lessee, Agent, any
Beneficiary or any other Person may have against any Beneficiary or any other
Person or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not Guarantors or any other
Person shall have any knowledge or notice thereof) including, without
limitation:
A. any amendment, modification, addition, deletion,
supplement or renewal to or of or other change in the
Liabilities or any Operative Document or any of the
agreements referred to in any thereof, or any other
instrument or agreement applicable to any Operative
Document or any of the parties to such agreements, or
to the Sites, or any assignment, mortgage or transfer
thereof or of any interest therein, or any furnishing
or acceptance of additional security for, guaranty of
or right of offset with respect to, any of the
Liabilities; or the failure of any security or the
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<PAGE>
Guaranty
failure of any Beneficiary to perfect or insure any
interest in any collateral;
B. any failure, omission or delay on the part of Lessor or
any Beneficiary to conform or comply with any term of
any instrument or agreement referred to in clause (A)
above;
C. any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect
of any instrument, agreement, guaranty, right of offset
or security referred to in clause (A) above or any
obligation or liability of Lessor or any Beneficiary,
or any exercise or non-exercise by any Beneficiary of
any right, remedy, power or privilege under or in
respect of any such instrument, agreement, guaranty,
right of offset or security or any such obligation or
liability;
D. any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or
similar proceeding with respect to Lessor or any
Beneficiary or any other Person or any of their
respective properties or creditors, or any action taken
by any trustee, receiver or court in any such
proceeding;
E. any limitation on the liability or obligations of any
Person under any Operative Document, the Liabilities,
any collateral security for the Liabilities, any other
guaranty of the Liabilities or any discharge,
termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of
any of the foregoing or any other agreement,
instrument, guaranty or security referred to in
clause (A) above or any term of any thereof;
F. any defect in the title, compliance with
specifications, condition, design, operation or fitness
for use of, or any damage to or loss or destruction of,
or any interruption or cessation in the use of the
Sites by Lessee or any other Person for any reason
whatsoever (including, without limitation, any
governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of
any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration
thereof (even though such duration would otherwise
constitute a frustration of a lease), whether or not
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<PAGE>
Guaranty
resulting from accident and whether or not without
fault on the part of Lessee or any other Person;
G. any merger or consolidation of Lessor, Lessee or
Guarantors into or with any other Person, or any sale,
lease or transfer of any of the assets of Lessor,
Lessee or Guarantors to any other Person;
H. any change in the ownership of any shares of capital
stock of Lessor, Lessee or Guarantors or any corporate
change in Lessor, Lessee or Guarantors;
I. any loan to or other transaction between the
Beneficiaries, or any of them, and Lessee or Lessor;
J. any assignment or consummation of assignment of the
Lease pursuant to Section 12.1 of the Lease; or
K. any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantors.
The obligations of Guarantors set forth herein constitute the full
recourse obligations of Guarantors enforceable against them to the full extent
of all of their assets and properties, notwithstanding any provision in the
Lease or any other Operative Document or any other document or agreement to the
contrary.
Guarantors waive any and all notice of the creation, renewal, extension
or accrual of any of the Liabilities and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty, and the
Liabilities, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty. Guarantors
unconditionally waive, to the extent permitted by law: (a) acceptance of this
Guaranty and proof of reliance by any Beneficiary hereon; (b) notice of any of
the matters referred to in clauses A through K above, or any right to consent or
assent to any thereof; (c) all notices that may be required by statute, rule of
law or otherwise, now or hereafter in effect, to preserve intact any rights
against Guarantors, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment under any Operative Document, and notice
of default or any failure on the part of Lessor to perform and comply with any
covenant, agreement, term or condition of any Operative Document; (d) any right
to the enforcement, assertion or exercise against
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<PAGE>
Guaranty
Lessor of any right, power, privilege or remedy conferred in any Operative
Document or otherwise; (e) any requirement of diligence on the part of any
Person; (f) any requirement of any Beneficiary to take any action whatsoever, to
exhaust any remedies or to mitigate the damages resulting from a default by any
Person under any Operative Document; (g) any notice of any sale, transfer or
other disposition by any Person of any right under, title to or interest in any
Operative Document or the Sites; and (h) any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge, release or defense of
a guarantor or surety, or that might otherwise limit recourse against
Guarantors.
Guarantors agree that this Guaranty shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of itself
or Lessor is rescinded or must be otherwise restored by any Beneficiary whether
as a result of any proceedings in bankruptcy or reorganization or otherwise.
Guarantors further agree that, without limiting the generality of this
Guaranty, if an Event of Default shall have occurred and be continuing and any
Beneficiary is prevented by applicable law from exercising its remedies under
the Operative Documents, such Beneficiary shall be entitled to receive hereunder
from Guarantors, upon demand therefor, the sums which would have otherwise been
due from Lessee had such remedies been exercised.
Section III. Incorporated Financial Covenants. Genesis hereby covenants
and agrees that it shall at all times comply with the Financial Covenants, which
covenants are incorporated herein by this reference, provided that compliance
hereunder with the Financial Covenants shall be waived to the extent that
compliance with such Financial Covenants may be waived from time to time under
and in accordance with the Credit Agreement, exclusive of waivers made in
contemplation of the termination of the Credit Agreement.
Section IV. Waiver of Subrogation. Guarantors hereby
irrevocably waive any claim or other rights which they may now or
hereafter acquire against Lessor.
Section V. Reasonableness and Effect of Waivers. Guarantors warrant and
agree that each of the waivers set forth in this Guaranty is made with full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable
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Guaranty
law or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
Section VI. Representations and Warranties of Guarantors. As of the
date hereof, each of the Guarantors makes the representations and warranties set
forth in this Section 6 to each of the Beneficiaries.
A. Due Organization, etc. It is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
state of its organization and it has full corporate power and authority to
conduct its business as presently and presently proposed to be conducted, to own
or hold under lease its properties, to enter into and perform its obligations
under each of the Operative Documents to which it is or is to be a party and
each other agreement, instrument and document to be executed and delivered by it
on or before the Document Closing Date in connection with or as contemplated by
each such Operative Document to which it is or is to be a party, and it is duly
qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect. The information set forth on Schedule 1 hereto
with respect to it is true and correct.
B. Authorization; No Conflict. The execution and delivery by
it of each of the Operative Documents to which it is or is to be a party, and
the performance by it of its obligations under such Operative Documents, have
been duly authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
Applicable Laws and Regulations currently in effect applicable to or binding on
it or the Sites; (ii) violate any provision of its charter or bylaws; (iii)
result in a breach of or constitute a default under any indenture, loan or
credit agreement, or any other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected, which breaches or
defaults would have, individually or in the aggregate, a Material Adverse
Effect; (iv) result in, or require, the creation or imposition of any Lien of
any nature upon or with respect to any of the properties now owned or hereafter
acquired by it (other than the security interests created pursuant to the
Operative Documents); or (v) require any Governmental Action by any Authority,
except for (A) the filings and recordings listed on Schedule 4.1B to the
Participation Agreement to perfect the rights of Lessor, the Lenders and Agent
intended to be created by the Operative Documents, and (B) those Governmental
Actions required with respect to Lessee or any of its Affiliates listed on
Schedule 4.1A to the Participation Agreement, each of which
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Guaranty
have been duly effected and are, or on the initial Advance Date will be, in full
force and effect; and it is not in default under or in violation of its charter
or bylaws. Attached as Schedule 4.1C to the Participation Agreement are correct
and complete computations demonstrating compliance by Genesis with Section 5.9
of the Indenture after giving effect as Indebtedness under such Indenture to the
obligations of Lessee and Guarantors under or in connection with the Operative
Documents.
C. Enforceability, etc. Each Operative Document to which it is
or is to be a party constitutes its legal, valid and binding obligation,
enforceable against it in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and by general equitable principles.
D. Litigation. There is no action, proceeding or investigation
pending or threatened which questions the validity of the Operative Documents to
which it is or is to be a party or any action taken or to be taken pursuant to
the Operative Documents to which it is or is to be a party, and there is no
action, proceeding or investigation pending or threatened which, if adversely
determined, would have a Material Adverse Effect.
E. Taxes. It has filed or caused to be filed all United States
Federal and all other material tax returns that are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessment received by it to the extent that such taxes have
become due and payable except to the extent that taxes due, but unpaid, are
being contested in good faith by it by appropriate action or proceeding and, to
the extent (if any) that such taxes are not due and payable, it has established
or caused to be established reserves that are adequate for the payment thereof
in accordance with GAAP.
F. Investment Company Act. It is not an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
G. Public Utility Holding Company. It is not subject to
regulation as a "holding company," 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.
H. Solvency. The consummation by Lessee and the Guarantors of
the transactions contemplated by the Operative
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Guaranty
Documents does not and will not render it insolvent, nor was it made in
contemplation of its insolvency; the value of its assets and properties at fair
valuation and at their then present fair salable value is and, after such
transactions, will be greater than its total liabilities, including contingent
liabilities, as they become due; the property remaining in its hands was not and
will not be an unreasonably small amount of capital.
Section VII. Covenants of Guarantors.
A. Consolidation, Merger, Sale, etc. No Guarantor shall
consolidate with any Person, merge with or into any Person or convey, transfer
or lease to any Person all or substantially all of its assets in any single
transaction (or series of related transactions), unless, immediately after
giving effect to such transaction, the conditions set forth in clauses (i)
through (v) shall have been satisfied:
1. the conditions of Section 7.09 or 7.10, as applicable, of
the Credit Agreement shall have been satisfied with respect to such
transaction; provided, that for purposes of this clause (i), (a) all
references in said Sections 7.09 and 7.10 to an Event of Default or
Potential Default shall include (x) a Lease Event of Default or Lease
Default, respectively, and (y) a default under this Guaranty, (b) all
notices, certificates and other documents required to be delivered
under said Section 7.09 shall also be delivered to Agent, on behalf of
the Participants, (c) all references in said Sections 7.09 and 7.10 to
Lender Party or Agent shall include Agent, on behalf of the
Participants, (d) all references in said Sections 7.09 and 7.10 to
Borrower or Borrowers shall be references to Guarantor or Guarantors,
respectively, and (e) all references in said Sections 7.09 and 7.10 to
Loan Obligations shall be references to the obligations of the
applicable parties under the Operative Documents and (f) all references
in said Sections 7.09 and 7.10 to Loan Documents shall be references to
the Operative Documents;
2. (x) the Person formed by such consolidation with or into
which such Guarantor shall be merged or (y) the Person which shall
acquire by conveyance, transfer or lease all or substantially all of
the assets of such Guarantor, if in the case of this clause (y), such
Person is obligated under the terms of the Credit Agreement to become a
party thereto (in the case of clause (x) or clause (y), as applicable,
the "Surviving Company"), if other than such Guarantor immediately
prior to such transaction, shall execute and deliver to each of the
parties hereto an agreement, in form
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Guaranty
and substance reasonably satisfactory to Agent, containing the
assumption by the Surviving Company of the due and punctual payment,
performance and observation of each obligation, covenant and agreement
of such Guarantor under this Guaranty;
3. if the applicable Guarantor is Genesis and the Surviving
Company is not Genesis, such Surviving Company shall be a corporation
that is organized under the laws of the United States of America, a
state thereof or the District of Columbia;
4. the title of Lessor to the Sites and Lessor's rights under
this Guaranty and the other Operative Documents and the first and prior
Lien of the Mortgage on the Collateral shall not be adversely affected;
and
5. Lessee shall have delivered to Agent, on behalf of Lessor
and the Lenders, an Officer's Certificate and an opinion of counsel
reasonably satisfactory to each such Person stating that such
transaction complies with this Section 7, that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Actions required in connection with such transaction have
been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than the applicable Guarantor immediately prior thereto, shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor immediately prior to such transaction under this Guaranty and each
other Operative Document to which such Guarantor was a party immediately prior
to such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 7, no conveyance, transfer or lease of all or substantially all of the
assets of any Guarantor shall release Guarantor from its payment or other
obligations under this Guaranty or any other Operative Document without the
written consent of Lessor and Agent.
B. Existence. Subject to Section 7(A), each Guarantor shall at
all times maintain its existence as a corporation or partnership in good
standing under the laws of the state of its organization and shall use
commercially reasonable efforts to preserve and keep in full force and effect
its franchises material to its business.
C. Senior Indebtedness. This Guaranty is an obligation of the
Guarantors under and in respect of the Lease,
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Guaranty
which lease refunded, refinanced and replaced that certain Acquisition Credit
Agreement, dated as of September 29, 1995, as amended, among Genesis, certain of
its Subsidiaries, Mellon Bank, N.A. ("Mellon") as Agent, Citibank, N.A.
("Citibank") as Co-Agent and the Lenders named therein, which agreement
supplemented that certain Amended and Restated Credit Agreement, dated as of
September 29, 1995, as amended, among Genesis, certain of its Subsidiaries,
Mellon as Issuer of Letters of Credit, Mellon as Agent and Citibank as Co-Agent,
which agreement refunded, refinanced and replaced that certain Credit Agreement,
dated as of November 22, 1993, among Genesis, certain of its Subsidiaries,
Mellon as Agent and the Lenders named therein. The obligations hereunder are
secured and superior in right of payment to the obligations under those certain
debentures issued pursuant to the 1993 Indenture and the 1995 Indenture (each as
hereinafter defined). The obligations hereunder constitute "Indebtedness" as
such term is defined in the 1995 Indenture (as hereinafter defined) and this
guarantee is a "Credit Facility", "Senior Indebtedness" and "Designated Senior
Indebtedness" within the meaning of that certain Indenture, dated as of June 15,
1995, between Genesis and Delaware Trust Company as Trustee (the "1995
Indenture") and is "Senior Indebtedness" within the meaning of that certain
Indenture, dated as of November 30, 1993, between Genesis and First Fidelity
Bank, N.A., Pennsylvania as Trustee (the "1993 Indenture").
Section VIII. Transfers by Beneficiaries. Each Beneficiary may, from
time to time, whether before or after any discontinuance of this Guaranty, at
its sole discretion (subject to the requirements of the Participation Agreement)
and without notice to or consent of Guarantors, assign or transfer any or all of
its portion of the Liabilities or any interest therein; and, notwithstanding any
such assignment or transfer or any subsequent assignment or transfer thereof,
such Liabilities shall be and remain Liabilities for the purposes of this
Guaranty, and each and every immediate and successive assignee or transferee of
any of the Liabilities or of any interest therein shall, to the extent of such
assignee's or transferee's interest in the Liabilities, be entitled to the
benefits of this Guaranty to the same extent as if such assignee or transferee
were such Beneficiary.
Section IX. No Waiver by Beneficiaries. No delay in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Guaranty be binding upon any Beneficiary
except as expressly set forth in a writing duly
-13-
<PAGE>
Guaranty
signed and delivered on its behalf. No action permitted hereunder shall in any
way affect or impair any Beneficiary's rights or Guarantors' obligations under
this Guaranty. For the purposes of this Guaranty, Liabilities shall include all
of the obligations described in the definition thereof, notwithstanding any
right or power of Guarantors or anyone else to assert any claim or defense as to
the invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the obligations of Guarantors hereunder.
Guarantors' obligations under this Guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might constitute a legal or
equitable discharge or defense of Guarantors. Guarantors hereby acknowledge that
there are no conditions to the effectiveness of this Guaranty.
Section X. Joint and Several Obligations; Successors and Assigns. All
obligations under this Guaranty are joint and several to each of the Guarantors
and any other party which hereafter guarantees any portion of the Liabilities,
and shall be binding upon them and upon their successors and assigns. All
references herein to Guarantors shall be deemed to include any successor or
successors, whether immediate or remote, to such Person.
Section XI. Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
Applicable Laws and Regulations, but if any provision of this Guaranty shall be
prohibited by or invalid thereunder, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
Section XII. Submission to Jurisdiction; Waivers. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY:
(A) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR
ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT OCCURRING IN
CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN
ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW AGREES
THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL
JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM (BUT
NOTHING
-14-
<PAGE>
Guaranty
HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM);
(B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(C) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(D) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
Section XIII. Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this Guaranty shall be in writing and shall be deemed to have
been duly given when addressed to the appropriate Person and delivered in the
manner specified in Section 21.3 of the Lease. The initial address for notices
to each of the Guarantors is set forth on Schedule 3 hereto.
-15-
<PAGE>
Guaranty
SECTION XIV. GOVERNING LAW. THIS GUARANTY HAS BEEN DELIVERED TO AGENT
AT PENNSYLVANIA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
Section XV. Joinder; Release. Genesis covenants that upon each and
every addition or deletion of a Subsidiary as a party to the Credit Agreement,
it will (i) promptly notify Agent thereof and (ii) cause to be executed and
delivered to Agent, on behalf of the Beneficiaries, a joinder or release in the
form of Exhibit A-1 or Exhibit A-2, respectively, attached hereto evidencing
such addition or deletion of a Material Subsidiary hereunder. Each Guaranty and
each Beneficiary hereby agree that no such joinder shall require the consent of
Agent, any other Beneficiary or any Guarantor. Each of the Beneficiaries hereby
authorizes Agent to execute and deliver any such release from time to time, but
no such release shall require the consent of any other Beneficiary or any
Guarantor. Each Guarantor agrees that no such joinder or release shall affect
the obligations of any Guarantor (other than the Guarantor which shall have
executed and delivered such joinder or release).
[SIGNATURE PAGES FOLLOW]
-16-
<PAGE>
Guaranty
IN WITNESS WHEREOF, Guarantors have caused this Guaranty and Agreement
of Suretyship Regarding Obligations of Lessee and Affiliates to be executed and
delivered as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
By:________________________________
Title: Senior Vice President and
Chief Financial Officer
BREVARD MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, its
sole general partner
CATONSVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation, one of its
sole general partners
EASTON MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, its
sole general partner
EDELLA STREET ASSOCIATES, a Pennsylvania
limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF BLOOMFIELD, INC.,
a Pennsylvania corporation
<PAGE>
Guaranty
GENESIS HEALTH VENTURES OF CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE NETWORK SERVICES, INC.
f/k/a GENESIS MANAGEMENT RESOURCES, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICAL SERVICES, INC.
f/k/a GENESIS PHYSICIAN SERVICES, INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
<PAGE>
Guaranty
HALLMARK HEALTHCARE LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation, its
sole general partner
HAMMONDS LANE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of
its general partner
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
HEALTHCARE SERVICES NETWORK, INC.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.
a Pennsylvania corporation
MILLVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its
sole general partner
<PAGE>
Guaranty
SEMINOLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
STAFF REPLACEMENT SERVICES, INC.,
a Pennsylvania corporation
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION SERVICES, INC.
f/k/a TEAM REHABILITATION, INC.
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P.,
a Pennsylvania limited partnership
By: Team Rehabilitation, Inc., its
sole general partner
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
VOLUSIA MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
WYNCOTE HEALTHCARE CORP.,
a Pennsylvania corporation
By:
------------------------------------------------
Title (as to each of the foregoing Subsidiaries):
<PAGE>
Guaranty
ASCO HEALTHCARE, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
BRINTON MANOR, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HEALTH SERVICES CORPORATION,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HEALTHCARE CENTERS HOLDINGS, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HOLDINGS, INC.
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GOVERNOR'S HOUSE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
HEALTH CONCEPTS AND SERVICES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
LINCOLN NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
SCHEDULE 1
Material Subsidiaries
<TABLE>
<CAPTION>
State of
Name Type of Entity Organization
- ---- -------------- ------------
<S> <C> <C>
Genesis Health Corporation Pennsylvania
Ventures, Inc.
Brevard Meridian Limited Partnership Maryland
Limited Partnership
Catonsville Meridian Limited Partnership Maryland
Limited Partnership
Easton Meridian Limited Partnership Maryland
Limited Partnership
Edella Street Limited Partnership Pennsylvania
associates
Genesis Health Corporation Pennsylvania
Ventures of Arlington,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of Bloomfield,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of Clarks
Summit, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Indiana, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Massachusetts, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Naugatuck, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Salisbury, Inc.
</TABLE>
<PAGE>
Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Genesis Health Corporation Pennsylvania
Ventures of Wayne,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of West
Virginia, Inc.
Genesis Health Corporation Pennsylvania
of Windsor, Inc.
Genesis Immediate Corporation Pennsylvania
Med Center, Inc.
Genesis Eldercare Corporation Pennsylvania
Network Services, Inc.
f/k/a Genesis
Management Resources,
Inc.
Genesis Eldercare Corporation Pennsylvania
Physical Services,
Inc. f/k/a Genesis
Physician Services,
Inc.
Genesis Properties Limited Partnership Pennsylvania
Limited Partnership
Greenspring Meridian Limited Partnership Maryland
Limited Partnership
Hallmark Healthcare Limited Partnership Maryland
Limited Partnership
Hammonds Lane Limited Partnership Maryland
Meridian Limited
Partnership
Healthcare Resources Corporation Pennsylvania
Corp.
Healthcare Services Corporation Pennsylvania
Network, Inc.
Knollwood Manor, Inc. Corporation Pennsylvania
Meridian Health, Inc. Corporation Pennsylvania
</TABLE>
<PAGE>
Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Meridian Healthcare, Corporation Pennsylvania
Inc.
Millville Meridian Limited Partnership Maryland
Limited Partnership
Pharmacy Equities, Inc. Corporation Pennsylvania
Philadelphia Avenue Limited Partnership Pennsylvania
Associates
Philadelphia Avenue Corporation Pennsylvania
Corporation
River Street Limited Partnership Pennsylvania
Associates
Seminole Meridian Limited Partnership Pennsylvania
Limited Partnership
Staff Replacement Corporation Pennsylvania
Services, Inc.
State Street Limited Partnership Pennsylvania
Associates, L.P.
State Street Corporation Pennsylvania
Associates, Inc.
Suburban Medical Corporation Pennsylvania
Services, Inc.
Genesis Eldercare Corporation Pennsylvania
Rehabilitation Services,
Inc. f/k/a Team
Rehabilitation, Inc.
Therapy Care Systems, Limited Partnership Pennsylvania
L.P.
The Tidewater Corporation Pennsylvania
Healthcare Shared
Services Group, Inc.
Volusia Meridian Limited Partnership Maryland
Limited Partnership
Wyncote Healthcare Corporation Pennsylvania
Corp.
</TABLE>
<PAGE>
Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Asco Healthcare, Inc. Corporation Maryland
Brinton Manor, Inc. Corporation Delaware
Concord Healthcare Corporation Delaware
Corporation
Crystal City Nursing Corporation Maryland
Center, Inc.
Eastern Medical Corporation Maryland
Supplies, Inc.
Eastern Rehab Corporation Maryland
Services, Inc.
Genesis Health Corporation Delaware
Services Corporation
Genesis Healthcare Corporation Delaware
Centers Holdings, Inc.
Genesis Holdings, Inc. Corporation Delaware
Genesis Properties of Corporation Delaware
of Delaware Corporation
Genesis Properties Limited Partnership Delaware
of Delaware Ltd.
Partnership, L.P.
Governor's House Corporation Delaware
Nursing Home, Inc.
Health Concepts and Corporation Maryland
Services, Inc.
Hilltop Health Care Corporation Delaware
Center, Inc.
Keystone Nursing Corporation Delaware
Home, Inc.
Lincoln Nursing Corporation Delaware
Home, Inc.
Wayside Nursing Corporation Delaware
Home, Inc.
</TABLE>
<PAGE>
Guaranty
SCHEDULE 2
Lenders
Mellon Bank, N.A.
<PAGE>
Guaranty
SCHEDULE 3
Addresses for Notices
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and
Chief Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
<PAGE>
Guaranty
EXHIBIT A-1
FORM OF JOINDER
JOINDER AGREEMENT
THIS JOINDER AGREEMENT, dated as of (this "Joinder"), is executed by
(the "Additional Guarantor"), with its principal place of business located at .
BACKGROUND
1. Genesis Eldercare Properties, Inc. ("Lessee"), Mellon Financial
Services Corporation #4 ("Lessor"), the Lenders party thereto, and Mellon Bank,
N.A., as Agent, entered into a Participation Agreement, dated as of July 24,
1996 (as heretofore amended, the "Participation Agreement") pursuant to which
Lessee has made a covenant that it shall cause the Guarantors to execute and
deliver the Guaranty and Agreement of Suretyship Regarding Obligations of Lessee
and Affiliates (the "Guaranty").
2. The Guaranty and Agreement of Suretyship provides that upon each and
every addition of a Subsidiary as a party to the Credit Agreement, Genesis will
cause this Joinder to be executed and delivered by such Subsidiary to Agent.
2. The Additional Guarantor desires to become a Guarantor pursuant to
Section 15 of the Guaranty.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Additional Guarantor hereby agrees as follows:
Section 1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Participation Agreement.
Section 2. Operative Documents.
The Additional Guarantor hereby agrees that it shall be bound by all
the terms and provisions of, and shall be deemed to be a party to (as if it were
an original signatory to), the Guaranty; from and after the date hereof, the
Additional Guarantor shall be a Guarantor of the Liabilities (as defined in
<PAGE>
Guaranty
the Guaranty). The Additional Guarantor hereby acknowledges that it has received
copies of the Participation Agreement, the Guaranty and the other Operative
Documents.
Section 3. Miscellaneous.
This Joinder shall be governed by, and construed in accordance with,
the internal laws of the Commonwealth of Pennsylvania. This Joinder is hereby
executed by the Additional Guarantor for the benefit of Lessor, the Agent and
the Lenders, and each of the foregoing parties may rely hereon. This Joinder
shall be binding upon, and shall inure to the benefit of, the Additional
Guarantor and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed by its duly authorized officer as of the date and year first above
written.
By:___________________________
Name:_________________________
Its:__________________________
<PAGE>
Guaranty
EXHIBIT A-2
Form of Release
RELEASE OF GUARANTY
Reference is made to the Guaranty and Agreement of Suretyship Regarding
Obligations of Lessee and Affiliates (the "Guaranty") dated as of July 24, 1996
made by Genesis Health Ventures, Inc. and its Material Subsidiaries for the
benefit of the Beneficiaries. Unless otherwise defined herein, terms used herein
have the meanings assigned to them in Appendix 1 to the Participation Agreement.
_____________________________ is no longer a party to the Credit
Agreement and thus, pursuant to Section 15 of the Guaranty, Agent hereby
releases _____________________ as a Guarantor under the Guaranty.
Dated: _______ __, ____
MELLON BANK N.A., as Agent
By:_______________________________
Title:____________________________
<PAGE>
Exhibit 10.44
Structural Guaranty
GUARANTY
AND AGREEMENT OF SURETYSHIP
from
GENESIS HEALTH VENTURES, INC.
and its
MATERIAL SUBSIDIARIES
Dated as of July 24, 1996
<PAGE>
GUARANTY AND AGREEMENT OF SURETYSHIP
THIS GUARANTY AND AGREEMENT OF SURETYSHIP, dated as of July 24, 1996,
is made by GENESIS HEALTH VENTURES, INC., a Pennsylvania corporation ("Genesis")
and the Material Subsidiaries set forth on Schedule 1 (the "Material
Subsidiaries") (Genesis and each of the Material Subsidiaries are individually a
"Guarantor" and collectively referred to herein, in their capacity as guarantors
hereunder, as the "Guarantors") in favor of the Beneficiaries (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, Genesis Eldercare Properties, Inc.
("Lessee"), as Lessee, Mellon Financial Services Corporation #4 ("Lessor"), as
Lessor, the Persons named on Schedule 2 attached hereto, as Lenders and Mellon
Bank, N.A., as Agent have entered into that certain Participation Agreement, and
Lessee and Lessor have entered into that certain Lease and Agreement, each dated
as of July 24, 1996. The Participation Agreement and the Lease and Agreement, as
they each may be modified, amended or restated from time to time as and to the
extent permitted thereby, are hereinafter referred to as the "Participation
Agreement" and "Lease" respectively. Unless otherwise defined herein or the
context hereof otherwise requires, terms which are defined or defined by
reference in the Participation Agreement or Lease shall have the same meanings
when used herein as such terms have therein; and
WHEREAS, Lessor has entered into a Loan Agreement dated as of even date
herewith (as amended or otherwise modified from time to time, the "Loan
Agreement" by and among Lessor, Lenders and Agent, pursuant to which the Lenders
have agreed to make a loan to Lessor, as evidenced by those certain non-recourse
promissory notes (the "Notes") from Lessor to Agent and secured by those certain
Mortgages and Deeds of Trust (the "Mortgages") made by Lessor to Agent, as agent
for the Lenders and those certain Assignments of Lease from Lessor to Agent, as
agent for the Lenders (the "Assignments of Lease").
WHEREAS, Lessee is a wholly-owned subsidiary of Genesis and
each of the Material Subsidiaries are Subsidiaries of Genesis;
and
WHEREAS, it is a covenant in the Participation Agreement that Lessee
shall cause the Guarantors to execute and deliver this Guaranty; and
-1-
<PAGE>
Structural Guaranty
WHEREAS, it is in the best interests of Guarantors that the
Overall Transaction and the Document Closing Date occur; and
WHEREAS, this Guaranty, and the execution, delivery and performance
hereof, have been duly authorized by all necessary corporate action of
Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantors, Guarantors hereby agree as follows:
SECTION I. Guarantee and Agreement of Suretyship. Guarantors hereby
jointly and severally, irrevocably and unconditionally guarantee to the
Beneficiaries and agree to act as surety to the Beneficiaries for (a) the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, and (b) the full and prompt performance, of all of the
Liabilities (as hereinafter defined), including interest and Yield on any such
Liabilities, whether accruing before or after any bankruptcy or insolvency case
or proceeding involving Lessee or any other Person, and, if interest or Yield on
any portion of such obligations ceases to accrue by operation of law by reason
of the commencement of such case or proceeding, including such interest and
Yield as would have accrued on any such portion of such obligations if such case
or proceeding had not commenced, and further agree to pay all expenses
(including attorneys' fees and legal expenses) paid or incurred by Lessor, Agent
or any of the Lenders (each a "Beneficiary") in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty. The term
"Liabilities", as used herein, shall mean all of the following, in each case
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due: (i) all of the Equity Amount and Yield accrued thereon; (ii) all
principal of the Notes and any interest accrued thereon; and (iii) all
additional amounts and other sums (other than Basic Rent) at any time due and
owing, and required to be paid, to Lessor and/or the Beneficiaries under the
terms of the Lease, the Participation Agreement or any other Operative Document
(whether or not Lessee or any other Person shall be released or relieved from
any or all liability or obligation under any thereof); provided, however, that
if Lessee duly and timely exercises and consummates the Sale Option pursuant to
Sections 6.3, 6.4 and 6.6 of the Lease, the amount guaranteed under clauses (i)
and (ii) hereof shall not exceed the aggregate amounts required to be paid by
Lessee pursuant to the Lease in connection with such exercise. If Lessee does
not duly and timely exercise and consummate the Sale Option pursuant to
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<PAGE>
Structural Guaranty
Section 6.6, then Guarantors shall be liable for the full amounts due under
clauses (i) through (iii) without limitation.
In any action or proceeding involving any state corporate law, or any
state or federal bankruptcy, insolvency, reorganization or any other law
affecting the rights of creditors generally, if the obligations of Guarantor
under this Guaranty would otherwise be held or determined by a final and
non-appealable order of a court of competent jurisdiction to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Guaranty, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by Guarantor or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding pursuant to such final and
non-appealable order.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessee, or the inability or failure of Lessee to pay debts as they
become due, or an assignment by Lessee for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessee under any
bankruptcy, insolvency or similar laws, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, Guarantors will pay
to the Beneficiaries forthwith the full amount which would be payable hereunder
by Guarantors as if all Liabilities were then due and payable.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessor, or the inability or failure of Lessor to pay debts as they
become due, or an assignment by Lessor for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessor under any
bankruptcy, insolvency or similar laws, and if such event (a "Lessor Bankruptcy
Event") shall occur at a time when any of the Liabilities may not then be due
and payable, Guarantors will pay to the Beneficiaries from time to time all
Liabilities then or thereafter due under the Operative Documents pursuant to
their terms or if the provisions of the immediately preceding paragraph are
applicable, at the time specified in the immediately preceding paragraph, all as
if such Lessor Bankruptcy Event shall not have occurred.
To secure all obligations of Guarantors hereunder, each Beneficiary
shall have a lien upon and security interest in (and may, without demand or
notice of any kind, at any time and from time to time when any amount shall be
due and payable by Guarantors hereunder, appropriate and apply toward the
payment of
-3-
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Structural Guaranty
such amount, in such order of application as the Agent may elect) any and all
balances, credits, deposits, accounts or moneys of or in the name of Guarantors
or any of its Affiliates now or hereafter, for any reason or purpose whatsoever,
in the possession or control of, or in transit to Lessor or any Beneficiary or
any agent or bailee for Lessor or any Beneficiary. Each Beneficiary shall
provide prompt written notice to the Agent of the exercise by such Beneficiary
of its rights under this paragraph, which notice shall set forth in reasonable
detail the amount of such application and shall remit such amount to Agent or as
Agent may direct.
The obligations of the Guarantors hereunder are secured by the Joint
Stock Collateral as set forth in the Amended and Restated Security Agreement
dated as of September 29, 1995, as amended, among Genesis and certain of its
subsidiaries and Mellon Bank, N.A. as Collateral Agent, subject to the terms and
provisions of that certain Amended and Restated Collateral Agency Agreement
dated as of September 29, 1995, as amended, among Genesis, such subsidiaries and
Mellon Bank, N.A., as RCA Agent, ACA Agent and Collateral Agent.
This Agreement shall constitute an agreement of suretyship as well as
of guaranty and shall constitute an absolute and unconditional guaranty of
payment and performance (and not of collection) and an absolute and
unconditional undertaking by each Guarantor with respect to the payment and
performance of the Liabilities. This Guaranty shall remain in full force and
effect (notwithstanding, without limitation, the dissolution of any of the
Guarantors). The liability of the Guarantors hereunder shall be direct, joint
and several, and may be enforced without the Beneficiaries being required to
resort to any other right, remedy or security.
Agent on behalf of itself and the other Beneficiaries, may, from time
to time at its discretion and without notice to Guarantors, but subject to the
provisions of the Participation Agreement, take or cause any of the other
Beneficiaries to take, any or all of the following actions, subject to the terms
of the Credit Agreement as in effect on the date hereof as such Credit Agreement
may be amended under the Participation Agreement with the consent of Agent (on
behalf of the Participants) and subject to the provisions of the Collateral
Agency Agreement with respect to the Joint Stock Collateral: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantors, with
respect to any of the Liabilities; (c) extend or renew for one or more periods
(regardless of
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whether longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of Guarantors hereunder or
any obligation of any nature of any other obligor with respect to any of the
Liabilities; (d) release or fail to perfect its lien upon or security interest
in, or impair, surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (regardless of
whether longer than the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any such
property; and (e) resort to Guarantors, or any one or more of them, for payment
of any of the Liabilities, regardless of whether Agent or any other Beneficiary
shall have resorted to any other Person any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in this paragraph being hereby
expressly waived by Guarantors).
SECTION II. Guarantors' Obligations Unconditional. Guarantors'
obligations hereunder are independent in respect of any other Person, and each
Beneficiary may enforce any of its rights hereunder independently of any other
right or remedy that it may at any time hold with respect to the Liabilities or
any security or other guaranty therefor; provided that no double recovery of the
same amount shall be permitted. Such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantors with their obligations
hereunder), whether based upon any claim that Lessor, Lessee, Agent, any
Beneficiary or any other Person may have against any Beneficiary or any other
Person or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not Guarantors or any other
Person shall have any knowledge or notice thereof) including, without
limitation:
A. any amendment, modification, addition, deletion,
supplement or renewal to or of or other change in the
Liabilities or any Operative Document or any of the
agreements referred to in any thereof, or any other
instrument or agreement applicable to any Operative
Document or any of the parties to such agreements, or
to the Sites, or any assignment, mortgage or transfer
thereof or of any interest therein, or any furnishing
or acceptance of additional security for, guaranty of
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or right of offset with respect to, any of the
Liabilities; or the failure of any security or the
failure of any Beneficiary to perfect or insure any
interest in any collateral;
B. any failure, omission or delay on the part of Lessor or
any Beneficiary to conform or comply with any term of
any instrument or agreement referred to in clause (A)
above;
C. any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect
of any instrument, agreement, guaranty, right of offset
or security referred to in clause (A) above or any
obligation or liability of Lessor or any Beneficiary,
or any exercise or non-exercise by any Beneficiary of
any right, remedy, power or privilege under or in
respect of any such instrument, agreement, guaranty,
right of offset or security or any such obligation or
liability;
D. any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or
similar proceeding with respect to Lessor or any
Beneficiary or any other Person or any of their
respective properties or creditors, or any action taken
by any trustee, receiver or court in any such
proceeding;
E. any limitation on the liability or obligations of any
Person under any Operative Document, the Liabilities,
any collateral security for the Liabilities, any other
guaranty of the Liabilities or any discharge,
termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of
any of the foregoing or any other agreement,
instrument, guaranty or security referred to in
clause (A) above or any term of any thereof;
F. any defect in the title, compliance with
specifications, condition, design, operation or fitness
for use of, or any damage to or loss or destruction of,
or any interruption or cessation in the use of the
Sites by Lessee or any other Person for any reason
whatsoever (including, without limitation, any
governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of
any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration
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thereof (even though such duration would otherwise constitute
a frustration of a lease), whether or not resulting from
accident and whether or not without fault on the part of
Lessee or any other Person;
G. any merger or consolidation of Lessor, Lessee or
Guarantors into or with any other Person, or any sale,
lease or transfer of any of the assets of Lessor,
Lessee or Guarantors to any other Person;
H. any change in the ownership of any shares of capital
stock of Lessor, Lessee or Guarantors or any corporate
change in Lessor, Lessee or Guarantors;
I. any loan to or other transaction between the
Beneficiaries, or any of them, and Lessee or Lessor; or
J. any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantors.
The obligations of Guarantors set forth herein constitute the full
recourse obligations of Guarantors enforceable against them to the full extent
of all of their assets and properties, notwithstanding any provision in the
Lease or any other Operative Document or any other document or agreement to the
contrary.
Guarantors waive any and all notice of the creation, renewal, extension
or accrual of any of the Liabilities and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty, and the
Liabilities, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty. Guarantors
unconditionally waive, to the extent permitted by law: (a) acceptance of this
Guaranty and proof of reliance by any Beneficiary hereon; (b) notice of any of
the matters referred to in clauses A through J above, or any right to consent or
assent to any thereof; (c) all notices that may be required by statute, rule of
law or otherwise, now or hereafter in effect, to preserve intact any rights
against Guarantors, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment under any Operative Document, and notice
of default or any failure on the part of Lessor to perform and comply with any
covenant, agreement, term or condition of any Operative Document; (d) any right
to the enforcement, assertion or exercise against Lessor of any right, power,
privilege or remedy conferred in any
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Operative Document or otherwise; (e) any requirement of diligence on the part of
any Person; (f) any requirement of any Beneficiary to take any action
whatsoever, to exhaust any remedies or to mitigate the damages resulting from a
default by any Person under any Operative Document; (g) any notice of any sale,
transfer or other disposition by any Person of any right under, title to or
interest in any Operative Document or the Sites; and (h) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or that might otherwise limit
recourse against Guarantors.
Guarantors agree that this Guaranty shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of itself
or Lessor is rescinded or must be otherwise restored by any Beneficiary whether
as a result of any proceedings in bankruptcy or reorganization or otherwise.
Guarantors further agree that, without limiting the generality of this
Guaranty, if an Event of Default shall have occurred and be continuing and any
Beneficiary is prevented by applicable law from exercising its remedies under
the Operative Documents, such Beneficiary shall be entitled to receive hereunder
from Guarantors, upon demand therefor, the sums which would have otherwise been
due from Lessee had such remedies been exercised.
Section III. Incorporated Financial Covenants. Genesis hereby covenants
and agrees that it shall at all times comply with the Financial Covenants, which
covenants are incorporated herein by this reference, provided that compliance
hereunder with the Financial Covenants shall be waived to the extent that
compliance with such Financial Covenants may be waived from time to time under
and in accordance with the Credit Agreement, exclusive of waivers made in
contemplation of the termination of the Credit Agreement.
Section IV. Waiver of Subrogation. Guarantors hereby
irrevocably waive any claim or other rights which they may now or
hereafter acquire against Lessor.
Section V. Reasonableness and Effect of Waivers. Guarantors warrant and
agree that each of the waivers set forth in this Guaranty is made with full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
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Section VI. Representations and Warranties of Guarantors. As of the
date hereof, each of the Guarantors makes the representations and warranties set
forth in this Section 6 to each of the Beneficiaries.
A. Due Organization, etc. It is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
state of its organization and it has full corporate power and authority to
conduct its business as presently and presently proposed to be conducted, to own
or hold under lease its properties, to enter into and perform its obligations
under each of the Operative Documents to which it is or is to be a party and
each other agreement, instrument and document to be executed and delivered by it
on or before the Document Closing Date in connection with or as contemplated by
each such Operative Document to which it is or is to be a party, and it is duly
qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect. The information set forth on Schedule 1 hereto
with respect to it is true and correct.
B. Authorization; No Conflict. The execution and delivery by
it of each of the Operative Documents to which it is or is to be a party, and
the performance by it of its obligations under such Operative Documents, have
been duly authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
Applicable Laws and Regulations currently in effect applicable to or binding on
it or the Sites; (ii) violate any provision of its charter or bylaws; (iii)
result in a breach of or constitute a default under any indenture, loan or
credit agreement, or any other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected, which breaches or
defaults would have, individually or in the aggregate, a Material Adverse
Effect; (iv) result in, or require, the creation or imposition of any Lien of
any nature upon or with respect to any of the properties now owned or hereafter
acquired by it (other than the security interests created pursuant to the
Operative Documents); or (v) require any Governmental Action by any Authority,
except for (A) the filings and recordings listed on Schedule 4.1B to the
Participation Agreement to perfect the rights of Lessor, the Lenders and Agent
intended to be created by the Operative Documents, and (B) those Governmental
Actions required with respect to Lessee or any of its Affiliates listed on
Schedule 4.1A to the Participation Agreement, each of which have been duly
effected and are, or on the initial Advance Date will be, in full force and
effect; and it is not in default under or in violation of its charter or bylaws.
Attached as Schedule
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4.1C to the Participation Agreement are correct and complete computations
demonstrating compliance by Genesis with Section 5.9 of the Indenture after
giving effect as Indebtedness under such Indenture to the obligations of Lessee
and Guarantors under or in connection with the Operative Documents.
C. Enforceability, etc. Each Operative Document to which it is
or is to be a party constitutes its legal, valid and binding obligation,
enforceable against it in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and by general equitable principles.
D. Litigation. There is no action, proceeding or investigation
pending or threatened which questions the validity of the Operative Documents to
which it is or is to be a party or any action taken or to be taken pursuant to
the Operative Documents to which it is or is to be a party, and there is no
action, proceeding or investigation pending or threatened which, if adversely
determined, would have a Material Adverse Effect.
E. Taxes. It has filed or caused to be filed all United States
Federal and all other material tax returns that are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessment received by it to the extent that such taxes have
become due and payable except to the extent that taxes due, but unpaid, are
being contested in good faith by it by appropriate action or proceeding and, to
the extent (if any) that such taxes are not due and payable, it has established
or caused to be established reserves that are adequate for the payment thereof
in accordance with GAAP.
F. Investment Company Act. It is not an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
G. Public Utility Holding Company. It is not subject to
regulation as a "holding company," 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.
H. Solvency. The consummation by Lessee and the Guarantors of
the transactions contemplated by the Operative Documents does not and will not
render it insolvent, nor was it made in contemplation of its insolvency; the
value of its assets and properties at fair valuation and at their then present
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fair salable value is and, after such transactions, will be greater than its
total liabilities, including contingent liabilities, as they become due; the
property remaining in its hands was not and will not be an unreasonably small
amount of capital.
Section VII. Covenants of Guarantors.
A. Consolidation, Merger, Sale, etc. No Guarantor shall
consolidate with any Person, merge with or into any Person or convey, transfer
or lease to any Person all or substantially all of its assets in any single
transaction (or series of related transactions), unless, immediately after
giving effect to such transaction, the conditions set forth in clauses (i)
through (v) shall have been satisfied:
1. the conditions of Section 7.09 or 7.10, as applicable, of
the Credit Agreement shall have been satisfied with respect to such
transaction; provided, that for purposes of this clause (i), (a) all
references in said Sections 7.09 and 7.10 to an Event of Default or
Potential Default shall include (x) a Lease Event of Default or Lease
Default, respectively, and (y) a default under this Guaranty, (b) all
notices, certificates and other documents required to be delivered
under said Section 7.09 shall also be delivered to Agent, on behalf of
the Participants, (c) all references in said Sections 7.09 and 7.10 to
Lender Party or Agent shall include Agent, on behalf of the
Participants, (d) all references in said Sections 7.09 and 7.10 to
Borrower or Borrowers shall be references to Guarantor or Guarantors,
respectively, and (e) all references in said Sections 7.09 and 7.10 to
Loan Obligations shall be references to the obligations of the
applicable parties under the Operative Documents and (f) all references
in said Sections 7.09 and 7.10 to Loan Documents shall be references to
the Operative Documents;
2. (x) the Person formed by such consolidation with or into
which such Guarantor shall be merged or (y) the Person which shall
acquire by conveyance, transfer or lease all or substantially all of
the assets of such Guarantor, if in the case of this clause (y), such
Person is obligated under the terms of the Credit Agreement to become a
party thereto (in the case of clause (x) or clause (y), as applicable,
the "Surviving Company"), if other than such Guarantor immediately
prior to such transaction, shall execute and deliver to each of the
parties hereto an agreement, in form and substance reasonably
satisfactory to Agent, containing the assumption by the Surviving
Company of the due and punctual payment, performance and observation of
each
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obligation, covenant and agreement of such Guarantor under this
Guaranty;
3. if the applicable Guarantor is Genesis and the Surviving
Company is not Genesis, such Surviving Company shall be a corporation
that is organized under the laws of the United States of America, a
state thereof or the District of Columbia;
4. the title of Lessor to the Sites and Lessor's rights under
this Guaranty and the other Operative Documents and the first and prior
Lien of the Mortgage on the Collateral shall not be adversely affected;
and
5. Lessee shall have delivered to Agent, on behalf of Lessor
and the Lenders, an Officer's Certificate and an opinion of counsel
reasonably satisfactory to each such Person stating that such
transaction complies with this Section 7, that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Actions required in connection with such transaction have
been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than the applicable Guarantor immediately prior thereto, shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor immediately prior to such transaction under this Guaranty and each
other Operative Document to which such Guarantor was a party immediately prior
to such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 7, no conveyance, transfer or lease of all or substantially all of the
assets of any Guarantor shall release Guarantor from its payment or other
obligations under this Guaranty or any other Operative Document without the
written consent of Lessor and Agent.
B. Existence. Subject to Section 7(A), each Guarantor shall at
all times maintain its existence as a corporation or partnership in good
standing under the laws of the state of its organization and shall use
commercially reasonable efforts to preserve and keep in full force and effect
its franchises material to its business.
C. Senior Indebtedness. This Guaranty is an obligation of the
Guarantors under and in respect of the Lease, which lease refunded, refinanced
and replaced that certain Acquisition Credit Agreement, dated as of September
29, 1995, as amended, among Genesis, certain of its Subsidiaries, Mellon Bank,
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N.A. ("Mellon") as Agent, Citibank, N.A. ("Citibank") as Co-Agent and the
Lenders named therein, which agreement supplemented that certain Amended and
Restated Credit Agreement, dated as of September 29, 1995, as amended, among
Genesis, certain of its Subsidiaries, Mellon as Issuer of Letters of Credit,
Mellon as Agent and Citibank as Co-Agent, which agreement refunded, refinanced
and replaced that certain Credit Agreement, dated as of November 22, 1993, among
Genesis, certain of its Subsidiaries, Mellon as Agent and the Lenders named
therein. The obligations hereunder are secured and superior in right of payment
to the obligations under those certain debentures issued pursuant to the 1993
Indenture and the 1995 Indenture (each as hereinafter defined). The obligations
hereunder constitute "Indebtedness" as such term is defined in the 1995
Indenture (as hereinafter defined) and this guarantee is a "Credit Facility",
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning of
that certain Indenture, dated as of June 15, 1995, between Genesis and Delaware
Trust Company as Trustee (the "1995 Indenture") and is "Senior Indebtedness"
within the meaning of that certain Indenture, dated as of November 30, 1993,
between Genesis and First Fidelity Bank, N.A., Pennsylvania as Trustee (the
"1993 Indenture").
Section VIII. Transfers by Beneficiaries. Each Beneficiary may, from
time to time, whether before or after any discontinuance of this Guaranty, at
its sole discretion (subject to the requirements of the Participation Agreement)
and without notice to or consent of Guarantors, assign or transfer any or all of
its portion of the Liabilities or any interest therein; and, notwithstanding any
such assignment or transfer or any subsequent assignment or transfer thereof,
such Liabilities shall be and remain Liabilities for the purposes of this
Guaranty, and each and every immediate and successive assignee or transferee of
any of the Liabilities or of any interest therein shall, to the extent of such
assignee's or transferee's interest in the Liabilities, be entitled to the
benefits of this Guaranty to the same extent as if such assignee or transferee
were such Beneficiary.
Section IX. No Waiver by Beneficiaries. No delay in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Guaranty be binding upon any Beneficiary
except as expressly set forth in a writing duly signed and delivered on its
behalf. No action permitted hereunder shall in any way affect or impair any
Beneficiary's rights or Guarantors' obligations under this Guaranty. For the
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purposes of this Guaranty, Liabilities shall include all of the obligations
described in the definition thereof, notwithstanding any right or power of
Guarantors or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
affect or impair the obligations of Guarantors hereunder. Guarantors'
obligations under this Guaranty shall be absolute and unconditional irrespective
of any circumstance whatsoever which might constitute a legal or equitable
discharge or defense of Guarantors. Guarantors hereby acknowledge that there are
no conditions to the effectiveness of this Guaranty.
Section X. Joint and Several Obligations; Successors and Assigns. All
obligations under this Guaranty are joint and several to each of the Guarantors
and any other party which hereafter guarantees any portion of the Liabilities,
and shall be binding upon them and upon their successors and assigns. All
references herein to Guarantors shall be deemed to include any successor or
successors, whether immediate or remote, to such Person.
Section XI. Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
Applicable Laws and Regulations, but if any provision of this Guaranty shall be
prohibited by or invalid thereunder, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
Section XII. Submission to Jurisdiction; Waivers. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY:
(A) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR
ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT OCCURRING IN
CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN
ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW AGREES
THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL
JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM (BUT
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM);
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(B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(C) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(D) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
Section XIII. Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this Guaranty shall be in writing and shall be deemed to have
been duly given when addressed to the appropriate Person and delivered in the
manner specified in Section 21.3 of the Lease. The initial address for notices
to each of the Guarantors is set forth on Schedule 3 hereto.
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SECTION XIV. GOVERNING LAW. THIS GUARANTY HAS BEEN DELIVERED TO AGENT
AT PENNSYLVANIA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
Section XV. Joinder; Release. Genesis covenants that upon each and
every addition or deletion of a Subsidiary as a party to the Credit Agreement,
it will (i) promptly notify Agent thereof and (ii) cause to be executed and
delivered to Agent, on behalf of the Beneficiaries, a joinder or release in the
form of Exhibit A-1 or Exhibit A-2, respectively, attached hereto evidencing
such addition or deletion of a Material Subsidiary hereunder. Each Guaranty and
each Beneficiary hereby agree that no such joinder shall require the consent of
Agent, any other Beneficiary or any Guarantor. Each of the Beneficiaries hereby
authorizes Agent to execute and deliver any such release from time to time, but
no such release shall require the consent of any other Beneficiary or any
Guarantor. Each Guarantor agrees that no such joinder or release shall affect
the obligations of any Guarantor (other than the Guarantor which shall have
executed and delivered such joinder or release).
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, Guarantors have caused this Guaranty and Agreement
of Suretyship to be executed and delivered as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
By:________________________________
Name: Ira C. Gubernick
Title: Secretary
BREVARD MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
CATONSVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of its
sole general partners
EASTON MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
EDELLA STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF CLARKS SUMMIT, INC.,
a Pennsylvania corporation
<PAGE>
Structural Guaranty
GENESIS HEALTH VENTURES OF INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE NETWORK SERVICES, INC.
f/k/a GENESIS MANAGEMENT RESOURCES, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICAL SERVICES, INC.
f/k/a GENESIS PHYSICIAN SERVICES, INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
HALLMARK HEALTHCARE LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation, its
sole general partner
<PAGE>
Structural Guaranty
HAMMONDS LANE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of
its general partner
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
HEALTHCARE SERVICES NETWORK, INC.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.
a Pennsylvania corporation
MILLVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
RIVER STREET ASSOCIATES, a
Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its
sole general partner
SEMINOLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
<PAGE>
Structural Guaranty
STAFF REPLACEMENT SERVICES, INC.,
a Pennsylvania corporation
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION SERVICES, INC.
f/k/a TEAM REHABILITATION, INC.
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P.,
a Pennsylvania limited partnership
By: Team Rehabilitation, Inc., its
sole general partner
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
VOLUSIA MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
WYNCOTE HEALTHCARE CORP.,
a Pennsylvania corporation
By:
Name: Ira C. Gubernick
Title: Secretary
ASCO HEALTHCARE, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
BRINTON MANOR, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
GENESIS HEALTH SERVICES CORPORATION,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS HEALTHCARE CENTERS HOLDINGS, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS HOLDINGS, INC.
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
GOVERNOR'S HOUSE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Seretary
HEALTH CONCEPTS AND SERVICES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
LINCOLN NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
SCHEDULE 1
Material Subsidiaries
<TABLE>
<CAPTION>
State of
Name Type of Entity Organization
- ---- -------------- ------------
<S> <C> <C>
Genesis Health Corporation Pennsylvania
Ventures, Inc.
Brevard Meridian Limited Partnership Maryland
Limited Partnership
Catonsville Meridian Limited Partnership Maryland
Limited Partnership
Easton Meridian Limited Partnership Maryland
Limited Partnership
Edella Street Limited Partnership Pennsylvania
Associates
Genesis Health Corporation Pennsylvania
Ventures of Arlington,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of Bloomfield,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of Clarks
Summit, Inc.
Genesis Health Corporation Pennsylvania
Ventures of Indiana,
Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Massachusetts, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Naugatuck, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Salisbury, Inc.
</TABLE>
<PAGE>
Structural Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Genesis Health Corporation Pennsylvania
Ventures of
Wayne, Inc.
Genesis Health Corporation Pennsylvania
Ventures of West
Virginia, Inc.
Genesis Health Corporation Pennsylvania
Ventures of
Windsor, Inc.
Genesis Immediate Corporation Pennsylvania
Med Center, Inc.
Genesis Management Corporation Pennsylvania
Resources, Inc.
Genesis Physician Corporation Pennsylvania
Services, Inc.
Genesis Properties Limited Partnership Pennsylvania
Limited Partnership
Greenspring Meridian Limited Partnership Maryland
Limited Partnership
Hallmark Healthcare Limited Partnership Maryland
Limited Partnership
Hammonds Lane Meridian Limited Partnership Maryland
Limited Partnership
Healthcare Resources Corporation Pennsylvania
Corp.
Healthcare Services Corporation Pennsylvania
Network, Inc.
Knollwood Manor, Inc. Corporation Pennsylvania
Meridian Health, Inc. Corporation Pennsylvania
Meridian Healthcare, Corporation Pennsylvania
Inc.
Millville Meridian Limited Partnership Maryland
Limited Partnership
</TABLE>
<PAGE>
Structural Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Pharmacy Equities, Inc. Corporation Pennsylvania
Philadelphia Avenue Limited Partnership Pennsylvania
Associates
Philadelphia Avenue Corporation Pennsylvania
Corporation
River Street Limited Partnership Pennsylvania
Associates
Seminole Meridian Limited Partnership Maryland
Limited Partnership
Staff Replacement Corporation Pennsylvania
Services, Inc.
State Street Limited Partnership Pennsylvania
Associates, L.P.
State Street Corporation Pennsylvania
Associates, Inc.
Suburban Medical Corporation Pennsylvania
Services, Inc.
Genesis Eldercare Corporation Pennsylvania
Rehabilitation Services,
Inc. f/k/a Team
Rehabilitation, Inc.
Therapy Care Limited Partnership Pennsylvania
Systems, L.P.
The Tidewater Corporation Pennsylvania
Healthcare Shared
Services Group, Inc.
Volusia Meridian Limited Partnership Maryland
Limited Partnership
Wyncote Healthcare Corporation Pennsylvania
Corp.
Asco Healthcare, Inc. Corporation Maryland
Briton Manor, Inc. Corporation Delaware
</TABLE>
<PAGE>
Structural Guaranty
<TABLE>
<CAPTION>
<S> <C> <C>
Concord Healthcare Corporation Delaware
Corporation
Crystal City Nursing Corporation Maryland
Center, Inc.
Eastern Medical Corporation Maryland
Supplies, Inc.
Eastern Rehab Corporation Maryland
Services, Inc.
Genesis Health Corporation Delaware
Services Corporation
Genesis Healthcare Corporation Delaware
Centers Holdings, Inc.
Genesis Holdings, Inc. Corporation Delaware
Genesis Properties Corporation Delaware
of Delaware Corporation
Genesis Properties Limited Partnership Delaware
of Delaware Ltd
Partnership, L.P.
Governor's House Corporation Delaware
Nursing Home, Inc.
Health Concepts and Corporation Maryland
Services, Inc.
Hilltop Health Care Corporation Delaware
Center, Inc.
Keystone Nursing Corporation Delaware
Home, Inc.
Lincoln Nursing Corporation Delaware
Home, Inc.
Wayside Nursing Corporation Delaware
Home, Inc.
</TABLE>
<PAGE>
Structural Guaranty
SCHEDULE 2
Lenders
Mellon Bank, N.A.
<PAGE>
Structural Guaranty
SCHEDULE 3
Addresses for Notices
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and
Chief Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
<PAGE>
Structural Guaranty
EXHIBIT A-1
FORM OF JOINDER
JOINDER AGREEMENT
THIS JOINDER AGREEMENT, dated as of (this "Joinder"), is executed by
(the "Additional Guarantor"), with its principal place of business located at .
BACKGROUND
1. Genesis Eldercare Properties, Inc. ("Lessee"), Mellon Financial
Services Corporation #4 ("Lessor"), the Lenders party thereto, and Mellon Bank,
N.A., as Agent, entered into a Participation Agreement, dated as of July 24,
1996 (as heretofore amended, the "Participation Agreement") pursuant to which
Lessee has made a covenant that it shall cause the Guarantors to execute and
deliver the Guaranty and Agreement of Suretyship (the "Guaranty").
2. The Guaranty and Agreement of Suretyship provides that upon each and
every addition of a Subsidiary as a party to the Credit Agreement, Genesis will
cause this Joinder to be executed and delivered by such Subsidiary to Agent.
2. The Additional Guarantor desires to become a Guarantor
pursuant to Section 15 of the Guaranty.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Additional Guarantor hereby agrees as follows:
Section 1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Participation Agreement.
Section 2. Operative Documents.
The Additional Guarantor hereby agrees that it shall be bound by
all the terms and provisions of, and shall be deemed to be a party to
(as if it were an original signatory to), the Guaranty; from and after
the date hereof, the Additional Guarantor shall be a Guarantor of the
Liabilities (as defined in the Guaranty). The Additional Guarantor
<PAGE>
Structural Guaranty
hereby acknowledges that it has received copies of the Participation Agreement,
the Guaranty and the other Operative Documents.
Section 3. Miscellaneous.
This Joinder shall be governed by, and construed in accordance with,
the internal laws of the Commonwealth of Pennsylvania. This Joinder is hereby
executed by the Additional Guarantor for the benefit of Lessor, the Agent and
the Lenders, and each of the foregoing parties may rely hereon. This Joinder
shall be binding upon, and shall inure to the benefit of, the Additional
Guarantor and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed by its duly authorized officer as of the date and year first above
written.
By:___________________________
Name:_________________________
Its:__________________________
<PAGE>
Structural Guaranty
EXHIBIT A-2
Form of Release
RELEASE OF GUARANTY
Reference is made to the Guaranty and Agreement of Suretyship (the
"Guaranty") dated as of July 24, 1996 made by Genesis Health Ventures, Inc. and
its Material Subsidiaries for the benefit of the Beneficiaries. Unless otherwise
defined herein, terms used herein have the meanings assigned to them in Appendix
1 to the Participation Agreement.
_____________________________ is no longer a party to the Credit
Agreement and thus, pursuant to Section 15 of the Guaranty, Agent hereby
releases _____________________ as a Guarantor under the Guaranty.
Dated: _______ __, ____
MELLON BANK N.A., as Agent
By:_______________________________
Title:____________________________
<PAGE>
Exhibit 10.45
AMENDED AND RESTATED LEASE AND AGREEMENT
Dated as of October 7, 1996
between
MELLON FINANCIAL SERVICES CORPORATION #4,
as Lessor,
and
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
ALL RIGHT, TITLE AND INTEREST OF LESSOR UNDER THIS LEASE AND AGREEMENT AND THE
PROPERTY SUBJECT HERETO HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF MELLON BANK, N.A., AGENT ("AGENT"), UNDER CERTAIN
MORTGAGES, ASSIGNMENTS OF RENTS AND LEASES, SECURITY AGREEMENTS AND FIXTURE
FILING STATEMENTS (AS SUCH AGREEMENTS AND INSTRUMENTS MAY BE AMENDED AND/OR
SUPPLEMENTED TO THE EXTENT PERMITTED THEREBY), FOR THE BENEFIT OF THE LENDERS
REFERRED TO IN SUCH SECURITY INSTRUMENTS. THIS LEASE AND AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS LEASE AND
AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS LEASE AND AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE "ORIGINAL EXECUTED
COUNTERPART NO. 1", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY AGENT ON OR FOLLOWING THE SIGNATURE PAGE THEREOF.
SEE SECTION 21.20 FOR THE NATURE OF THIS TRANSACTION AND INTENTION OF THE
PARTIES.
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART NO. 1.
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Lease and Agreement)
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS; LESSEE LIABILITY................................................................................... 1
ARTICLE II
LEASE OF SITES; LEASE TERM...................................................................................... 2
SECTION 2.1. Acceptance and Lease of Sites............................................................... 2
SECTION 2.2. Acceptance Procedure........................................................................ 2
SECTION 2.3. Lease Term.................................................................................. 3
SECTION 2.4. Lease Renewal............................................................................... 3
ARTICLE III
OTHER PROPERTY.................................................................................................. 4
ARTICLE IV
RENT............................................................................................................ 4
SECTION 4.1. Basic Rent.................................................................................. 4
SECTION 4.2. Supplemental Rent........................................................................... 4
SECTION 4.3. Method and Amount of Payment................................................................ 4
SECTION 4.4. Late Payment................................................................................ 5
SECTION 4.5. Net Lease; No Setoff; Etc................................................................... 5
ARTICLE V
UTILITY CHARGES................................................................................................. 7
ARTICLE VI
RENEWAL OPTION; SALE, RETURN AND PURCHASE OPTIONS............................................................... 7
SECTION 6.1. Renewal Option ............................................................................ 7
SECTION 6.2. Purchase Option ............................................................................ 8
SECTION 6.3. Sale Option ................................................................................ 8
SECTION 6.4. Conditions for Sale of the Sites............................................................ 9
SECTION 6.5. Early Termination........................................................................... 12
SECTION 6.6. Exercise of Options; Failure to Elect....................................................... 13
SECTION 6.7. Return of Sites ............................................................................ 13
SECTION 6.8. Completion of Facilities.................................................................... 14
SECTION 6.9. Failure of Lessee to Sell Sites............................................................. 14
ARTICLE VII
CONDITION AND USE OF SITES...................................................................................... 18
SECTION 7.1. Waivers .................................................................................... 18
ARTICLE VIII
LIENS; EASEMENTS................................................................................................ 19
SECTION 8.1. Liens....................................................................................... 19
SECTION 8.2. No Lessor Consent or Liability.............................................................. 19
SECTION 8.3. Easements .................................................................................. 19
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE IX
MAINTENANCE AND REPAIR;
<S> <C> <C>
ALTERATIONS AND ADDITIONS....................................................................................... 21
SECTION 9.1. Maintenance and Repair; Compliance With Law................................................. 21
SECTION 9.2. Alterations................................................................................. 22
SECTION 9.3. Title to Alterations........................................................................ 24
SECTION 9.4. Maintenance and Repair Reports.............................................................. 25
SECTION 9.5. Permitted Contests.......................................................................... 25
ARTICLE X
USE............................................................................................................. 26
ARTICLE XI
INSURANCE....................................................................................................... 26
SECTION 11.1. Required Coverages......................................................................... 26
SECTION 11.2. Delivery of Insurance Certificates......................................................... 28
ARTICLE XII
ASSIGNMENT AND SUBLEASING....................................................................................... 29
SECTION 12.1. Assignment and Subletting.................................................................. 29
SECTION 12.2. Sublease Subordination..................................................................... 31
ARTICLE XIII
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE....................................................................... 32
SECTION 13.1. Event of Loss; Condemnation or Casualty.................................................... 32
SECTION 13.2. Application of Payments Relating to an Event of Loss....................................... 33
SECTION 13.3. Application of Certain Payments Relating to a Condemnation................................. 33
SECTION 13.4. Casualty .................................................................................. 33
SECTION 13.5. Other Dispositions......................................................................... 34
SECTION 13.6. Negotiations ............................................................................ 34
SECTION 13.7. No Rent Abatement.......................................................................... 35
ARTICLE XIV
NON-INTERFERENCE................................................................................................ 35
SECTION 14.1. Non-Interference........................................................................... 35
SECTION 14.2. Certain Duties and Responsibilities of Lessor.............................................. 35
ARTICLE XV
INSPECTION AND REPORTS.......................................................................................... 36
SECTION 15.1. Inspection................................................................................. 36
SECTION 15.2. Reports ................................................................................... 36
ARTICLE XVI
OWNERSHIP, GRANT OF SECURITY INTEREST AND FURTHER ASSURANCES.................................................... 36
SECTION 16.1. Grant of Security Interest................................................................. 36
SECTION 16.2. Attorney-in-Fact........................................................................... 37
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE XVII
LEASE EVENTS OF DEFAULT......................................................................................... 38
ARTICLE XVIII
ENFORCEMENT..................................................................................................... 41
SECTION 18.1. Remedies .................................................................................. 41
SECTION 18.2. Proceeds of Sale; Deficiency............................................................... 45
SECTION 18.3. Grant and Foreclosure on Lessee's Estate................................................... 45
SECTION 18.4. Remedies Cumulative; No Waiver; Consents................................................... 46
ARTICLE XIX
RIGHT TO PERFORM FOR LESSEE..................................................................................... 46
ARTICLE XX
LESSOR LIENS.................................................................................................... 47
ARTICLE XXI
MISCELLANEOUS................................................................................................... 47
SECTION 21.2. Severability............................................................................... 47
SECTION 21.3. Notices.................................................................................... 48
SECTION 21.4. Amendment; Complete Agreements............................................................. 48
SECTION 21.5. Headings................................................................................... 48
SECTION 21.6. Original Lease ............................................................................ 48
SECTION 21.7. GOVERNING LAW ............................................................................ 48
SECTION 21.8. Discharge of Lessee's Obligations by its Affiliates........................................ 49
SECTION 21.9. Liability of Lessor Limited................................................................ 49
SECTION 21.10. Estoppel Certificates...................................................................... 49
SECTION 21.11. No Joint Venture........................................................................... 50
SECTION 21.12. No Accord and Satisfaction................................................................. 50
SECTION 21.13. No Merger.................................................................................. 50
SECTION 21.14. Successor Lessor........................................................................... 51
SECTION 21.15. Survival................................................................................... 51
SECTION 21.16. Transfer of Sites to Lessee or any other Person............................................ 51
SECTION 21.17. Enforcement of Certain Warranties.......................................................... 51
SECTION 21.18. Investment of Security Funds............................................................... 52
SECTION 21.19. Recording of Lease Supplements............................................................. 52
SECTION 21.20. Nature of Transaction...................................................................... 53
SCHEDULE I - Description of Initial Sites
EXHIBIT A - Form of Lease Supplement and Memorandum of Lease and Agreement
</TABLE>
iii
<PAGE>
Lease Agreement
THIS AMENDED AND RESTATED LEASE AND AGREEMENT dated as of October 7,
1996 (as amended, supplemented, or otherwise modified from time to time, this
"Lease"), is between MELLON FINANCIAL SERVICES CORPORATION #4, a Pennsylvania
corporation, as Lessor and as mortgagee ("Lessor"), and GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation and a wholly-owned subsidiary of
Genesis, as Lessee and as mortgagor ("Lessee").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, hereby
agree as follows:
ARTICLE I
DEFINITIONS; LESSEE LIABILITY
This Lease is an amendment and restatement of an existing Lease and
Agreement dated as of July 24, 1996 (the "Original Lease") and the existing
Lease Supplements under such Lease and Agreement relating to the Sites
identified on Schedule I hereof, which Lease Supplements shall continue to be in
full force and effect hereunder.
For all purposes hereof, the capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix 1 to that
certain Amended and Restated Participation Agreement dated as of October 7,
1996, by and among Lessee, Lessor, the Lenders identified therein, and Mellon
Bank, N.A., as Agent (the "Participation Agreement"). All obligations imposed on
the "Lessee" in this Lease shall be the full recourse liability of Lessee and no
obligation or liability of Lessee hereunder or under any other Operative
Document shall be limited by reason of any provision of any Ground Lease
restricting the liability of "Landlord" thereunder.
This Lease refunds, refinances and replaces that certain Acquisition
Credit Agreement, dated as of September 29, 1995, as amended, among Genesis
Health Ventures, Inc. ("Genesis"), certain of its subsidiaries, Mellon Bank,
N.A., ("Mellon") as Agent, Citibank, N.A. ("Citibank") as Co-Agent and the
lenders named therein, which agreement supplemented that certain Amended and
Restated Credit Agreement, dated as of September 29, 1995, as amended, among
Genesis, certain of its subsidiaries, Mellon as Issuer of Letters of Credit,
Mellon as agent and Citibank as co-Agent, which agreement refunded, refinanced
and replaced that certain Credit Agreement, dated as of November 22, 1993, among
Genesis, certain of its subsidiaries, Mellon as agent and the lenders named
therein. The obligations hereunder are secured and
<PAGE>
Lease Agreement
superior in right of payment to the obligations under those certain Debentures
issued pursuant to the 1993 Indenture (as hereinafter defined). This Lease
(including all amendments and supplements hereto including, without limitation,
any amendments which may increase the amount of this facility) is a "Credit
Facility" within the meaning of that certain Indenture, dated as of June 15,
1995, between Genesis and Delaware Trust Company as Trustee (the "1995
Indenture") and constitutes "Senior Indebtedness" within the meaning of that
certain Indenture, dated as of November 30, 1993, between Genesis and First
Fidelity Bank, N.A., Pennsylvania as Trustee (the "1993 Indenture"). From and
after the execution and delivery of the 1996 Indenture and the issuance of the
notes thereunder, this Lease (including all amendments and supplements hereto
including, without limitation, any amendments which may increase the amount of
this facility) will be a "Credit Facility" within the meaning of the 1996
Indenture.
ARTICLE II
LEASE OF SITES; LEASE TERM
SECTION 2.1. Acceptance and Lease of Sites. On each Site Acquisition
Date, Lessor, subject to the satisfaction or waiver of the conditions set forth
in Article III of the Participation Agreement, hereby agrees to accept delivery
on such Site Acquisition Date of the portion of the Land Interests together with
any Facilities thereon (or, with respect to the Non-Acquired Land Interests, the
ground lease of such Non-Acquired Land Interest and the Facilities located on
such Non-Acquired Land Interests) to be delivered on such Site Acquisition Date
pursuant to the terms of the Participation Agreement and simultaneously to lease
(or in the case of such Non-Acquired Land Interests, sublease) such portion of
the Land Interests together with any Facilities thereon to Lessee hereunder, and
Lessee, subject to the satisfaction or waiver of the conditions set forth in
Article III of the Participation Agreement, hereby agrees, expressly for the
direct benefit of Lessor, to lease commencing on such Site Acquisition Date from
Lessor for the Lease Term, such portion of the Land Interests together with any
Facilities thereon to be delivered on such Site Acquisition Date, and with
respect to any Facilities constructed thereon pursuant to the Construction
Agency Agreement, such Facilities automatically (without further act) commencing
on expiration or termination of the Construction Period applicable to such
Facilities. Lessee has heretofore accepted delivery and entered into a lease,
pursuant to the Original Lease, with Lessor of the Sites known as the NHCA
Sites.
2
<PAGE>
Lease Agreement
SECTION 2.2. Acceptance Procedure. Lessor hereby authorizes a
Responsible Officer of Lessee, to be designated by Lessee, as the authorized
representative or representatives of Lessor to accept delivery of the portion of
the Site(s) identified on the applicable Advance Request. Lessee hereby agrees
that such acceptance of delivery by such authorized representative or
representatives and the execution and delivery by Lessee as of each Site
Acquisition Date, of a Lease Supplement in the form of Exhibit A hereto or in
such other form as may be reasonably acceptable to the Agent and Lessor (in each
case, appropriately completed) shall, without further act, constitute the
irrevocable acceptance by Lessee of the Site(s) which are the subject thereof
for all purposes of this Lease and the other Operative Documents on the terms
set forth therein and herein. Any Facility constructed on an Undeveloped Site
pursuant to the Construction Agency Agreement shall be deemed to be included in
the Leasehold Estate as of the date of expiration or termination of the
Construction Period applicable to such Facility.
SECTION 2.3. Lease Term. Unless earlier terminated, the term of this
Lease shall consist of the Basic Term, commencing on and including July 24, 1996
and ending on the date (the "Basic Term Expiration Date") which is five years
thereafter (i.e., July 24, 2001) and the Renewal Term, if exercised and
effective (collectively, the "Lease Term"); provided, that with respect to the
Developed Sites and the Undeveloped Sites (but only in respect of the Land
Interest portion of such Undeveloped Sites, including any Non-Acquired Land
Interest), the commencement of the Basic Term shall be the relevant Site
Acquisition Date for each such Site (which, in the case of the NHCA Sites shall
be July 24, 1996, as provided in Section 3.2(s) of the Participation Agreement);
provided, further, that with respect to the Facility to be constructed on any
Undeveloped Site, the commencement of the Basic Term shall be upon the
expiration or termination of the Construction Period for such Undeveloped Site
and the end of the Basic Term with respect to such Facility shall be upon the
Basic Term Expiration Date. Any provision of this Lease or any other Operative
Document to the contrary notwithstanding, Lessee acknowledges that Lessor's sole
interest in the Non-Acquired Land Interests, if any, is as ground lessee, and
Lessor is hereby subleasing such Non-Acquired Land Interests to Lessee; and
Lessor and Lessee specifically agree that this Lease and the remedies available
to Lessor for Lessee's default hereunder shall apply to the Non-Acquired Land
Interests, notwithstanding that such Land Interests are not owned by Lessor, and
Lessee shall pay as and when due all ground rent applicable to any Non-Acquired
Land Interest and shall perform all obligations of the ground lessee under any
Ground Lease accruing prior to the Lease Termination Date with respect to such
Land Interest.
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SECTION 2.4. Lease Renewal. Subject to the consent of Lessor and the
Lenders pursuant to Section 2.10 of the Participation Agreement, Lessee may
elect to renew this Lease for one five-year renewal term (the "Renewal Term")
commencing upon the expiration of the Basic Term (the "Renewal Term Commencement
Date") and ending on the date which is five years after the Renewal Term
Commencement Date, as provided in Article VI and in the applicable Lease
Supplement.
ARTICLE III
OTHER PROPERTY
Lessee may from time to time own or hold under lease from Persons other
than Lessor, furniture, trade fixtures and equipment located on or about the
Sites that is not subject to this Lease. Lessor shall from time to time, upon
the reasonable request, and at the cost and expense of Lessee, which request
shall be accompanied by such supporting information and documents as Lessor may
reasonably require, promptly acknowledge in writing to Lessee or other Persons
that the particular items of furniture, trade fixtures and equipment in question
are not part of the related Site and that, subject to the rights of Lessor under
any other Operative Documents, Lessor does not own or have any other right or
interest in or to such furniture, trade fixtures and equipment.
ARTICLE IV
RENT
SECTION 4.1. Basic Rent. Lessee shall pay to Agent, for the benefit of
Lessor and the Lenders, the amounts of Basic Rent during the Basic Term and, if
applicable, the Renewal Term, determined in accordance with the definition of
"Basic Rent" on each Payment Date.
SECTION 4.2. Supplemental Rent. Lessee shall pay to Agent, for the
benefit of Lessor, or to whomever shall be entitled thereto as expressly
provided herein or in any other Operative Document (and Lessor hereby directs
Lessee, on behalf of Lessor, to so pay such Agent or other Person), any and all
Supplemental Rent promptly as the same shall become due and payable and, in the
event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor
shall have all rights, powers and remedies provided for herein or by law or in
equity or otherwise in the case of nonpayment of Basic Rent. Lessee hereby
reaffirms its obligation to pay as Supplemental Rent (i) any and all
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Additional Costs, and (ii) any Transaction Costs not paid by Lessor, as further
described in Section 9.9 of the Participation Agreement.
SECTION 4.3. Method and Amount of Payment. As long as any obligations
remain outstanding under the Loan Agreement, Basic Rent and Supplemental Rent
shall be paid to Agent (or, in the case of Supplemental Rent, to such Person as
may be entitled thereto) on the due date therefor at such place as Agent shall
specify in writing to Lessee at least two (2) Business Days prior to the due
date therefor. Agent, on behalf of Lessor, shall notify Lessee of the applicable
LIBO Rate or Prime Rate, as applicable, promptly upon the determination thereof.
Each payment of Rent shall be made by Lessee prior to 12:00 noon Philadelphia
time (and payments made after such time shall be deemed to have been made on the
next day) at the place of payment in funds consisting of lawful currency of the
United States of America which (in the case of any amount payable to Lessor,
Agent or any Lender) shall be immediately available on the scheduled date when
such payment shall be due, unless the scheduled date shall not be a Business
Day, in which case such payment shall be made on the next succeeding Business
Day (unless the result of such extension would be to carry such payment into the
next calendar month, in which event such payment shall be made on the next
preceding Business Day). The provisions of the foregoing sentence of this
Section 4.3 shall be applicable only to Basic Rent and to Supplemental Rent
payable to, or on behalf of or for the account of, Lessor, any Lender, Agent and
any other Indemnitee. Any amounts payable by Lessee to Lessor hereunder shall be
payable in accordance with Section 9.16 of the Participation Agreement.
SECTION 4.4. Late Payment. If any Basic Rent shall not be paid when due
(not taking into account any applicable grace period), Lessee shall pay to Agent
on behalf of Lessor and the Lenders, or if any Supplemental Rent payable to or
on behalf or for the account of Lessor, any Lender, Agent or other Indemnitee is
not paid when due (not taking into account any applicable grace period), Lessee
shall pay to whomever shall be entitled thereto, in each case as Supplemental
Rent, interest at the Overdue Rate (to the maximum extent permitted by law) on
such overdue amount from and including the initial due date thereof (not taking
into account any applicable grace period) to but excluding the Business Day of
payment thereof at the Overdue Rate.
SECTION 4.5. Net Lease; No Setoff; Etc. This Lease shall constitute a
net lease and, notwithstanding any other provision of this Lease, it is intended
that Basic Rent and Supplemental
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Rent shall be paid without counterclaim, setoff, deduction or defense of any
kind and without abatement, suspension, deferment, diminution or reduction of
any kind, and Lessee's obligation to pay all such amounts, throughout the Basic
Term and the Renewal Term, if applicable, is absolute and unconditional. The
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation,
to the maximum extent permitted by law: (a) any defect in the condition,
merchantability, design, construction, quality or fitness for use of any portion
of the Sites, or any failure of the Sites to comply with all Applicable Laws and
Regulations, including any inability to occupy or use the Sites by reason of
such non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of the Sites or any
part thereof, including eviction; (c) any restriction, prevention or curtailment
of or interference with any use of the Sites or any part thereof, including
eviction; (d) any defect in title to or rights to the Sites or any Lien on such
title or rights or on the Sites; (e) any change, waiver, extension, indulgence
or other action or omission or breach in respect of any obligation or liability
of or by Lessor, Agent or any Lender; (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to Lessee, Lessor, Agent, any Lender or any other Person,
or any action taken with respect to this Lease by any trustee or receiver of
Lessee, Lessor, Agent, any Lender or any other Person, or by any court, in any
such proceeding; (g) any claim that Lessee has or might have against any Person,
including, without limitation, Lessor, or any Lender; (h) any failure on the
part of Lessor to perform or comply with any of the terms of this Lease, any
other Operative Document or of any other agreement whether or not related to the
Overall Transaction; (i) any invalidity or unenforceability or disaffirmance
against or by Lessee of this Lease or any provision hereof or any of the other
Operative Documents or any provision of any thereof; (j) the impossibility of
performance by Lessee, Lessor or both; (k) any action by any court,
administrative agency or other Authority; any restriction, prevention or
curtailment of or any interference with the construction on or any use of any
Site or any part thereof; or (l) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Lessee shall have notice
or knowledge of any of the foregoing. Except as specifically set forth in
Section 6.5 or Article XIII of this Lease, this Lease shall be noncancellable by
Lessee for any reason whatsoever, and Lessee, to the extent permitted by
Applicable Laws and Regulations, waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate or surrender this Lease, or to any
diminution, abatement or
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reduction of Rent payable by Lessee hereunder. If for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or otherwise,
except as expressly provided in Section 6.5 or Article XIII of this Lease,
Lessee shall, unless prohibited by Applicable Laws and Regulations, nonetheless
pay to Lessor (or, in the case of Supplemental Rent, to whomever shall be
entitled thereto) an amount equal to each Rent payment at the time and in the
manner that such payment would have become due and payable under the terms of
this Lease if it had not been terminated in whole or in part, and in such case,
so long as such payments are made and no Lease Event of Default shall have
occurred and be continuing, Lessor will deem this Lease to have remained in
effect. Each payment of Rent made by Lessee hereunder shall be final and, absent
manifest error in the computation of the amount thereof, Lessee shall not seek
or have any right to recover all or any part of such payment from Lessor, Agent
or any party to any agreements related thereto for any reason whatsoever. Lessee
assumes the sole responsibility for the condition, use, operation, maintenance,
and management of the Sites and Lessor shall have no responsibility in respect
thereof and shall have no liability for damage to the property of Lessee or any
subtenant of Lessee on any account or for any reason whatsoever other than by
reason of Lessor's willful misconduct or gross negligence or breach of any of
its obligations under any Operative Document.
ARTICLE V
UTILITY CHARGES
Lessee shall pay or cause to be paid all charges for electricity,
power, gas, oil, water, telephone, sanitary sewer service and all other rents
and utilities used in or on a Site during the Lease Term. Lessee shall be
entitled to receive any credit or refund with respect to any utility charge paid
by Lessee and the amount of any credit or refund received by Lessor on account
of any utility charges paid by Lessee, net of the costs and expenses reasonably
incurred by Lessor in obtaining such credit or refund, shall be promptly paid
over to Lessee. All charges for utilities imposed with respect to a Site for a
billing period during which this Lease expires or terminates (except pursuant to
Section 6.2, in which case Lessee shall be solely responsible for all such
charges) shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.
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ARTICLE VI
RENEWAL OPTION; SALE, RETURN AND PURCHASE OPTIONS
SECTION 6.1. Renewal Option. Subject to the consent of Lessor and the
Lenders pursuant to Section 2.10 of the Participation Agreement, Lessee shall
have the right, at its option, to request the Participants to renew all (but not
less than all) of the Lease Supplements for the Renewal Term, commencing
immediately following the expiration of the Basic Term. In order to exercise
such option, Lessee shall give irrevocable written notice thereof to Lessor no
earlier than fifteen (15) months and no later than twelve (12) months prior to
the end of the Basic Term and no Lease Payment/Bankruptcy Default or Lease Event
of Default shall have occurred and be continuing at the time of exercise and at
the commencement of the Renewal Term. If the Renewal Term is applicable, Lessee
shall continue to pay Rent, including Basic Rent (upon the terms agreed to by
Lessee and the Participants for the Renewal Term), during the Renewal Term on
each Payment Date occurring during the Renewal Term. All of the provisions of
this Lease shall remain in effect during the Renewal Term.
SECTION 6.2. Purchase Option. Lessee will have the right, at its option
and upon ten (10) months prior written notice (which notice shall be
irrevocable) to Lessor prior to expiration of the Lease Term, to purchase all
(but not less than all) of the Sites then subject to the Lease Supplements at a
price equal to the Purchase Option Exercise Amount (the "Purchase Option"). If
Lessee shall have elected to purchase the Sites, Lessor shall, upon discharge of
the Lien of the Mortgages pursuant to the provisions thereof, and the payment in
full of an amount sufficient to retire the Notes and pay in full the Equity
Amount, and the payment of all accrued but unpaid Rent and breakage fees, if
any, plus all other amounts (including, without limitation, all Supplemental
Rent), fees and expenses then due and payable, transfer by quitclaim deed (or
quitclaim ground lease assignment) all of Lessor's right, title and interest in
and to the Sites to Lessee or its designee, without recourse or warranty (except
as to the absence of Lessor Liens), and re-assign to Lessee, as Construction
Agent, any Construction Documents previously assigned by Lessee, as Construction
Agent, to Lessor, against payment by Lessee of the Purchase Option Exercise
Amount in immediately available funds. Lessee, at its option, may assign its
right to exercise the Purchase Option by written notice thereof to Agent and
Lessor; provided that (i) Lessee shall be bound by any exercise of the Purchase
Option by the assignee, (ii) such assignee shall be bound by the provisions of
this Article VI applicable to the Purchase Option, and (iii) no such assignment
shall release Lessee from its obligations under this
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Article VI and, without limitation, Lessee shall remain primarily liable to
Lessor for the payment of all amounts due under this Article VI in respect of
the Purchase Option.
SECTION 6.3. Sale Option. If no Lease Payment/Bankruptcy Default or
Lease Event of Default shall have occurred and be continuing, then Lessee may
cause all (but not less than all) of the Sites subject to the Lease Supplements
to be sold on the last day of the Lease Term for cash to a purchaser or
purchasers not affiliated in any way with Lessee (the "Sale Option"); provided
that each Land Interest and the Facility thereon shall be sold to the same
Person and all Land Interests and all Facilities thereon shall be sold to one or
more Persons in the same transaction; and provided further that in connection
with the sale of each Facility located on a Non-Acquired Land Interest, Lessee
shall be obligated to sell the related Land Interest as well. In the event
Lessee timely elects the Sale Option, on the last day of the Lease Term, Lessee
will pay as Supplemental Rent to Lessor the amounts determined in accordance
with Section 6.4(b) until the Lease Balance and all other amounts payable under
the Operative Documents have been paid in full.
SECTION 6.4. Conditions for Sale of the Sites.
(a) In the event that the Sale Option is applicable, Lessee
shall cause all (but not less than all) of the Sites to be sold in accordance
with the procedures set forth in this Section 6.4. In order to exercise the Sale
Option, Lessee shall give notice of its election of the Sale Option effective at
the expiration of the Basic Term or Renewal Term, as the case may be, not later
than ten (10) months prior to such expiration, which exercise shall be
irrevocable, and any failure of Lessee to so elect the Sale Option shall be
deemed an election of the Purchase Option pursuant to Section 6.2. Subject to
the preceding sentence, during the period commencing on the date ten (10) months
prior to the scheduled end of the Basic Term or the Renewal Term, as the case
may be, Lessee, on behalf of Lessor, shall use best commercial efforts, as
nonexclusive agent for Lessor, to obtain the highest cash bids for the purchase
of the Sites and, in the event it receives any bid, Lessee shall, within five
(5) Business Days after receipt thereof and at least twenty (20) Business Days
prior to the Lease Termination Date, certify to Lessor and Agent in writing the
amount and terms of such bid, and the name and address of the party or parties
(who shall not be Lessee or any Affiliate of Lessee or any Person with whom
Lessee has an understanding or arrangement regarding the future use of the Sites
by Lessee or such Affiliate, but who may be Lessor or a Lender, any Affiliate
thereof or any Person contacted by a Lender) submitting such bid. Lessee will
keep Agent
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promptly informed of the material terms of any proposed bid. Lessee shall bear
its own expenses and pay, as Supplemental Rent, the reasonable expenses of
Lessor, Agent and each Lender in connection with any such bidding and sale
process pursuant to this Section 6.4 including any recapture costs incurred
under government-funded healthcare programs, as well as all costs and expenses
incurred by any party (including a buyer or potential buyer) to place the Sites
in the condition required by Section 9.1 and costs of repairs, Alterations or
improvements desired by such buyer.
(b) In the event that Lessee contemplates accepting any bid
which, upon payment of all amounts under Section 6.4(b), shall result in any
portion of the Lease Balance or any other amount due under the Operative
Documents remaining outstanding (a "Loss Bid"), Lessee shall notify Agent and
Lessor in writing (a "Loss Bid Notice") of such fact and the calculation thereof
prior to accepting any such bid; and in the event of such bid, any Participant
may submit a bid to Lessee not later than thirty (30) days after the date of
such notice from Lessee. On or before the Lease Termination Date, so long as no
Lease Event of Default or Lease Payment/Bankruptcy Default shall have occurred
and be continuing, and subject to the release of the security interest with
respect to the Sites under the Mortgages: (i) Lessee shall transfer all of
Lessee's right, title and interest in the Sites, or cause the Sites to be
transferred, to the bidder(s), if any, which shall have submitted the highest
bid therefor at least twenty (20) (or, in the case of a Participant, any
Affiliate thereof or Person contacted by a Participant, five (5)) Business Days
prior to such Lease Termination Date, in the same manner and in the same
condition and otherwise in accordance with all the terms of this Lease; (ii)
subject to prior or concurrent payment by Lessee of all amounts due under clause
(iii) of this sentence, Lessor shall exercise such rights as it has to cause the
Sites to be released from the Lien of the Mortgages and shall, without recourse
or warranty (except as to the absence of Lessor Liens), transfer by quitclaim
deed Lessor's right, title and interest in and to the Sites for cash to such
bidder(s); and (iii) Lessee shall simultaneously pay or cause to be paid to
Lessor in immediately available funds an amount equal to the sum of (p) all
unpaid Basic Rent due on or prior to the Lease Termination Date, and all
Supplemental Rent due on or prior to such date and any other amounts due and
payable by Lessee to Lessor, Agent and each Lender plus (q) the gross sale
proceeds of the Sites sold by Lessor (the "Proceeds"); plus (r) the Applicable
Percentage Amount. To the extent the sum of the Proceeds plus the Applicable
Percentage Amount shall exceed the Lease Balance, upon receipt of the amounts
described in clause (p) of the preceding sentence, Lessor shall apply the amount
of Proceeds equal to such
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excess to the amount payable by Lessee under clause (r); provided, that to the
extent that the Proceeds alone shall exceed the Lease Balance, upon receipt of
the Proceeds and the amounts described in clause (p) of the preceding sentence,
Lessor shall pay the amount of such excess to Lessee. For purposes of clause
(q), with respect to the gross sales proceeds relating to the sale of the
Non-Acquired Land Interests and the related Facilities, such gross proceeds
shall be allocated between Lessee's interest in such Non-Acquired Land Interest
(as the owner thereof) and Lessor's interest in such Non-Acquired Land Interest
(as the ground lessee thereof) and in the Facility thereon based upon the
respective Fair Market Sales Values of Lessee's interest in such Non-Acquired
Land Interest and Lessor's interest in such Non-Acquired Land Interest and the
Facility thereon as determined by an appraisal conducted, at Lessee's expense,
by an appraiser of nationally recognized standing, selected and engaged by the
Required Participants; provided, that the maximum portion of the gross sales
proceeds allocated to any Non-Acquired Land Interest shall be Lessee's cost for
such Non- Acquired Land Interest as set forth in the applicable Lease
Supplement. The "Applicable Percentage Amount" shall be based upon the
Applicable Percentage for the Lease Supplement applicable to such Site, and
shall be determined in accordance with the definition thereof in Appendix 1 to
the Participation Agreement. The "Applicable Percentage" for each Lease
Supplement shall be determined on or about the date of acquisition by Lessor of
the related Undeveloped Site or as soon thereafter as Lessor obtains sufficient
information to make a determination for financial accounting purposes and shall
be set forth in the Lease Supplement; provided that the maximum "Applicable
Percentage Amount" will be determined as the greatest amount which would not
cause the present value at the beginning of the Lease Term of the minimum lease
payments (including, without limitation, such Applicable Percentage Amount), as
determined in accordance with generally accepted accounting principles, to equal
or exceed ninety percent (90%) of the Fair Market Sales Value, at the beginning
of this Lease, of the applicable Site. The Applicable Percentage for any Lease
Supplement shall in no event be less than eighty percent (80%).
(c) If Lessee exercises the Sale Option and a Loss Bid Notice
is to be provided pursuant to Section 6.4(b), then as a condition to Lessee's
right to consummate the Sale Option pursuant to Sections 6.3 and 6.4, Lessee
shall cause to be delivered to Lessor not later than five (5) Business Days
prior to the Lease Termination Date, at Lessee's sole cost and expense, a report
in form and substance reasonably satisfactory to the Agent and Lessor from an
Appraiser selected by Lessee and
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reasonably acceptable to the Agent and Lessor (the "End of Term Report") to
establish the reason for any impairment to the value of any of the Sites which
are being sold for less than the Allocated Amount applicable to such Site.
Without limiting the indemnities provided in the Operative Documents, on the
Lease Termination Date, Lessee shall pay to Agent, on behalf of Lessor and the
Lenders, an amount equal to the Shortfall Amount that the End of Term Report
demonstrates was the result of any impairment to the value in any of the Sites
due to:
(i) the existence of any Hazardous Materials, Environmental
Concern Materials or violations of Environmental Laws with
respect to a Site occurring or discovered after the date
such Site becomes subject to the Lease (regardless of the
Person so discovering any of the foregoing), or
(ii) any restoration or rebuilding carried out by Lessee
or any failure of Lessee to complete any Alterations,
restoration or rebuilding, or
(iii) any easements or other actions described in
clauses (i) through (viii) of Section 8.3, or
(iv) the failure of Lessor to have good and marketable title to
any Site free and clear of all Liens (including Permitted
Liens (other than Lessor Liens)) and exceptions to title
caused by the acts or omissions of Lessee or any Affiliate
or Subtenant.
As used herein, the term "Shortfall Amount" means the excess, if any, of (i) the
Lease Balance over (ii) the sum of the Proceeds plus the Applicable Percentage
Amount.
SECTION 6.5. Early Termination.
(a) Commencing July 24, 1998 and provided that no Lease
Payment/Bankruptcy Default or Lease Event of Default shall have occurred and be
continuing (or any such defaults are cured contemporaneously with the
consummation of the purchase option under this Section 6.5(a)), Lessee shall
have the option to purchase all (but not less than all) of the Sites on the next
scheduled Payment Date for an amount equal to, without penalty, the Lease
Balance plus all other amounts then due under the Lease and the other Operative
Documents, including, without limitation, accrued but unpaid Rent and breakage
fees, if any, plus all other amounts, fees and expenses then due and payable.
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(b) On any scheduled Payment Date on or prior to July 24,
1997, Lessee may, at its option, by giving at least ninety (90) days' advance
written notice to Lessor, purchase all (but not less than all) of the Sites for
an amount equal to the Lease Balance, accrued but unpaid Rent and breakage fees,
if any, all other amounts, fees and expenses then due and payable plus a
prepayment fee equal to 50 basis points of the Lease Balance. On any scheduled
Payment Date after July 24, 1997, but prior to July 24, 1998, Lessee may, at its
option, by giving at least ninety (90) days' advance written notice to Lessor,
purchase all (but not less than all) of the Sites for an amount equal to the
Lease Balance, accrued but unpaid Rent and breakage fees, if any, all other
amounts, fees and expenses then due and payable, plus a prepayment fee equal to
25 basis points of the Lease Balance.
SECTION 6.6. Exercise of Options; Failure to Elect. In order to
exercise any of its purchase or sale options under this Lease (other than under
Section 6.5), Lessee shall give irrevocable written notice to Lessor not less
than twelve (12) months prior to the end of the Basic Term, that Lessee intends
to exercise one of the options provided in this Article VI and specifying such
option. If Lessee shall fail to deliver such written notice in the time
required, Lessee shall be deemed to have elected to exercise the Purchase Option
pursuant to Section 6.2. Lessee's election (or deemed election) of the Purchase
Option will be irrevocable at the time it is made (or deemed made). If Lessee
has elected the option to sell the Sites under Section 6.3, such option shall be
automatically revoked and such election shall be deemed of no effect if, on or
after the date Lessee elects such option, there exists or occurs a Lease Event
of Default or Lease Payment/Bankruptcy Default or Lessee shall fail in any
manner fully to comply with this Article VI, in which case Lessee shall be
automatically deemed to have elected the Purchase Option pursuant to Section
6.2.
SECTION 6.7. Return of Sites. Unless the Sites shall have been
transferred to Lessee pursuant to Section 6.2 or 6.5, Lessee shall, on the Lease
Termination Date, and at its own expense, transfer the Sites (together with the
reports described in Section 9.4 relating thereto) to the independent purchaser
thereof pursuant to Section 6.3, free and clear of all Liens other than
Permitted Exceptions and Lessor Liens, in as good condition as they were on the
Document Closing Date, ordinary wear and tear excepted, and in compliance with
all Applicable Laws and Regulations and the other requirements of Article IX
(and in any event without (x) any asbestos installed or maintained in any part
of the Site, (y) any polychlorinated byphenyls (PCBs) in, on or used, stored or
located at the Site,
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and (z) any other Hazardous Materials). Lessee shall cooperate with the
independent purchaser of the Site in order to facilitate the ownership and
operation by such purchaser of the Site after the Lease Termination Date,
including providing all books, reports and records regarding the maintenance,
repair and ownership of the Site and all data and technical information relating
to the physical operation and maintenance of the Site, granting or assigning (to
the extent permitted by law) all licenses necessary for the operation and
maintenance of the Site and cooperating in seeking and obtaining all necessary
Governmental Action. Lessee shall have also paid the total cost for the
completion of all Alterations commenced prior to the Lease Termination Date. The
obligation of Lessee under this Article VI regarding the Purchase Option shall
survive the expiration or termination of this Lease, except if Lessee duly and
timely exercises the Sale Option and performs its obligations under Sections 6.3
and 6.4, or Lessee duly and timely exercises its rights under Section 6.5 and
performs its obligations thereunder. Unless Lessee shall have exercised or been
deemed to have exercised its option to purchase the Sites, then after the date
which is twelve (12) months prior to the Lease Termination Date, Lessor shall at
Lessee's expense be entitled to perform such investigation, including obtaining
reports of engineers and other experts as to the condition and state of repair
and maintenance required by this Section 6.7 and as to the compliance with
Environmental Laws of the Site, as it deems appropriate. Lessee, at its sole
cost and expense, shall cause the repair or other remediation of any
discrepancies between the actual condition of the Site and the condition
required under the Lease, such repair or remediation to be completed not later
than the expiration of this Lease.
SECTION 6.8. Completion of Facilities. In the event that any Facility
becomes subject to this Lease pursuant to Sections 2.1 and 2.2 prior to
Completion thereof due to the termination of the Construction Period applicable
thereto under Section 5.1 of the Construction Agency Agreement, Lessee (at its
cost) shall diligently pursue construction of such Facility in accordance with
the construction-related provisions of the Operative Documents (including those
set forth in the provisions of Article III of the Participation Agreement,
notwithstanding that the Participants shall not be obligated to make any
Advances in respect of such construction) and shall cause the Completion of such
Facility not later than the earlier to occur of (x) the date which is twelve
(12) months after the Site Acquisition Date for the Site on which such Facility
is being constructed and (y) the original expiration date of the Construction
Period for such Facility, not taking into account the early termination of such
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Construction Period; provided that the dates described in clauses (x) and (y)
for such Facility shall be subject to extension for Force Majeure delays not to
exceed ninety (90) days in the aggregate.
SECTION 6.9. Failure of Lessee to Sell Sites. If Lessee shall exercise
the Sale Option and shall fail to arrange for the sale of all of the Sites on or
before the Lease Termination Date in accordance with and subject to the
provisions of Sections 6.4 and 6.6, then Lessee and Lessor hereby agree as
follows:
(a) On the Lease Termination Date, Lessee shall (i) pay to
Agent (on behalf of the Participants) the Applicable Percentage Amount
and (ii) Lessee will do both of the following:
(1) at the option of Agent (on behalf of the
Participants), either (x) cancel the sale of the Sites for
which Lessee has arranged a sale (in which case, all Sites
will constitute "unsold Sites" under this Section 6.9) or (y)
sell the Sites for which Lessee has arranged a sale pursuant
to the provisions of Sections 6.4 and 6.6; and
(2) at the option of Agent (on behalf of the
Participants), either (x) tender to Lessor possession of the
unsold Sites or (y) continue to lease the unsold Sites during
a holdover period (the "Holdover Period") and in the case of
such holdover, Lessee shall continue to market, on a
non-exclusive basis, the Sites for sale on behalf of Lessor in
accordance with the provisions of the Lease. For each such
Site, such Holdover Period shall expire on the earlier of (x)
the sale of such Site and (y) the reduction of the Lease
Balance to zero and the payment by Lessee of all Basic Rent,
Supplemental Rent and all other amounts then due and payable
under the Operative Documents, and (z) written notice by
Agent, as Agent for the Lenders, of a date specified for the
termination of such Holdover Period with respect to such Site.
The Basic Rent payable by Lessee for the Sites during any
Holdover Period shall be applied first to payment of the
portion of Basic Rent set forth in clauses (i) and (ii) of the
definition thereof, with any excess being applied to reduce
such Lease Balance. Any Proceeds from the sale of any Sites
during the Holdover Period will be applied to reduce the Lease
Balance, with such application being allocated first to the
Lenders in respect of the
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remaining amount of the Notes (i.e., that portion of the
outstanding principal balance of the Notes in excess of the
Applicable Percentage Amount), and second to the Equity
Amount. If and when the Lease Balance shall be reduced to
zero, (i) any further Proceeds from the sale of any remaining
Sites shall be remitted to Lessee for its own account, (ii) at
the request of either Lessor (or Agent on Lessor's behalf) or
Lessee, Lessor will transfer to Lessee or its designee, and
Lessee will accept or cause its designee to accept the
transfer of, all remaining Sites by quitclaim deed, and Lessee
shall pay or cause to be paid all costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses of counsel to the Participants) in connection with
such transfer.
Agent shall not make the elections under clause (1)(y) and clause
(2)(x) above without receiving (x) the consent of the Lenders if after
giving effect to such partial sale and payment by Lessee of the
Applicable Percentage Amount, any portion of the principal of and
accrued interest on the Notes will remain outstanding, and (y) the
consent of the Lessor if after giving effect to such partial sale and
payment by Lessee of the Applicable Percentage Amount, any portion of
the Equity Amount or accrued Yield will remain outstanding.
(b) On or after the Lease Termination Date, Agent, on behalf
of Lessor and the Lenders, shall have the right, but not the
obligation, to sell the Sites for such purchase price and upon such
terms as Agent shall determine in its sole discretion. In the event
that Agent shall so elect to sell the Sites, Agent shall notify each of
Lessor, Lessee and the Lenders thereof, and each shall have the right
to submit a bid and/or to cause any other Person to submit a bid to
Agent not later than twenty (20) Business Days prior to the date Agent
desires to sell the Sites (as set forth in the aforementioned notice
thereof); provided, however, that Agent, on behalf of Lessor and the
Lenders, shall have the right, in its sole discretion, from time to
time, to defer such proposed sale date, in which event, the rights of
Lessee, Lessor and each Lender to submit a bid and/or to cause any
other Person to submit a bid to Agent shall be extended to the date
that is twenty (20) Business Days prior to the revised proposed sale
date. At no time shall Agent be obligated to accept any bid for the
sale of the Sites (whether such bid was obtained by Lessee, Lessor, any
Lender or otherwise) or to consummate any proposed sale.
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(c) At any time and from time to time on or after the Lease
Termination Date, Agent, on behalf of Lessor and the Lenders, shall
have the right to withdraw from the Sale Deposit (other than the
portion thereof constituting the Applicable Percentage Amount) amounts
to pay, or reimburse itself for the payment of, expenses of Lessor,
Agent and each Participant in connection with any bidding and sale (or
proposed sale, whether or not consummated) described in clause (b). In
the event that there are insufficient funds remaining from the Sale
Deposit to pay such expenses, Lessee shall pay such expenses from time
to time upon demand.
(d) Contemporaneously with the consummation of any sale of the
Sites by Lessee or Agent pursuant to this Section 6.9, (i) Lessee will
transfer all of Lessee's right, title and interest in the Sites to be
transferred to the purchaser, (ii) subject to prior or concurrent
payment by Lessee of all amounts due under clause (iii) of this
sentence and receipt by Lessor of Proceeds from such sale, Lessor shall
exercise such rights as it has to cause the Sites to be released from
the Lien of the Mortgages and shall, without recourse or warranty
(except as to the absence of Lessor Liens), transfer by quitclaim deed
Lessor's right, title and interest in and to the Sites for cash to such
purchaser; and (iii) Lessee shall simultaneously pay or cause to be
paid to Agent, on behalf of Lessor and the Lenders, in immediately
available funds an amount equal to all unpaid Basic Rent and all
Supplement Rent due on or prior thereto and any other amounts due and
payable by Lessee to Lessor, Agent and each Lender. Any Proceeds in
excess of the sum of (x) the Lease Balance, plus (y) all unpaid Basic
Rent and all Supplemental Rent due on or prior thereto and any other
amounts due and payable by Lessee to Lessor, Agent and each Lender,
shall be remitted to Lessee promptly after receipt.
(e) Until a sale of the Sites by Lessee or Agent pursuant to
this Section 6.9, Lessee shall be bound by all of the obligations and
duties of Lessee under this Lease, notwithstanding the occurrence of
the Lease Termination Date.
(f) Lessor reserves all rights under this Lease and the other
Operative Documents arising out of Lessee's breach of any provisions of
this Lease (including Article VI), whether occurring prior to, on or
after the Lease Termination Date, including Lessee's breach of any of
its
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obligations under Sections 6.3 and 6.4, including the right to sue
Lessee for damages.
(g) To the greatest extent permitted by law, Lessee hereby
unconditionally and irrevocably waives, and releases Lessor and Agent
from, any right to require Lessor or Agent to sell the Sites at all or
for any minimum purchase price or on any particular terms and
conditions, Lessee hereby agreeing that if Lessee shall elect the Sale
Option, its ability to sell the Sites on or prior to the Lease
Termination Date and its right thereafter to submit a bid or to cause
any other Person to submit a bid to Agent pursuant to Section 6.9(b) in
the event Agent shall elect to sell the Sites, shall constitute full
and complete protection of Lessee's interest hereunder.
ARTICLE VII
CONDITION AND USE OF SITES
SECTION 7.1. Waivers. LESSEE ACKNOWLEDGES AND AGREES THAT, ALTHOUGH
LESSOR WILL OWN AND HOLD TITLE TO THE SITES, LESSEE IS SOLELY RESPONSIBLE UNDER
THE TERMS OF THE CONSTRUCTION AGENCY AGREEMENT FOR THE DESIGN, DEVELOPMENT,
BUDGETING, CHANGE ORDERS AND CONSTRUCTION OF THE FACILITIES AND ANY ALTERATIONS.
The Sites are let by Lessor "AS IS" in their present or then condition, as the
case may be, subject to (a) any rights of any parties in possession thereof, (b)
the state of the title thereto existing at the time Lessor acquired its interest
in the Site, (c) any state of facts which an accurate survey or physical
inspection might show (including any survey delivered on or prior to the
Document Closing Date or the Completion Date), (d) all Applicable Laws and
Regulations, and (e) any violations of Applicable Laws and Regulations which may
exist at the commencement of the Lease Term. Lessee has examined the Site and
(insofar as Lessor is concerned) has found the same to be satisfactory. NEITHER
LESSOR, AGENT NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE TO THE SITES OR TO THE VALUE,
MERCHANTABILITY, HABITABILITY, CONDITION, OR FITNESS FOR USE OF THE SITES, OR
ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE SITES, OR ANY PART THEREOF, AND NEITHER LESSOR,
AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF THE SITES, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAWS AND REGULATIONS, except that Lessor hereby represents and
warrants that the Site is and shall be free of Lessor Liens. Lessee has been
afforded full
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opportunity to inspect the Sites, is satisfied with the results of its
inspections and is entering into this Lease solely on the basis of the results
of its own inspections, and all risks incident to the matters discussed in the
preceding sentence (other than Lessor Liens), as between Lessor, Agent and the
Lenders, on the one hand, and Lessee, on the other, are to be borne by Lessee.
The provisions of this Article VII have been negotiated, and, except to the
extent otherwise expressly stated, the foregoing provisions are intended to be a
complete exclusion and negation of any representations or warranties by any of
Lessor, Agent or the Lenders, express or implied, with respect to the Sites (or
any interest therein), that may arise pursuant to any law now or hereafter in
effect or otherwise.
ARTICLE VIII
LIENS; EASEMENTS
SECTION 8.1. Liens. Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien, defect, attachment, levy, title
retention agreement or claim upon any Site or Alteration, or with respect to the
Sites, any Basic Rent or Supplemental Rent, the title thereto, or any interest
therein, including all Liens which arise out of the possession, use, occupancy
or construction of the Sites or by reason of labor or materials furnished or
claimed to have been furnished to Lessee, or any of its contractors or agents or
by reason of the financing of any Alterations constructed by or for the benefit
of Lessee and not financed by Lessor, except in all cases Permitted Liens. With
respect to all Liens other than Permitted Liens, Lessee shall promptly, but not
later than thirty (30) days (or, in the case of non-consensual Liens, sixty (60)
days) after the filing thereof, at its own expense, take such action as may be
necessary duly to discharge or eliminate or bond in a manner reasonably
satisfactory to Lessor any such Lien if the same shall arise at any time.
SECTION 8.2. No Lessor Consent or Liability. Nothing contained in this
Lease shall be construed as constituting the consent or request of the Lessor,
expressed or implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to any Site or any part thereof. NOTICE IS HEREBY GIVEN THAT
NEITHER LESSOR NOR ANY LENDER OR AGENT IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING A SITE OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND
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THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR, AGENT OR ANY LENDER IN AND TO
ANY SITE.
SECTION 8.3. Easements. Subject to Section 3.4 of the Construction
Agency Agreement (which shall take precedence over these provisions during the
Construction Period with respect to any Undeveloped Site) and notwithstanding
the foregoing paragraph, at the request of Lessee, Lessor shall, from time to
time during the Lease Term and upon at least thirty (30) days' prior written
notice from Lessee, and receipt of the materials specified in the next
succeeding sentence, consent to and join in any (i) grant of easements,
licenses, rights of way, party wall rights and other rights in the nature of
easements, with or without consideration, (ii) release or termination of
easements, licenses, rights of way, party wall rights or other rights in the
nature of easements which are for the benefit of a Site or any portion thereof,
with or without consideration, (iii) dedication or transfer of portions of a
Site, not improved with a building, for road, highway or other public purposes,
with or without consideration, (iv) execution of petitions to have a Site or any
portion thereof annexed to any municipal corporation or utility district, (v)
execution of agreements for the use and maintenance of common areas, for
reciprocal rights of parking, ingress and egress and amendments to any covenants
and restrictions affecting a Site or any portion thereof, with or without
consideration, (vi) request to any Authority for platting or subdivision or
replatting or resubdivision approval with respect to a Site or any portion
thereof or any parcel of land of which a Site or any portion thereof forms a
part or a request for any variance from zoning, (vii) creation of a governmental
special benefit district for public improvements and collection of special
assessments in connection therewith, in lump sum or installments, and (viii)
execution and delivery of any instrument appropriate to confirm or effect such
grant, release, dedication, transfer request or such other matter, document or
proceeding. Lessor's obligations pursuant to the preceding sentence shall be
subject to the requirements that:
(a) any such action shall be at the sole cost and expense of
Lessee, and Lessee shall pay all reasonable out-of-pocket costs of Lessor, Agent
and the Lenders in connection therewith (including, without limitation, the
reasonable fees of attorneys (including allocated costs of internal counsel of
Agent);
(b) Lessee shall have delivered to Lessor a certificate of a
Responsible Officer of Lessee stating that:
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(1) such action will not cause the Site or any
portion thereof to fail to comply in any respect with the provisions of
the Lease or any other Operative Documents and in any material respect
with all Applicable Laws and Regulations (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements);
(2) all governmental consents or approvals required
prior to such action have been obtained, and all filings required prior
to such action have been made;
(3) such action will not result in any material
down-zoning of the Site or any portion thereof or a material reduction
in the maximum density or development rights available to the Site
under all Applicable Laws and Regulations;
(4) this Lease and Lessee's obligations hereunder
shall continue in full force and effect, without abatement, suspension,
deferment, diminution, reduction, counterclaim, setoff, defense or
deduction;
(5) such action will not materially reduce the Fair
Market Sales Value, utility, remaining economic useful life or residual
value of the Site or Lessor's interest therein; and
(6) such action will not impose or create any
liability or obligation on Lessor;
(c) all consideration received in connection with such
action shall be paid to Lessee; and
(d) no Lease Event of Default shall have occurred and
be continuing.
ARTICLE IX
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS
SECTION 9.1. Maintenance and Repair; Compliance With Law. Lessee, at
its own expense, shall at all times (a) maintain the Sites in good repair and
condition, subject to ordinary wear and tear, and in safe repair and condition
(all whether involving interior or exterior, structural or nonstructural,
ordinary or
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extraordinary, and foreseen or unforeseen circumstances); (b) except to the
extent Section 9.5 shall apply, maintain, manage and monitor the Sites in
accordance with all Applicable Laws and Regulations, whether or not such
maintenance requires structural modifications, noncompliance with which (i)
would have a material adverse effect on Lessee's right to use the Sites or
Lessee's business or financial condition, (ii) would cause any of the results
enumerated in Section 9.5 hereof, (iii) would materially adversely affect the
Fair Market Sales Value, utility, remaining economic useful life or residual
value of the Sites, or (iv) would materially adversely affect Lessor's interest
in the Sites; (c) comply with the standards imposed by any insurance policies
required to be maintained hereunder which are in effect at any time with respect
to the Sites or any part thereof; (d) maintain, manage and monitor the Sites in
accordance with all applicable contracts, including service contracts and
insurance contracts; (e) conduct maintenance and repair under the same programs
and subject to the same standards as Lessee or its Affiliates shall maintain and
repair other healthcare facilities owned, leased or operated by Lessee or its
Affiliates; (f) cause the Sites to continue to have at all times the capacity
and functional ability to be used for, on a continuing basis (subject to normal
interruption in the ordinary course of business for maintenance, inspection and
repair) and in commercial operation, the purposes for which it was specifically
designed; (g) maintain appropriate and customary written environmental
operations and maintenance plans (including, where appropriate for
asbestos-containing materials) for the Sites; and (h) procure, maintain and
comply in all material respects with all material licenses, permits, orders,
approvals, consents and other authorizations required for the construction, use,
maintenance and operation of the Sites and for the use, operation, maintenance,
repair and restoration of the Facilities. Lessee waives any right that it may
now have or hereafter acquire to (x) require Lessor to maintain, repair,
replace, alter, remove or rebuild all or any part of the Sites or (y) make
repairs at the expense of Lessor pursuant to any Applicable Laws and Regulations
or other agreements.
SECTION 9.2. Alterations.
(a) At Lessee's own cost and expense, (i) Lessee shall make
alterations, renovations, improvements and additions to any Site(s) or any part
thereof and substitutions and replacements therefor (collectively,
"Alterations") so long as such Alterations are (A) made to repair or maintain
the Site(s) in the condition required by Section 9.1; (B) necessary in order for
the Site(s) to be in compliance with Applicable Laws and Regulations; or (C)
necessary or advisable to restore the Site(s) to their
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condition existing prior to a Casualty or Condemnation; and (ii) so long as no
Lease Event of Default or Lease Payment/Bankruptcy Default has occurred and is
continuing, Lessee may undertake Alterations on one or more Sites so long as
such Alterations comply with Applicable Laws and Regulations and with Section
9.1 and subsection (b) of this Section 9.2.
(b) The making of any Alterations must be in compliance with
the following requirements; provided that in the case of any Alteration required
by an emergency or by Applicable Laws and Regulations, Lessee shall (x) promptly
notify Agent thereof, (y) not be bound by the provisions of clause (1) below and
(z) effect such Alteration in a manner to avoid (or minimize if it is not
possible to avoid) any violation of clause (5) below:
(1) No such Alterations with a cost exceeding $500,000 (or, in
the case of related Alterations at any one Site, with an aggregate cost
exceeding $500,000) shall be made or undertaken except upon not less
than thirty days' prior written approval of Agent, which approval shall
not be unreasonably withheld. For any Alterations which are subject to
this clause (1), if Agent, in its good faith judgment, believes that
such Alterations may violate the provisions of clause (5) below, Agent
(on behalf of the Participants) may engage an appraiser of nationally
recognized standing, at Lessee's expense, to determine (by appraisal
methods satisfactory to Agent) the projected Fair Market Sales Value of
any Facility following the completion of Alterations relating thereto
and may delay its approval until receipt of such appraisal.
(2) Lessee shall not make any Alterations in violation of the
terms of any restriction, easement, condition or covenant or other
matter affecting title to the Site.
(3) No Alterations shall be undertaken until Lessee shall have
procured and paid for, so far as the same may be required from time to
time, all permits and authorizations relating to such Alterations of
all municipal and other Authorities having jurisdiction over the Site.
Lessor, at Lessee's expense, shall join in the application for any such
permit or authorization and execute and deliver any document in
connection therewith, whenever such joinder is necessary or advisable.
(4) The Alterations shall be expeditiously completed
in a good and workmanlike manner and in compliance with all
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Applicable Laws and Regulations then in effect and the standards
imposed by any insurance policies required to be maintained hereunder.
(5) All Alterations shall, when completed, be of such a
character as to not materially adversely affect the Fair Market Sales
Value, utility, remaining economic useful life or residual value of the
Site from its Fair Market Sales Value, utility, remaining economic
useful life or residual value immediately prior to the making thereof
or, in the case of Alterations being made by virtue of a Casualty or
Condemnation, immediately prior to the occurrence of such Casualty or
Condemnation.
(6) Lessee shall have made adequate arrangements for payment
of the cost of all Alterations when due so that the Site shall at all
times be free of Liens for labor and materials supplied or claimed to
have been supplied to the Site, other than Permitted Liens; provided,
that Lessee shall have the right to contest the amount claimed by any
such supplier of labor or materials in accordance with the applicable
provisions of Section 9.5.
SECTION 9.3. Title to Alterations. Title to Alterations shall without
further act vest in Lessor and shall be deemed to constitute a part of the
related Site and be subject to this Lease in the following cases:
(a) such Alterations shall be in replacement of or in
substitution for a portion of the Facilities and/or the Sites;
(b) such Alterations shall be required to be made
pursuant to the terms of Section 9.1 or 9.2(a)(i) hereof; or
(c) such Alterations shall be Nonseverable.
Lessee, at Lessor's request, shall execute and deliver any
deeds, bills of sale, assignments or other documents of conveyance reasonably
necessary to evidence the vesting of title in and to such Alterations to Lessor.
If such Alterations are not within any of the categories set
forth in clauses (a) through (c) of this Section 9.3, then title to such
Alterations shall vest in Lessee and such Alterations shall not be deemed to be
Alterations which are part of the Site.
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All Alterations to which Lessee shall have title may, so long
as removal thereof shall not result in the violation of any Applicable Laws and
Regulations and no Lease Event of Default or Lease Payment/Bankruptcy Default is
continuing, be removed at any time by Lessee. Any such Alterations shall be
removed by Lessee at its expense if Lessor shall so request prior to the return
of the Site to Lessor or sale of the Site in accordance with the provisions of
this Lease, and Lessee shall at its expense repair any damage to the Site caused
by the removal of such Alterations. Lessor (or the purchaser of the applicable
Site) may purchase from Lessee Alterations (if not already owned by Lessor)
which Lessee notifies Lessor that Lessee intends to remove from the Site prior
to the return of the Site to Lessor or sale of the Site, which purchase shall be
at the Fair Market Sales Value of such Alterations. Title to any Lessee
Alterations shall vest in Lessor (or the purchaser of the applicable Site) if
not removed from the Site by Lessee prior to the return of the Site to Lessor or
sale of the Site.
SECTION 9.4. Maintenance and Repair Reports. Lessee shall keep
maintenance and repair reports in sufficient detail, and as customary for owners
of commercial real estate, to indicate the nature and date of major work done.
Lessee shall prepare and maintain appropriate and customary written operations
and maintenance plans (including, where appropriate for asbestos-containing
materials) for the Sites. Such reports and plans shall be kept on file by Lessee
at its offices during the Lease Term, and shall be made available to Lessor upon
reasonable request. Lessee shall give notice to Lessor and Agent of any
Condemnation or Casualty the cost to repair which is reasonably expected by
Lessee to exceed $250,000, promptly after Lessee has knowledge thereof.
SECTION 9.5. Permitted Contests. If, to the extent and for so long as
(a) a test, challenge, appeal or proceeding for review of any Applicable Laws
and Regulations or any Governmental Action relating to any Site or to the
operation or maintenance of any Facility shall be prosecuted diligently and in
good faith in appropriate proceedings by Lessee or (b) compliance with such
Applicable Laws and Regulations or such Governmental Action shall have been
excused or exempted by a valid nonconforming use permit, waiver, extension or
forbearance, Lessee shall not be required to comply with such Applicable Laws
and Regulations or such Governmental Action but only if and so long as any such
test, challenge, appeal, proceeding or noncompliance shall not, in the
reasonable opinion of Lessor, involve (A) any meaningful risk of (1)
foreclosure, forfeiture or loss of a Site, (2) criminal liability being imposed
on Lessor, Agent, any Lender or
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the Site or (3) the nonpayment of Rent or (B) any substantial danger of (1) the
sale of, or the creation of any Lien (other than a Permitted Lien) on, any part
of the Site, (2) material civil liability being imposed on Lessor, Agent, any
Lender or the Site, (3) the extension of the ultimate imposition of such
Applicable Laws and Regulations or such Governmental Action beyond the last day
of the Lease Term, or (4) enjoinment of, or interference with, the use,
possession or disposition of the Site in any material respect. Lessee shall
provide Lessor with notice of any contest of the type described in clause (a)
above in detail sufficient to enable Lessor to ascertain whether such contest
may have an effect of the type described in clauses (b)(A) and (B) above.
Lessor will not be required to join in any proceedings
pursuant to this Section 9.5 unless a provision of any Applicable Laws and
Regulations requires, or, in the good faith opinion of Lessee, it is helpful to
Lessee that such proceedings be brought by or in the name of Lessor; and in that
event Lessor will join in the proceedings or permit them or any part thereof to
be brought in its name if and so long as no Lease Event of Default or Lease
Payment/Bankruptcy Default is continuing and Lessee pays all related expenses.
ARTICLE X
USE
Each Site shall be used, during its Construction Period, in a manner
consistent with the Construction Agency Agreement, and thereafter, Lessee may
use each Site as a health care facility and for related ancillary purposes, or
in such other manner reasonably acceptable to Lessor and Agent in their sole
discretion. Lessee shall not use any Site or any part thereof for any purpose or
in any manner that would materially adversely affect the Fair Market Sales
Value, utility, remaining useful life or residual value of the Site or that
would create a materially increased risk of environmental liability or that
would violate or conflict with, or constitute or result in a violation or
default under (a) any Applicable Laws and Regulations whether now existing or
hereafter in effect, foreseen or unforeseen, except to the extent permitted by
Section 9.5, (b) any insurance policies required by Article XI, or (c) any
Operative Document. Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Sites as contemplated by this Lease
and the Construction Agency Agreement. Lessee shall not commit or permit any
waste of the Sites or any part thereof.
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ARTICLE XI
INSURANCE
SECTION 11.1. Required Coverages. Lessee will keep insured all property
of a character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations, and carry such other
insurance as is usually carried by such corporations, provided that in any event
Lessee will maintain:
(a) Commercial General Liability Insurance. Combined single
limit insurance against claims for bodily injury, death or third-party property
damage occurring on, in or about each Site (including adjoining streets and
sidewalks) in an amount at least equal to $5,000,000 per person and $5,000,000
per occurrence (subject to a maximum deductible of $350,000 per occurrence) and
$5,000,000 for property damage per occurrence, with a minimum general annual
limit of $5,000,000 and a minimum of $15,000,000 excess of such coverage.
(b) Property Insurance. Insurance against loss of damage
covering each Site or any portion thereof by reason of any Peril (as defined
below) in an amount (subject to such deductibles and/or self-insurance in such
maximum amounts as is approved by Agent from time to time, such approval not to
be unreasonably withheld) at least equal to such minimum amounts as are carried
by corporations owning and/or operating healthcare facilities comparable to the
Sites; provided, however, that at no time shall the amount of such coverage be
less than replacement cost.
(c) Workers' Compensation Insurance. Lessee shall, in the
construction of the Facilities (including in connection with any Alterations
thereof) and the operation of the Sites, comply with the applicable Workers'
Compensation laws and protect Lessor, Agent and the Lenders against any
liability under such laws.
(d) Builder's Risk Insurance. During the construction of any
Alteration, Lessee shall also maintain, for the benefit of Lessor, all-risk
Builders' Risk Insurance in an amount equal to the greater of the replacement
value of the applicable Facility and Alteration and the then outstanding
Allocated Amount of the applicable Site.
(e) Flood Insurance. For any Site located in a special flood
hazard area (as defined in National Flood Insurance
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Reform Act), Lessee shall maintain flood insurance, for the benefit of Lessor,
Agent and the Lenders, in an amount at least equal to the then outstanding
Allocated Amount of the applicable Site. Prior to the date hereof and from time
to time upon Lessor's request, Lessee shall deliver to Lessor evidence
reasonably satisfactory to Lessor for each Site establishing whether such Site
is located in a special flood hazard area.
(f) Other Insurance. Such other insurance, including worker's
compensation insurance, malpractice or professional liability insurance,
automobile liability (if applicable) and business interruption insurance, in
each case as is generally carried by owners of similar properties in such
amounts and against such risks as are then customary for properties similar in
use.
Such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise reasonably
appropriate considering the amount and type of insurance being provided by such
companies. Any insurance company selected by Lessee shall be rated in A.M.
Best's Insurance Guide or any successor thereto (or if there be none, an
organization having a similar national reputation) and shall have a general
policyholder rating of "A-" (or comparable rating for a rating by an
organization other than A.M. Best) and a financial rating of at least "X" (or
comparable rating for a rating by an organization other than A.M. Best) or be
otherwise acceptable to the Required Participants. In the case of liability
insurance maintained by Lessee, it shall name Agent, together with Lessor, as
additional insureds and, in the case of property insurance maintained by Lessee,
it shall name Agent, together with Lessor, as mortgagees and loss payees. Each
policy referred to in this Section 11.1 shall provide that: (i) it will not be
cancelled, materially modified or its limits reduced, or allowed to lapse
without renewal, except after not less than 30 days' prior written notice to
Agent; (ii) the interests of Agent and Lessor shall not be invalidated by any
act or negligence of or breach of warranty or representation by Lessee or any
Person having an interest in a Site or the Facility thereon; (iii) such
insurance is primary with respect to any other insurance carried by or available
to Agent and Lessor; (iv) the insurer shall waive any right of subrogation,
setoff, counterclaim, or other deduction, whether by attachment or otherwise,
against Agent or Lessor; and (v) such policy shall contain a cross-liability
clause providing for coverage of Agent and Lessor as if separate policies had
been issued to each of them. Lessee will notify Agent promptly of any policy
cancellation, reduction in policy limits, modification or amendment. The term
"Peril" shall mean, collectively, fire, lightning, flood, windstorm, hail,
explosion, riot and civil
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commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and all other perils covered by the "all risk endorsement" then in use in
the Commonwealth of Pennsylvania.
SECTION 11.2. Delivery of Insurance Certificates. On or before the
Document Closing Date, Lessee shall deliver to Agent and Lessor certificates of
insurance satisfactory to Agent and Lessor evidencing the existence of all
insurance required to be maintained hereunder and setting forth the respective
coverages, limits of liability, carrier, policy number and period of coverage.
Thereafter, throughout the Lease Term, at the time each of Lessee's insurance
policies is renewed (but in no event less frequently than once each year),
Lessee shall deliver to Agent and Lessor certificates of insurance evidencing
that all insurance required by Section 11.1 to be maintained by Lessee with
respect to the Sites is in effect.
ARTICLE XII
ASSIGNMENT AND SUBLEASING
SECTION 12.1. Assignment and Subletting.
(a) Lessee may not assign, mortgage or pledge, in whole or in
part, any of its right, title or interest in, to or under this Lease or any
portion of the Sites to any Person (including an Affiliate of Lessee) at any
time, and any such assignment, mortgage or pledge shall be void; provided,
however, that without the consent of Lessor, Lessee may assign this Lease to a
single-purpose, wholly-owned, direct or indirect Subsidiary of Genesis (the
"Permitted Assignee") provided that the following conditions are met:
(i) The Permitted Assignee must be incorporated under the laws
of the State of Delaware or the Commonwealth of Pennsylvania;
(ii) No Lease Event of Default or Lease Payment/Bankruptcy
Default shall have occurred and be continuing;
(iii) The Permitted Assignee shall, prior to or simultaneously
with the assignment, enter into an assumption agreement, which
agreement shall include all of the representations, warranties
and covenants contained in this Lease;
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(iv) Genesis and its Material Subsidiaries shall, prior to or
simultaneously with the assignment of the Lease deliver a
reaffirmation of the Guaranties; and
(v) Lessee shall deliver an opinion of counsel for the
Permitted Assignee, reasonably acceptable to Lessor and Agent,
dated as of the date of the assignment, stating that the
Permitted Assignee has the legal capacity to perform and
fulfill all of the obligations and liabilities contained in
the Lease, and containing other matters as reasonably
requested by Lessor and Agent.
Lessee may not sublease, in whole or in part, any of its right, title or
interest in, to or under this Lease or any portion of the Sites to any Person at
any time, and any such sublease shall be void and of no force or effect;
provided, however, that without the consent of Lessor, Lessee may sublease any
Site to a wholly-owned direct or indirect Subsidiary of Genesis (any such
permitted sublease is hereinafter referred to as a "Sublease"). Any such
permitted sublessee under any Sublease described in this Section 12.1(a) shall
hereinafter be referred to as a "Subtenant."
Regardless of Lessor's consent, no subletting shall release
Lessee of Lessee's obligation or alter the primary liability of Lessee to pay
Rent hereunder (including, without limitation, Basic Rent and Supplemental Rent)
and to perform all other obligations to be performed by Lessee hereunder. The
acceptance of Rent by Lessor from any other Person shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one subletting of one Site
shall not be deemed consent to any subsequent or further subletting of such Site
or any other Site. Lessor may proceed directly against Lessee without the
necessity of exhausting remedies against said successor.
(b) Lessee hereby assigns to Lessor all of Lessee's right,
title and interest in and to all Subleases entered into by Lessee in accordance
with Section 12.1(a), now or hereafter in effect, including but not limited to
all rents and other sums payable to Lessee under each such Sublease. Lessor
shall have no obligation to perform, and Lessee shall not by reason of such
assignment be relieved of its obligation to perform, any of Lessee's covenants
or agreements under this Lease or covenants or agreements of Lessee, as
sublessor, under any such Sublease; provided that, upon the termination of this
Lease or upon termination of Lessee's right to possess the Site following a
Lease Event of Default (the date of such termination shall be referred to herein
as the "Turnover Date") the following shall
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apply: (A) if Lessee acquires ownership of the Site in accordance with the terms
of this Lease or if Lessee's right to possess the Site has been terminated
following a Lease Event of Default then, subject to the provisions of Article
XVIII, Lessee shall continue to be liable for all obligations under the
Subleases; or (B) if Lessee does not acquire ownership of the Site, (i) Lessee
shall continue to be liable for any obligations under the Subleases accruing or
arising prior to the Turnover Date and for any tenant improvement obligations
arising or accruing prior to the later of (x) the Turnover Date and (y) the
scheduled termination date of the Basic Term or the Renewal Term or the Extended
Renewal Term, as applicable, and (ii) with respect to any Subleases not
terminated in accordance with Section 12.2(b), Lessor (or any successor owner of
the Site (the "Designated Owner")) shall assume and be liable for, subject to
the limitations on the liability of the Designated Owner set forth in Section
12.2 and subject to the limitations on the liability of Lessee set forth in
Article XVIII, Lessee's obligations under the Subleases other than those
referred to in clause (i) above. Prior to the Turnover Date, Lessee shall have
the right to collect and enjoy all rents and other sums of money payable under
any Sublease and Lessee shall have the right to modify, extend, amend or
terminate any or all of the Subleases (except that Lessee shall not have the
right to amend or modify any Sublease, the effect of which would be to cause a
Qualified Subtenant (defined below) to become a non-Qualified Subtenant, unless
the modification also revises the language required in the Sublease pursuant to
Section 12.2(a) hereof to be consistent with the language required by Section
12.2(c) hereof.
SECTION 12.2. Sublease Subordination.
(a) In the case of any proposed Sublease with a Subtenant, not
less than thirty days prior to the consummation of such Sublease (or in the case
of a Sublease to be entered into within ten days after the Document Closing
Date, not later than the fifth day after the Document Closing Date), Lessee
shall deliver to Lessor each of the following: (i) a certification of Lessee
identifying the proposed Subtenant in question and confirming that such proposed
Subtenant satisfies the requirements of Section 12.1(a) and Section 12.2(b), and
(ii) a copy of the proposed Sublease.
(b) In the case of any Sublease, following the Turnover Date
the Designated Owner shall have the right to terminate such Sublease and the
Subtenant's Sublease and right of possession thereunder or, in the alternative
(at the Designated Owner's option), the Designated Owner may require the
Subtenant under such Sublease to attorn to the Designated Owner; and in the
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case of such required attornment, the rights (including, without limitation, the
right of possession) of such Subtenant under such Sublease shall not be
disturbed or affected by the Designated Owner so long as no default by such
Subtenant exists under the terms of such Sublease as would enable Lessee (as
sublessor) to terminate such Sublease or would cause termination of such
Sublease or would entitle Lessee (as sublessor) to dispossess the Subtenant
under such Sublease. Each Sublease shall contain the following language:
"The Tenant hereunder agrees that this Lease is subject and
subordinate to the lease under which the Landlord hereunder
occupies the Property (the "Overlease", with the landlord
under the Overlease and its successors and assigns in interest
to the Property or this Lease being hereinafter referred to as
the "Overlandlord") and in the event of the termination of the
Overlease or in the event the Overlandlord terminates the
Landlord's right of possession under the Overlease (the date
on which either such termination becomes effective being
referred to herein as the "Turnover Date"), the Overlandlord
shall have (i) the right to terminate this Lease and the
Tenant's right of possession hereunder, or, in the alternative
(at the Overlandlord's option), (ii) the right to require the
Tenant hereunder to attorn to the Overlandlord; and in the
case of such required attornment election, the Tenant
hereunder will attorn to the Overlandlord and pay the
Overlandlord all of the rents and other monies required to be
paid by the Tenant hereunder, and perform all of the terms,
covenants, conditions and obligations contained in this Lease,
and this Lease shall continue as a direct lease between the
Tenant hereunder and the Overlandlord upon all of the terms
and conditions hereof except that in no event shall the
Overlandlord have any obligation to perform any obligation of
the Landlord hereunder with respect to obligations of the
Landlord hereunder accruing prior to the Turnover Date and
that any obligations of the Overlandlord (or any successor
Overlandlord) hereunder arising after the Turnover Date shall
be without recourse to Overlandlord
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(other than the interest of the Overlandlord in the property
demised by this Lease)."
ARTICLE XIII
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
SECTION 13.1. Event of Loss; Condemnation or Casualty.
(a) If an Event of Loss shall occur, Lessee shall give Lessor
and Agent prompt written notice of such occurrence and the date thereof and
Lessee shall purchase the Site(s) affected thereby from Lessor on the next
succeeding Payment Date after the date such Event of Loss shall have occurred at
a purchase price equal to the sum of (A) the Allocated Amount, plus (B) all
accrued but unpaid Rent, plus (C) all other sums due and payable by Lessee to
Lessor, Agent or any Lender with respect to such affected Site(s) under any of
the Operative Documents.
(b) Upon payment in full of all amounts payable pursuant to
Section 13.1(a) and the discharge of the Lien of the Mortgage pursuant to
Section 6.3 thereof, (i) the Lease Term shall end with respect to the affected
Site(s), (ii) the obligations of Lessee hereunder with respect to the affected
Site(s) (other than any obligations expressed herein as surviving termination of
this Lease) shall terminate as of the date of such payment.
SECTION 13.2. Application of Payments Relating to an Event of Loss. All
Net Condemnation Proceeds and property insurance proceeds received at any time
by Lessor, Lessee or Agent from any Authority or other Person with respect to
any Event of Loss of one or more Sites shall be promptly remitted to Lessor and,
in the event Lessee purchases the affected Site(s) pursuant to Section 13.1(a),
be applied against the purchase price payable by Lessee pursuant to Section
13.1(a), and any such Net Condemnation Proceeds and property insurance proceeds
remaining thereafter shall be paid over to, or retained by, Lessee, or as Lessee
may direct.
SECTION 13.3. Application of Certain Payments Relating to a
Condemnation. In case of a requisition for temporary use of all or a portion of
any Site which is not an Event of Taking, this Lease shall remain in full force
and effect, without any abatement or reduction of Rent, and the proceeds
received from any Authority relating to a Condemnation for the affected Site
shall be paid to Lessee, except that any portion of such proceeds that is
awarded with respect to the time period after the expiration or termination of
the Lease Term (unless Lessee shall
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have exercised an option to purchase the Sites and no Lease Payment/Bankruptcy
Default or Lease Event of Default shall have occurred and be continuing) shall
be paid to Lessor; provided, that if Lessee has paid the Lease Balance to
Lessor, such proceeds (or the portion of such proceeds in excess of the portion
thereof applied to payment of the Lease Balance) shall be paid over to Lessee.
SECTION 13.4. Casualty. Upon any Casualty with respect to a Site the
cost of repair of which would exceed $250,000, Lessee shall give to Lessor
written notice thereof. As soon as practicable after a Casualty, Lessee shall
repair and rebuild the affected portions of the Site suffering such Casualty (or
cause such affected portions to be repaired and rebuilt) to the condition
required to be maintained by Section 9.1 hereof; provided, that the value and
functional capability of such item as restored is at least equivalent to the
value and functional capability of such item as in effect immediately prior to
the occurrence of such Casualty. If any insurance proceeds received with respect
to any Casualty shall be in excess of twenty-five percent (25%) of the Allocated
Amount for the applicable Site, the insurance proceeds received with respect to
such Casualty shall be paid over to or retained by Agent (on behalf of the
Participants), to be distributed to Lessee upon completion of such repairs and
rebuilding of the affected portions of the applicable Site in accordance with
the conditions set forth in this Section 13.4; provided that in such event, at
Lessee's request and expense, Agent and Lessee shall enter into an insurance
escrow and disbursement agreement in form and substance reasonably satisfactory
to Agent providing for the disbursement of proceeds (not more often than once
per month and with each monthly disbursement being not less than $100,000) to
Lessee or its contractor during the course of such repair and rebuilding upon
conditions satisfactory to Agent in its reasonable judgment.
SECTION 13.5. Other Dispositions. Notwithstanding the foregoing
provisions of this Article XIII, as long as a Lease Payment/Bankruptcy Default
or Lease Event of Default shall have occurred and be continuing, any amount that
would otherwise be payable to or for the account of, or that would otherwise be
retained by, Lessee pursuant to this Article XIII shall be paid to Agent (or to
Lessor after the Loan Agreement shall have been satisfied and discharged) as
security for the obligations of Lessee under this Lease, shall be invested by
Agent (or Lessor) in accordance with Section 21.18 in Permitted Investments and,
if a Lease Event of Default is continuing, may be applied to the obligations of
Lessee hereunder, and, at such time thereafter as no Lease Payment/Bankruptcy
Default or Lease Event of Default shall be continuing, such amount and gain
thereon shall be paid
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promptly to Lessee to the extent not previously applied in accordance with the
terms of this Lease.
SECTION 13.6. Negotiations. In the event any part of a Site becomes
subject to condemnation or requisition proceedings, Lessee shall give notice
thereof to Lessor and Agent promptly after Lessee has knowledge thereof and, to
the extent permitted by any Applicable Laws and Regulations, Lessee shall
control the negotiations with the relevant Authority unless a Lease
Payment/Bankruptcy Default or Lease Event of Default shall be continuing, in
which case Lessor shall control such negotiations; provided that in any event
Lessor may participate at Lessor's expense (or if a Lease Payment/Bankruptcy
Default or Lease Event of Default shall be continuing, at Lessee's expense) in
such negotiations; and provided in all cases, that no settlement will be made
without Lessor's prior written consent, not to be unreasonably withheld. Lessee
shall give to Lessor and Agent such information, and copies of such documents,
which relate to such proceedings, or which relate to the settlement of amounts
due under insurance policies required by Article XI, and are in the possession
of Lessee, as are reasonably requested by Lessor or Agent. If the proceedings
relate to an Event of Taking, Lessee shall act diligently in connection
therewith.
SECTION 13.7. No Rent Abatement. Rent shall not abate hereunder by
reason of any Casualty, any Event of Loss, any Event of Taking or any
Condemnation of a Site, and Lessee shall continue to perform and fulfill all of
Lessee's obligations, covenants and agreements hereunder notwithstanding such
Casualty, Event of Loss, Event of Taking or Condemnation until the Lease
Termination Date.
ARTICLE XIV
NON-INTERFERENCE
SECTION 14.1. Non-Interference. Lessor covenants that it will not
interfere in Lessee's or any of its Subtenants' use of the Sites in accordance
with this Lease during the Lease Term, so long as no Lease Event of Default has
occurred and is continuing; it being agreed that Lessee's remedies for breach of
the foregoing covenant shall be limited to a claim for damages or the
commencement of proceedings to enjoin such breach. Such right is independent of
and shall not affect Lessor's rights otherwise to initiate legal action to
enforce the obligations of Lessee under this Lease.
SECTION 14.2. Certain Duties and Responsibilities of Lessor. Lessor
undertakes to perform such duties and only such
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duties as are specifically set forth herein and in the other Operative
Documents, and no implied covenants or obligations shall be read into this Lease
against Lessor, and Lessor agrees that it shall not, nor shall it have a duty
to, manage, control, use, sell, maintain, insure, register, lease, operate,
modify, dispose of or otherwise deal with the Sites in any manner whatsoever,
except as required by the terms of the Operative Documents and as otherwise
provided herein; provided that during the continuance of a Lease Event of
Default or a Lease Payment/Bankruptcy Default, Lessor shall have no obligation
to Lessee to perform any such duties.
ARTICLE XV
INSPECTION AND REPORTS
SECTION 15.1. Inspection. Upon five (5) Business Days prior notice to
Lessee, each of Agent, Lessor, any Lender and their respective authorized
representatives (the "Inspecting Parties") may inspect (a) any Site and (b) the
books and records of Lessee relating directly and primarily to the Site and make
copies and abstracts therefrom, but only after material related to matters other
than the Site shall have been redacted therefrom. All such inspections shall be
at the expense and risk of the Inspecting Parties, except that if a Lease Event
of Default or Lease Payment/Bankruptcy Default has occurred and is continuing,
Lessee shall reimburse the Inspecting Parties for the reasonable costs of such
inspections and such inspection shall be at Lessee's risk. Lessee shall furnish
to the Inspecting Parties statements accurate in all material respects regarding
the condition and state of repair of the Sites, all at such times and as often
as may be reasonably requested. No inspection shall unreasonably interfere with
Lessee's operations or the operations of any other occupant of the Sites. None
of the Inspecting Parties shall have any duty to make any such inspection or
inquiry, and none of the Inspecting Parties shall incur any liability or
obligation by reason of not making any such inspection or inquiry. None of the
Inspecting Parties shall incur any liability or obligation by reason of making
any such inspection or inquiry unless and to the extent, so long as no Lease
Event of Default has occurred and is continuing at the time of inspection, such
Inspecting Party causes damage to the Site or any property of Lessee or any
other Person during the course of such inspection.
SECTION 15.2. Reports. To the extent permissible under Applicable Laws
and Regulations, Lessee shall prepare and file in timely fashion, or, where
Lessor shall be required to file, Lessee shall prepare and make available to
Lessor and Agent
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within a reasonable time prior to the date for filing and Lessor shall file, any
reports with respect to the condition or operation of the Sites that shall be
required to be filed with any Authority.
ARTICLE XVI
OWNERSHIP, GRANT OF SECURITY INTEREST
AND FURTHER ASSURANCES
SECTION 16.1. Grant of Security Interest. Lessee hereby assigns, grants
and pledges to Lessor for the benefit of Agent and the Lenders a security
interest in and Lien against all of Lessee's right, title and interest, whether
now or hereafter existing or acquired, in the Sites and proceeds therefrom, to
secure the payment and performance of all obligations of Lessee now or hereafter
existing under this Lease or any other Operative Document. Lessee shall, at its
expense, do any further act and execute, acknowledge, deliver, file, register
and record any further documents which Lessor or any Lender may reasonably
request in order to protect Lessor's title to and their perfected Lien in the
Sites, subject to no Liens other than Permitted Liens, and Lessor's rights and
benefits under this Lease. Lessee shall promptly and duly execute and deliver to
Lessor such documents and assurances and take such further actions as Lessor or
any Lender may from time to time reasonably request in order to carry out more
effectively the intent and purpose of this Lease and the other Operative
Documents, to establish and protect the rights and remedies created or intended
to be created in favor of Lessor hereunder and thereunder, and to establish,
perfect and maintain the right, title and interest of Lessor in and to the
Sites, subject to no Lien other than Permitted Liens, or of such financing
statements or fixture filings or other documents with respect hereto as Lessor
or any Lender may from time to time reasonably request, and Lessee agrees to
execute and deliver promptly such of the foregoing financing statement and
fixture filings or other documents as may require execution by Lessee. To the
extent permitted by Applicable Laws and Regulations, Lessee hereby authorizes
any such financing statement and fixture filings to be filed without the
necessity of the signature of Lessee. Upon Lessee's request, Lessor shall at
such time as all of the obligations of Lessee under this Lease or any other
Operative Documents have been indefeasibly paid or performed in full (other than
Lessee's contingent obligations, if any, under Article VII of the Participation
Agreement) execute and deliver termination statements and other appropriate
documentation reasonably requested by Lessee, all at Lessee's expense, to
evidence Lessor's release of its Lien against the Sites.
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SECTION 16.2. Attorney-in-Fact. Lessee hereby irrevocably appoints
Agent as Lessee's attorney-in-fact, with full authority in the place and stead
of Lessee and in the name of Lessee or otherwise, from time to time in Lessor's
discretion, upon the occurrence and during the continuance of a Lease Event of
Default, to take any action (including any action that Lessee is entitled to
take) and to execute any instrument which Lessor may deem necessary or advisable
to accomplish the purposes of this Lease (subject to any limitations set forth
in the Operative Documents), including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for money due and to become due under
or in connection with the Sites;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the foregoing clause
(a);
(c) to file any claim or take any action or institute any
proceedings which Lessor may deem to be necessary or advisable for the
collection thereof or to enforce compliance with the terms and conditions of the
Lease; and
(d) to perform any affirmative obligations of Lessee
hereunder.
Lessee hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 16.2 is irrevocable and coupled with an
interest.
ARTICLE XVII
LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following events,
whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, shall constitute a "Lease Event of
Default":
(a) Lessee shall fail to make any payment (i) of any
Supplemental Rent payable to Agent or any Participant or of Basic Rent when due
and such failure shall continue for a period of five days, or (ii) of amounts
payable pursuant to the exercise of the Sale Option, or amounts payable pursuant
to Section 13.1, when due, or (iii) of Supplemental Rent payable to any Person
other than Agent or a Participant and such failure under this
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clause (iii) shall continue for a period of five days after notice to Lessee
from any Person of such failure; provided that Lessee shall not be entitled to
any five-day grace or cure period under this clause (a) with respect to any
payment of the Lease Balance under Section 6.2 or Section 6.5, or Proceeds or
the Applicable Percentage Amount under Section 6.4(b) or Section 6.9(a);
(b) Lessee or any Guarantor shall fail to make any payment of
any other amount payable hereunder or under any of the other Operative Documents
(other than the Construction Agency Agreement) and such failure shall continue
for a period of five days after such amount first became due and payable (or in
the case of any payment to any Person other than Agent or any Participant, such
failure shall continue for a period of five days after notice to Lessee from any
Person of such failure);
(c) Lessee shall (i) fail to maintain insurance as required by
Section 11.1, or (ii) default in the performance or observance of any term,
covenant, condition or agreement on its part to be performed or observed under
Section 5.2, 5.3, 5.4, 5.7 or 5.11 of the Participation Agreement;
(d) any representation or warranty by Lessee or any Guarantor
in any Operative Document or in any certificate or document (including any
Advance Request) delivered to Lessor, Agent or any Lender pursuant to any
Operative Document shall have been incorrect in any material respect when made
and shall remain material when discovered and if curable shall continue for a
period of 30 days; provided that if Lessee or such Guarantor shall commence such
cure within said 30-day period and shall diligently be pursuing such cure, then
said 30-day period shall be extended to 90 days;
(e) Lessee or any Guarantor shall fail in any material respect
timely to perform or observe any covenant, condition or agreement (not included
in any other clause of this Article XVII) to be performed or observed by it
hereunder or under any other Operative Document and such failure shall continue
for a period of 30 days; provided that if Lessee or such Guarantor shall
commence such cure within said 30-day period and shall diligently be pursuing
such cure, then said 30-day period shall be extended to 90 days;
(f) (i) Lessee or any Guarantor shall generally fail to pay,
or admit in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any case or proceeding or file any petition under any
bankruptcy, insolvency or similar law or seeking dissolution, liquidation or
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reorganization or the appointment of a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, or shall
file any answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition filed against it in any bankruptcy,
insolvency or similar case or proceeding, or shall be adjudicated bankrupt, or
shall make a general assignment for the benefit or creditors, or shall consent
to, or acquiesce in the appointment of, a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business, or (ii) corporate action shall be taken by Lessee or any Guarantor for
the purpose of effectuating any of the foregoing;
(g) involuntary proceedings or an involuntary petition shall
be commenced or filed against Lessee or any Guarantor under any bankruptcy,
insolvency or similar law or seeking the dissolution, liquidation or
reorganization of Lessee or the appointment of a receiver, trustee, custodian or
liquidator for Lessee or any Guarantor or of a substantial part of the property,
assets or business of Lessee or any Guarantor or, any writ, judgment, warrant of
attachment, execution or similar process shall be issued or levied against a
substantial part of the property, assets or business of Lessee or any Guarantor,
and such proceedings or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded, within 30 days after commencement, filing or levy, as
the case may be;
(h) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against Lessee
or any Guarantor or any Subsidiary of any Guarantor, and such judgment or
judgements remain undischarged, unbonded, unstayed or unsatisfied for a period
(during which execution shall be effectively stayed) of 30 days; provided, that
the aggregate of all such judgments exceeds $500,000;
(i) Lessee or any Guarantor shall directly or indirectly
contest the validity of any Operative Document in any manner in any court of
competent jurisdiction or the Lien granted by this Lease or any Mortgage;
(j) (A) an event of default shall occur in the payment when
due (subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness of Lessee or any Guarantor or any Subsidiary of
any Guarantor that individually or in the aggregate exceeds $1,000,000 or (B)
any
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other event of default shall occur with respect to any Indebtedness of Lessee or
any Guarantor or any Subsidiary of any Guarantor that individually or in the
aggregate exceeds $1,000,000;
(k) Any one or more Pension-Related Events referred to in
subsection (a)(ii), (b) or (e) of the definition of "Pension- Related Event"
shall have occurred; or any one or more other Pension-Related Events shall have
occurred and the Agent shall determine in good faith (which determination shall
be conclusive) that such other Pension-Related Events, individually or in the
aggregate, could have a Material Adverse Effect;
(l) either of the Guaranties shall no longer be in full force
and effect; or
(m) an Event of Default (as defined in the Credit Agreement)
shall occur under the Credit Agreement.
ARTICLE XVIII
ENFORCEMENT
SECTION 18.1. Remedies. Upon the occurrence of a Lease Event of
Default, at Lessor's option and without limiting Lessor in the exercise of any
other right or remedy Lessor may have on account of such default (including,
without limitation, the obligation of Lessee to purchase the Sites as set forth
below), and without any further demand or notice, Lessor may cause the following
to occur:
(i) By notice to Lessee, Lessor may terminate
Lessee's right to possession of the Sites. A notice given in connection
with unlawful detainer proceedings specifying a time within which to
cure a default shall terminate Lessee's right to possession if Lessee
fails to cure the default within the time specified in the notice.
(ii) Upon termination of Lessee's right to possession
and without further demand or notice, Lessee shall surrender possession
and vacate the Sites and deliver possession thereof, and Lessor may
re-enter the Sites and remove any persons in possession thereof.
(iii) Upon termination of Lessee's right to
possession, this Lease shall terminate and Lessor may declare to be
immediately due and payable, and Lessor shall be entitled to (x)
recover from Lessee the following amounts and (y) take the following
actions:
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(A) Lessee shall pay all accrued and unpaid
Rent hereunder (including, without
limitation, Basic Rent and Supplemental
Rent) which had been earned at the time of
termination;
(B) Lessor may elect any of the following:
(1) Lessor may demand, by written notice to
the Lessee specifying a Payment Date (the
"Final Rent Payment Date") not earlier than
ten (10) days after the date of such notice,
that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the Final Rent Payment
Date (in lieu of Basic Rent due after the
Final Rent Payment Date), an amount equal to
the sum of (A) the Lease Balance computed as
of the Final Rent Payment Date, plus (B) all
accrued and unpaid Rent due and unpaid to
and including the Final Rent Payment Date,
and upon payment of such amount, and the
amount of all other sums due and payable by
Lessee under this Lease and the other
Operative Documents (and interest at the
Overdue Rate on the amounts payable under
this clause (B)(1) from the Final Rent
Payment Date to the date of actual payment),
Lessor shall transfer by quitclaim deed to
Lessee all of Lessor's right, title and
interest in and to the Sites without
recourse or warranty, but free and clear of
Lessor Liens; or
(2) Lessor may sell its interest in the
Sites, in which event Lessee shall pay to
Lessor an amount equal to the excess, if
any, of (x) all amounts due Lessor under
clause (B)(1) above over (y) the net sale
proceeds received by Lessor from the
foregoing sale (provided, that in
calculating such net sale proceeds, all
expenses and taxes incurred by Lessor, Agent
or any of the Lenders in connection with
such sale, including, without limitation,
legal fees, shall be deducted from such
sales proceeds);
(C) Any other amount necessary to compensate
Lessor for all actual damages caused by
Lessee's failure to perform Lessee's
obligation under this Lease or which in the
ordinary course of things would be likely to
result therefrom, including, but not limited
to, the costs and
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expenses (including without limitation,
reasonable attorneys' fees, advertising
costs and brokers' commissions) of
recovering possession of the Sites, removing
persons or property therefrom, placing the
Sites in good order, condition, and repair,
preparing and altering the Sites for
reletting, and all other costs and expenses
of reletting; and
(D) Such other amounts in addition to or in
lieu of the foregoing as may be permitted
from time to time by applicable law.
(iv) Lessor may enforce the Lien given hereunder
pursuant to Section 16.1 hereof, Section 11 of the Lease Supplements,
the Uniform Commercial Code or any other law.
(v) If Lessee has breached this Lease and abandoned
the Site, this Lease shall continue in effect for so long as Lessor
does not terminate Lessee's right to possession, and Lessor may enforce
all of Lessor's rights and remedies under this Lease, including the
right to recover the Rent hereunder (including, without limitation,
Basic Rent and Supplemental Rent) as it becomes due under this Lease.
Lessee's right to possession shall not be deemed to have been
terminated by Lessor except pursuant to clause (i) above. The following
do not constitute a termination of Lessee's right to possession:
(A) Acts of maintenance or preservation or
efforts to relet the Sites;
(B) The appointment of a receiver upon the
initiative of Lessor to protect Lessor's
interest under this Lease;
(C) Reasonable withholding of consent to an
assignment or subletting, or terminating a
subletting or assignment by Lessee.
(vi) In the event that Lessor elects to continue this
Lease in full force and effect, Lessor may enforce all its rights and
remedies under this Lease, including, but not limited to, the right to
recover Rent hereunder (including, without limitation, Basic Rent and
Supplemental Rent) as it becomes due. During the continuance of a Lease
Event of Default, Lessor may enter the Sites in accordance with
applicable law without terminating this Lease and sublet all or any
part of the Sites for Lessee's account to any Person, for such term
(which may be a period beyond the remaining
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Lease Term), at such rents and on such other terms and conditions as
are commercially reasonable. In the event of any such subletting, rents
received by Lessor from such subletting shall be applied (i) first, to
the payment of the reasonable costs incurred by Lessor in maintaining,
preserving, altering and preparing the Sites for subletting and other
costs of subletting, including, but not limited to, brokers'
commissions and attorneys' fee; (ii) second, to the payment of Rent
hereunder (including, without limitation, Basic Rent and Supplemental
Rent) then due and payable; (iii) third, to the payment of future Rent
hereunder (including, without limitation, Basic Rent and Supplemental
Rent) as the same may become due and payable hereunder; (iv) fourth, to
the payment of all other obligations of Lessee hereunder, and (v)
fifth, the balance, if any, shall be paid to Lessee upon (but not
before) expiration of the Lease Term. If the rents received by Lessor
from such subletting, after application as provided above, are
insufficient in any period to pay the Rent (including, without
limitation, Basic Rent and Supplemental Rent) due and payable hereunder
for such period, Lessee shall pay such deficiency to Lessor upon
demand. Notwithstanding any such subletting for Lessee's account
without termination, Lessor may at any time thereafter, by written
notice to Lessee, elect to terminate this Lease by virtue of a previous
Lease Event of Default.
Upon (but not before) and during the continuance of a Lease
Event of Default, if Lessee has abandoned the Sites, for so long as
Lessor does not terminate Lessee's right to possession of the Sites,
Lessor shall not unreasonably withhold its approval to a sublease of
the Sites; provided, however, that Lessor's withholding of such consent
shall not be deemed unreasonable upon the standard contained in Section
12.1.
(vii) Lessor may exercise any other right or remedy
that may be available to it under Applicable Laws and Regulations or in
equity, or proceed by appropriate court action (legal or equitable) to
enforce the terms or to recover damages for the breach hereof. Separate
suits may be brought to collect any such damages for any Rent
Installment Period(s), and such suits shall not in any manner prejudice
Lessor's right to collect any such damages for any subsequent Rent
Installment Period(s), or Lessor may defer any such suit until after
the expiration of the Basic Term or any Renewal Term, in which event
such suit shall be deemed not to have accrued until the expiration of
the Basic Term, or such Renewal Term; or
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(viii) Lessor may retain and apply against Lessor's
damages all sums which Lessor would, absent such Lease Event of
Default, be required to pay to, or turn over to, Lessee pursuant to the
terms of this Lease.
(ix) Lessor may exercise the remedies described in
Section 11 of the Lease Supplement.
In addition to the foregoing, Lessee acknowledges that (i) pursuant to the
Collateral Agency Agreement and the Security Agreement, the Joint Stock
Collateral constitutes additional security for the payment and performance of
Lessee's obligations under this Lease and the other Operative Documents, and
(ii) the Guaranty and Agreement of Suretyship Regarding Obligations Lessee and
Affiliates, as it may be amended from time to time, which constitutes one of the
Guaranties shall constitute further additional security for, among other things,
the payment and performance of Lessee's obligations under this Lease and the
other Operative Documents.
SECTION 18.2. Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by Lessor at any time when a Lease Event of Default
shall have occurred and be continuing and after the Lease Balance shall have
been accelerated pursuant to Article XVIII as well as all payments or amounts
then held or thereafter received by Lessor, except for rents received by Lessor
from subletting pursuant to Section 18.1(vi) and the proceeds of sale pursuant
to Section 11 of the Lease Supplements, shall be distributed forthwith upon
receipt by Lessor in the following order of priority:
first: so much of such payments or amounts as shall be
required to reimburse Lessor for any tax (other than any income tax
payable on Basic Rent or interest and on fees and other compensation of
Lessor), expense or other amount owed to Lessor in connection with the
collection or distribution of such payments or amounts to the extent
not previously reimbursed by Lessee (including, without limitation, the
expenses of any sale, taking or other proceeding, expenses in
connection with realizing on any of the Sites, reasonable attorneys'
fees and expenses (including the allocated costs of internal counsel),
court costs and any other reasonable expenditures incurred or
reasonable expenditures or advances made by Lessor in the protection,
exercise or enforcement of any right, power or remedy upon such Lease
Event of Default whether pursuant to Article XVII or otherwise) shall
be so applied by Lessor;
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second: so much of such payments or amounts except those
specified in clause third below, which under the terms of this Lease
and the other Operative Documents have accrued shall be so applied;
third: so much of such payments or amounts remaining as shall
be required to pay Agent (on behalf of the Participants) in full the
aggregate unpaid Lease Balance and all Basic Rent (including, to the
extent permitted by applicable law, interest on interest) shall be so
applied (to be distributed by Agent pursuant to Section 3.3 of the Loan
Agreement); and
fourth: so much of such payments or amounts as shall remain
shall be distributed to Lessee.
SECTION 18.3. Grant and Foreclosure on Lessee's Estate. Each Lease
Supplement shall contain a provision by which Lessee grants to a trustee, in
trust, with power of sale, or grants a mortgage lien to Lessor in, all of
Lessee's right, title and interest in and to the Sites subject to each such
Lease Supplement and, upon the occurrence of a Lease Event of Default, granting
Lessor the power and authority, after fulfillment of certain conditions, to
cause the trustee to sell, or foreclose its mortgage lien against, the Sites.
SECTION 18.4. Remedies Cumulative; No Waiver; Consents. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Laws and
Regulations, each and every right, power and remedy herein specifically given to
Lessor or otherwise in this Lease shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any right, power or remedy. No delay or omission
by Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of Lessee or be an acquiescence therein.
Lessor's consent to any request made by Lessee shall not be deemed to constitute
or preclude the necessity for obtaining Lessor's consent, in the future, to all
similar requests. No express or implied waiver by Lessor of any Lease Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Default or Lease
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Event of Default. To the extent permitted by Applicable Laws and Regulations,
Lessee hereby waives any rights now or hereafter conferred by statute or
otherwise that may require Lessor (i) to provide any notice to Lessee, or (ii)
to sell, lease or otherwise use the Site or part thereof in mitigation of
Lessor's damages, or (iii) to take any other action, upon the occurrence of a
Lease Event of Default, or that may otherwise limit or modify any of Lessor's
rights or remedies under this Article XVIII.
ARTICLE XIX
RIGHT TO PERFORM FOR LESSEE
If Lessee shall fail to perform or comply with any of its
agreements contained herein, Lessor may, but shall not be obligated to, on five
Business Days' prior notice to Lessee (except in the event of an emergency, in
which case only one Business Day's prior notice shall be required), perform or
comply with such agreement, and Lessor shall not thereby be deemed to have
waived any default caused by such failure, and the amount of such payment and
the amount of the expenses of Lessor (including reasonable attorneys' fees and
expenses) incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Overdue Rate, shall be deemed Supplemental Rent, payable by
Lessee to Lessor upon demand; provided that in the case of an emergency Lessee
shall permit Lessor so to perform or comply on less than one Business Day's
notice unless Lessee has a good faith reason not to permit Lessor to do so.
ARTICLE XX
LESSOR LIENS
In the event that Lessor shall be obligated to remove any Lessor Liens
from the Sites and shall fail to do so, Lessee shall have a claim against Lessor
for such failure, but shall not have any right of offset.
ARTICLE XXI
MISCELLANEOUS
SECTION 21.1. Binding Effect; Successors and Assigns; Survival. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor, Lessee, Agent and the Lenders shall be binding upon them
and their respective successors, legal representatives and assigns
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(including, in the case of Lessor, any Person to whom Lessor may transfer the
Sites or any interest therein in accordance with the provisions of the Operative
Documents), and inure to their benefit and the benefit of their respective
permitted successors, legal representatives and assigns.
SECTION 21.2. Severability. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and Lessee shall remain
liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Laws and Regulations,
Lessee hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
SECTION 21.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be in writing and shall be delivered and shall be deemed to have
been given in accordance with Section 9.3 of the Participation Agreement.
SECTION 21.4. Amendment; Complete Agreements. Neither this Lease nor
any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification shall be sought. This Lease, together with the other Operative
Documents, is intended by the parties as a final expression of their agreement
and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein and therein. No course of prior dealings between the parties
or their officers, employees, agents or Affiliates shall be relevant or
admissible to supplement, explain, or vary any of the terms of this Lease or any
other Operative Document. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement between the parties or
their Affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease or any other Operative Document. No
representations, undertakings, or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth in the
Operative Documents.
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SECTION 21.5. Headings. The Table of Contents and headings of the
various Articles and Sections of this Lease are for convenience of reference
only and shall not modify, define or limit any of the terms or provisions
hereof.
SECTION 21.6. Original Lease. The single executed original of this
Lease containing the receipt of Lessor therefor on or following the signature
page thereof shall be the "original executed counterpart" of this Lease. To the
extent that this Lease constitutes chattel paper, as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the "original executed counterpart".
SECTION 21.7. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE
CREATION, PERFECTION AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE
EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE APPLICABLE SITE
IS LOCATED.
SECTION 21.8. Discharge of Lessee's Obligations by its Affiliates.
Lessor agrees that performance of any of Lessee's obligations hereunder by one
or more of its Affiliates or one or more sublessees of the Site or any part
thereof shall constitute performance by Lessee of such obligations to the same
extent and with the same effect hereunder as if such obligations were performed
by Lessee, but no such performance shall excuse Lessee from any obligation not
performed by it or on its behalf under the Operative Documents.
SECTION 21.9. Liability of Lessor Limited. The parties hereto agree
that Lessor shall have no personal liability whatsoever to Lessee or its
respective successors and assigns for any Claim based on or in respect of this
Lease or any of the other Operative Documents or arising in any way from the
transactions contemplated hereby or thereby; provided, however, that Lessor
shall be liable in its individual capacity for (i) Lessor Liens required to be
removed by Lessor under Section 6.2(a) of the Participation Agreement and (ii)
its own willful misconduct or gross negligence. It is understood and agreed
that, except as provided in the preceding proviso: (i) Lessor shall have no
personal liability under any of the Operative Documents; (ii) all obligations of
Lessor to Lessee are solely nonrecourse obligations, recourse being limited to
its interest
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in the Sites and the Operative Documents (excluding Excluded Amounts); and (iii)
all such personal liability of Lessor is expressly waived and released as a
condition of, and as consideration for, the execution and delivery of the
Operative Documents by Lessor.
SECTION 21.10. Estoppel Certificates. Each party hereto agrees that at
any time and from time to time during the Lease Term, it will promptly, but in
no event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchaser has signed a commitment letter or
letter of intent to purchase the Sites or any part thereof or to purchase any
Note), assignee or mortgagee or third party designated by such other party, a
certificate stating (a) that this Lease is unmodified and in force and effect
(or if there have been modifications, that this Lease is in force and effect as
modified, and identifying the modification agreements); (b) the date to which
Basic Rent has been paid; (c) in the case of an estoppel certificate to be given
by Lessee, whether or not there is any existing default by Lessee in the payment
of Basic Rent or any other sum of money hereunder, and whether or not there is
any other existing Lease Default or Lease Event of Default with respect to which
a notice of default has been served, and, if there is any such default,
specifying the nature and extent thereof; (d) in the case of an estoppel
certificate to be given by Lessee, whether or not, to the knowledge of Lessee
after due inquiry and investigation, there are any purported setoffs, defenses
or counterclaims against enforcement of the obligations to be performed
hereunder existing in favor of Lessee; and (e) other items that may be
reasonably requested; provided that no such certificate may be requested unless
the requesting party has a good faith reason for such request. In addition,
Lessee, promptly, but in no event later than thirty days after request by any
other party hereto, shall obtain and deliver to such other party or to any
prospective purchaser (if such prospective purchaser has signed a commitment
letter or letter of intent to purchase the Site or any part thereof or to
purchase any Note), assignee, mortgagee or third party designated by such other
party, an estoppel certificate from each Subtenant under each Sublease
containing such items as reasonably requested by the party requesting the same;
provided that no such certificate may be requested unless the requesting party
has a good faith reason for such request.
SECTION 21.11. No Joint Venture. Any intention to create a joint
venture or partnership relation between Lessor and Lessee is hereby expressly
disclaimed.
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SECTION 21.12. No Accord and Satisfaction. The acceptance by Lessor of
any sums from Lessee (whether as Basic Rent or otherwise) in amounts which are
less than the amounts due and payable by Lessee hereunder is not intended, nor
shall be construed, to constitute an accord and satisfaction of any dispute
between Lessor and Lessee regarding sums due and payable by Lessee hereunder,
unless the Required Participants specifically deem it as such in writing.
SECTION 21.13. No Merger. In no event shall the Leasehold Estate of
Lessee hereunder, or the rights and interests of the holder of any Notes secured
by a Lien in this Lease, merge with any interests, estates or rights of Lessor
in or to the Site, it being understood that such Leasehold Estate of Lessee
hereunder, and the rights and interests of the holder of any Notes secured by a
Lien in this Lease, shall be deemed to be separate and distinct from Lessor's
interests, estates and rights in or to the Site, notwithstanding that any such
interests, estates or rights shall at any time or times be held by or vested in
the same Person.
SECTION 21.14. Successor Lessor. Lessee agrees that, in the case of any
transfer of the Sites to a successor Lessor in accordance with the provisions of
Section 6.2 of the Participation Agreement from time to time, such successor
Lessor shall, upon written notice by such successor Lessor to Lessee, succeed to
all the rights, powers and title of Lessor hereunder and shall be deemed to be
Lessor for all purposes hereof and without in any way altering the terms of this
Lease or Lessee's obligations hereunder. Such transfer to a successor Lessor
shall not exhaust the right to any further transfer to another successor Lessor
pursuant to said Section 6.2, but such right may be exercised repeatedly as long
as this Lease shall be in effect.
SECTION 21.15. Survival. The obligations of Lessee to be performed
under this Lease prior to the Lease Termination Date and the obligations of
Lessee pursuant to Sections 4.1, 4.2, 4.4, 4.5, Article XVIII and Section 21.1
shall survive the expiration or termination of this Lease. The extension of any
applicable statute of limitations by Lessor, Agent, Lessee or any other
Indemnitee shall not affect such survival.
SECTION 21.16. Transfer of Sites to Lessee or any other Person.
Whenever pursuant to any provision of this Lease Lessor is required to transfer
the Sites to Lessee or to any other Person, such transfer shall be made at
Lessee's expense (including, without limitation, all costs of conveyance,
applicable transfer taxes and recording fees without regard to local custom) by
the quitclaim transfer of all of Lessor's right,
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title and interest in and to the Sites on an "as is, where is, with all faults"
basis free and clear of all Lessor Liens, but subject to the Lien of the Loan
Agreement if and to the extent it may then attach, and otherwise without
recourse, representation or warranty of any kind, and together with the due
assumption by Lessee (or such third party) of, and due release of Lessor from,
all obligations relating to the Sites or the Operative Documents. Any provision
in this Lease or other Operative Document to the contrary notwithstanding,
Lessor shall not be obligated to make any such transfer until Lessor has
received all Rent and other amounts due and owing hereunder.
SECTION 21.17. Enforcement of Certain Warranties.
(a) Unless a Lease Event of Default shall have occurred and be
continuing, Lessor authorizes Lessee (directly or through agents), at Lessee's
expense, to assert, during the Lease Term, all of Lessor's rights (if any) under
any applicable warranty and any other claim that Lessee or Lessor may have under
the warranties provided to Lessor in connection with the purchase, of the Sites
and Lessor agrees to cooperate, at Lessee's expense, with Lessee and its agents
in asserting such rights. Any amount recovered by Lessee under any such
warranties shall be paid to Lessee.
(b) Notwithstanding the foregoing provisions of this Section
21.17, so long as a Lease Event of Default or Lease Payment/Bankruptcy Default
shall have occurred and be continuing, any amount that would otherwise be
retained by Lessee pursuant to Section 21.17(a) shall be paid to Lessor as
security for the obligations of Lessee under this Lease, shall be invested by
Lessor in accordance with Section 21.18 in Permitted Investments and, if a Lease
Event of Default is continuing, may be applied to the obligations of Lessee
hereunder, and, at such time thereafter as no Lease Event of Default or Lease
Payment/Bankruptcy Default shall be continuing, such amount and gain thereon
shall be paid promptly to Lessee to the extent not previously applied in
accordance with the terms of this Lease.
SECTION 21.18. Investment of Security Funds. Any amounts not payable to
Lessee and paid to or retained by Lessor pursuant to any provision hereof solely
because a Lease Event of Default or Lease Payment/Bankruptcy Default shall have
occurred and be continuing or because Lessee shall not have performed in full
its obligations under Article XIII shall be held by Lessor as security for the
obligations of Lessee under this Lease and the other Operative Documents. At
such time as no Lease Event of Default or Lease Payment/Bankruptcy Default, or
failure to perform shall be continuing, such amounts, net of any amounts
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previously applied to Lessee's obligations hereunder or under any other
Operative Documents, shall be paid to Lessee. Any such amounts which are held
pending payment to Lessee or application hereunder shall be invested by Lessor
(or Agent) as directed from time to time in writing by Lessee (provided,
however, if a Lease Event of Default has occurred and is continuing it will be
directed by Lessor), and at the expense and risk of Lessee, in Permitted
Investments. Any gain (including interest received) realized as the result of
any such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) shall be applied from time to time
in the same manner as the principal invested. Lessee will promptly pay to Lessor
on demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other expenses, if any, incurred in
connection with such investment), such amount to be held, paid and applied in
the same manner as other amounts subject to this Section 21.18.
SECTION 21.19. Recording of Lease Supplements. Concurrently with the
execution and delivery of this Lease and concurrently with the execution and
delivery of each Lease Supplement, Lessor and Lessee shall execute, acknowledge
and cause to be recorded each such Lease Supplement in the official records of
each County where the Site(s) that are the subject of this Lease or such Lease
Supplement are located. Notwithstanding the execution, delivery and recording of
any such Lease Supplement, the terms, covenants and conditions of this Lease
shall control.
SECTION 21.20. Nature of Transaction. (a) It is the intent of the
parties hereto that: (i) the transaction contemplated hereby constitutes an
operating lease from Lessor to Lessee for purposes of Lessee's financial
reporting, (ii) the transaction contemplated hereby preserves ownership in the
Sites to Lessee for purposes of Federal and state tax and bankruptcy purposes,
(iii) Lessee, pursuant to the Lease, grants a security interest or lien, as the
case may be, in the Sites and the other Collateral to Lessor, (iv) for purposes
of Federal and state tax and bankruptcy purposes, the payment by Lessee of the
portions of Basic Rent described in clauses (i) and (ii) of the definition
thereof shall be treated as payments of interest, and the payment by Lessee of
the portions of Basic Rent described in clause (iii) of the definition thereof
and any other amounts in respect of the Lease Balance shall be treated as
repayments of principal, and (v) the Mortgage and Assignment of Lease create a
lien and security interest in the Sites, subject to certain limited exceptions.
Nevertheless, Lessee acknowledges and agrees that none of Lessor, Agent or any
Lender has provided or will provide
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tax, accounting or legal advice to Lessee regarding the Overall Transaction or
made any representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Documents and that Lessee has obtained and
relied upon such tax, accounting and legal advice concerning the Operative
Documents as it deems appropriate.
(b) Specifically, without limiting the generality of subsection (a) of
this Section 21.20, but understanding that the parties' characterization is not
the sole determinant of the issue, the parties hereto intend and agree that with
respect to the nature of the transactions evidenced by this Lease in the context
of the exercise of remedies under the Operative Documents, relating to and
arising out of any insolvency or receivership proceedings or a petition under
the United States bankruptcy laws or any other applicable insolvency laws or
statute of the United States of America or any State or Commonwealth thereof
affecting Lessee, Lessor or any Lender or any enforcement or collection actions,
the transactions evidenced by the Operative Documents are loans made by the
Lenders as unrelated third party lenders to Lessee secured by the Sites.
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IN WITNESS WHEREOF, the undersigned have each caused this
Lease to be duly executed and delivered by their respective officers thereunto
duly authorized as of the day and year first above written.
MELLON FINANCIAL SERVICES
CORPORATION #4, as Lessor
By:_____________________________________________________
Name Printed: Robert C. Carpenter
Title: Assistant Vice President
Address:
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
By:______________________________________________________
Name Printed: ___________________________________________
Title: __________________________________________________
Address:
148 West State Street
Kennett Square, PA 19348
Attn: George V. Hager, Jr.
55
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Lease Agreement
RECEIPT FOR COUNTERPART NO. 1
MELLON BANK, N.A., as Agent
By:______________________________________________________
Name Printed: Carol Paige
Title: Vice President
56
<PAGE>
Lease Agreement
STATE OF PENNSYLVANIA )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of _______________, State of Pennsylvania, this
____ day of October, 1996, by Carol Paige, as Vice President of MELLON BANK,
N.A., a national banking association, on behalf of the such national banking
association.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
57
<PAGE>
Lease Agreement
STATE OF PENNSYLVANIA )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of ______, State of Pennsylvania, this ____ day of
October, 1996, by ___________________, as _________ of GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation, on behalf of the corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires: _____________________
58
<PAGE>
Lease Agreement
STATE OF PENNSYLVANIA )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of ______, State of Pennsylvania, this ____ day of
October, 1996, by Robert C. Carpenter, as Assistant Vice President of MELLON
FINANCIAL SERVICES CORPORATION #4, a Pennsylvania corporation, on behalf of the
corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires: ____________________
59
<PAGE>
Lease Agreement
SCHEDULE I
to
LEASE AGREEMENT
DESCRIPTION OF INITIAL SITES
Atlantis Rehabilitation and Health Care Center
Old Congress Road, Lantana, Florida;
Bowman's Health Care Center
South Ridgewood, Ormand Beach, Florida;
Eagle Crest Nursing Center
Parental Home Road, Jacksonville, Florida;
Oakwood Rehabilitation and Health Care Center
South East Bay Street, Eustis, Florida;
Tierra Pines Health Care Center
Ulmerton Road, Largo, Florida;
Woodlands Nursing Center
North 46th Street, Tampa, Florida;
Williamsburg Health Care and Rehabilitation Center
Mount Vernon Avenue, Williamsburg, Virginia;
Winham
Main Street, Route 240, Crozet, Virginia;
Woodmont Health Care Center
Dairy Lane, Fredrickburg, Virginia
Attached hereto are legal descriptions for the above-described Sites.
<PAGE>
Lease Agreement
Atlantis
Legal Description
A tract of land in Section 6, Township 45 South, Range 43 East, Palm Beach
County, Florida, said parcel of land being specifically described as follows, to
wit:
BEGINNING at a point 33.00 feet West of the East line of said Section 6 and
40.00 feet South of the North line of said Section; thence bear South 00(degree)
10' 40" West, along a line parallel to and 33.00 feet West of, as measured at
right angles to, the East line of said Section 6, a distance of 257.00 feet;
thence North 89(degree) 55' 30" West, along a line parallel to the North line of
said Section, a distance of 350.20 feet; thence North 00(degree) 10' 40" East,
along a line parallel to the East line of said Section, a distance of 257 feet
to a point on the South right-of-way line of the Lake Worth Drainage District
Lateral No. 16; thence South 89(degree) 55' 30" East along said South
right-of-way line, said line being parallel to and 40.00 feet South of, as
measured at right angles to, the North line of said Section, a distance of
350.20 feet to the POINT OF BEGINNING.
Said lands situate, lying and being in Palm Beach County, Florida.
Tax Assessor's No. PCN 00-43-45-06-00-000-1051
2
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Lease Agreement
Bowman's
Legal Description
Lots 7, 8, 9, 10, 11 and 12, Block 2, HAND TRACT IN THE THOMAS FITCH GRANT,
according to the map thereof, as recorded in Map Book P, Page 1, of the Public
Records of Volusia County, Florida.
3
<PAGE>
Lease Agreement
Eagle Crest
Legal Description
That certain piece, parcel or tract of land, situate, lying and being a part of
Farm 10, as shown on the Plat of Love Grove Farms, as recorded in Plat Book 7,
page 3 of the current public records of Duval County, Florida, and being more
particularly described as follows: Beginning at the Southeast corner of those
lands shown on Plat of Sans Souci Estates Unit 2, as recorded in Plat Book 29
page 25 of said public records, said point also being the Southwest corner of
said Farm 10; thence North 2 degrees 06 minutes 20 seconds East along the East
line of said Sans Souci Estates, Unit 2, 342.62 feet; thence North 78 degrees 33
minutes 20 seconds East, 608.72 feet to the Southwesterly right of way line of
Dean Road (a 50-foot right of way as now established by possession and usage);
thence South 19 degrees 20 minutes 20 seconds East along said Southwesterly
right of way line of Dean Road, 215.28 feet to its intersection with the
Westerly right of way line of Parental Home Road (a 66-foot right of way as now
established); thence South 8 degrees 14 minutes 00 seconds West along said
Westerly right of way line of Parental Home Road, 286.04 feet to its
intersection with the South line of said Farm 10; thence North 87 degrees 56
minutes 10 seconds West along said South line of Farm 10, 639.95 feet to the
point of beginning.
4
<PAGE>
Lease Agreement
Oakwood
Legal Description
A tract of land located in the City of Eustis, Section 11, Township 19 South,
Range 26 East, Lake County, Florida, and being Lots 1 to 16, inclusive, of Block
34, in Pendryville, a subdivision in the City of Eustis, Florida, according to
the plat thereof recorded in Plat Book 1, Page 45, of the Public Records of Lake
County, Florida, and also being otherwise described as Lots 1 to 16, inclusive,
of Block 84, in the City of Eustis, Florida, according to the plat thereof
recorded in Plat Book 1, Page 79, Public Records of Lake County, Florida, and
being measured and described as follows:
Beginning at a concrete monument located at the intersection of the Southerly
edge of the right-of-way of Lemon Avenue (a 66-foot wide right-of-way) and the
Westerly edge of Eustis Street (a 66-foot wide right-of-way); thence running
Southerly along the Westerly edge of the right-of-way of Eustis Street, a
distance of 264.35 feet to a concrete monument at the point of intersection of
said Westerly edge of the right-of-way of Eustis Street and the Northerly edge
of the right-of-way of Ward Avenue (a 66-foot wide right-of-way); thence running
Westerly along a course making an interior angle of 89(degree)59'36" with the
preceding course, a distance of 263.96 feet along the Northerly edge of the
right-of-way of Ward Avenue to the point of intersection of said Northerly edge
of the right-of-way of Ward Avenue with the Easterly edge of the right-of-way of
Bay Street (a 66-foot wide right-of-way), said point being marked by an "X" cut
in a retaining wall; thence running Northerly along a course making an interior
angle of 90(degree)07'44" with the preceding course, a distance of 264.29 feet
along the Easterly edge of the right-of-way of Bay Street, to the intersection
of said Easterly right-of-way of Bay Street, with the Southerly edge of Lemon
Avenue, said intersecting point being presently marked by an "X" cut in a
sidewalk to an old residence; thence running Easterly along a course making an
interior angle of 89(degree)53'03" with the preceding course, a distance of
264.59 feet along the Southerly edge of the right-of-way of Lemon Avenue to the
point of beginning.
5
<PAGE>
Lease Agreement
Tierra Pines
Legal Description
Parcel 1:
Commence at the Northeast corner of the Northwest 1/4 of Section 7, Township 30
South, Range 16 East, Pinellas County, Florida; thence North 87 deg 36 min 11
sec West along the North boundary of the Northwest 1/4 of said Section 7, 768.79
feet; thence South 00 deg 18 min 30 sec East, 75.00 feet Westerly of and
parallel to the East boundary of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, as recorded in Plat Book 1, Page 55 of the
public records of Pinellas County, Florida, 72.08 feet to a Point of Beginning;
thence continue South 00 deg 18 min 30 sec East along the West boundary of a 50
foot wide non-exclusive easement recorded in O.R. Book 4636, Page 1802 of the
public records of Pinellas County, Florida, 606.00 feet; thence North 87 deg 36
min 11 sec West, 215.00 feet; thence North 00 deg 18 min 30 sec West, 606.00
feet; thence South 87 deg 36 min 11 sec East along the Southerly right-of-way
line of Ulmerton Road, 215.00 feet to the Point of Beginning.
Parcel 2:
Commence at the Northeast corner of the Northwest 1/4 of Section 7, Township 30
South, Range 16 East, Pinellas County, Florida; thence North 87 deg 36 min 11
sec West along the North boundary of the Northwest 1/4 of said Section 7, 743.76
feet; thence South 00 deg 18 min 30 sec East, 50.00 feet Westerly of and
parallel to the East boundary of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, as recorded in Plat Book 1, Page 55 of the
public records of Pinellas County, Florida, 72.08 feet to a Point of Beginning;
thence continue South 00 deg 18 min 30 sec East along the centerline of a 50.00
foot wide non-exclusive easement recorded in O.R. Book 4636, Page 1802 of the
public records of Pinellas County, Florida, 606.00 feet; thence North 87 deg 36
min 11 sec West, 25.03 feet; thence North 00 deg 18 min 30 sec West, 606.00
feet; thence South 87 deg 36 min 11 sec East along the Southerly right-of-way
line of Ulmerton Road, 25.03 feet to the Point of Beginning.
TOGETHER WITH a non-exclusive easement for ingress, egress, utilities and
drainage, described as follows:
The Westerly 25.00 feet of the Easterly 50.00 feet of the Southerly 605.32 feet
of the Northerly 677.32 feet of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, Township 30 South, Range 16 East, as recorded
in Plat Book 1, Page 55 of the public records of Pinellas County, Florida.
6
<PAGE>
Lease Agreement
Woodlands
Legal Description
The South 1/2 of the Southeast 1/4 of the Northeast 1/4 of the Southwest 1/4 of
Section 4, Township 28 South, Range 19 East, LESS the East 25 feet thereof for
road right-of-way, all lying and being in Hillsborough County, Florida.
7
<PAGE>
Lease Agreement
Williamsburg
Legal Description
ALL those certain lots, pieces or parcels of land located in the City of
Williamsburg, Virginia, on the eastern most line of Mount Vernon Avenue,
together with all improvements thereon and appurtenances thereto belonging,
which are shown on a certain plat of survey dated March 10, 1989, by Harvey L.
Parks, Inc., entitled "PLAT OF TWO PARCELS OF LAND WITH IMPROVEMENTS SHOWN
THEREON, SITUATED ON THE EASTERN MOST LINE OF MOUNT VERNON AVENUE IN THE CITY OF
WILLIAMSBURG, VIRGINIA.", and being more particularly described as follows:
BEGINNING at a rod found on the northern line of Mount Vernon Avenue (55' R/W),
said rod being 196.91' from the intersection with the southern line of
Monticello Avenue, and running from said rod in a northerly direction N 49
degrees 37' 30" E a distance of 199.54' to a rod; thence S 40 degrees 22' 30" E
a distance of 580.62' to a rod; thence S 49 degrees 37' 30" W a distance of
193.75' to a rod on the northern right-of-way line of Mount Vernon Avenue;
thence along the northern right-of-way line of Mount Vernon Avenue along a curve
to the right with a radius of 322.50' a length of 63.59' to a rod; thence along
said right-of-way line N 40 degrees 22' 30" W a distance of 496.95' to a rod;
thence continuing along said right-of-way on a curve to the right with a radius
of 472.50' a length of 20.53' to a rod found, being the point and place of
beginning, containing 2.663 acres, more or less, all in the City of
Williamsburg, Virginia further described as Parcel No. 2 and Parcel No. 3, as
shown on plat of survey made by Harvey L. Parks, Inc., dated March 10, 1989, a
copy of which is attached to the Deed of Trust, recorded February 6, 1990, in
the Clerk's Office, Circuit Court, City of Williamsburg, Virginia, in Deed Book
90, at page 710, reference to which is made for a more particular description.
BEING the same property conveyed to The Industrial Development Authority of the
City of Hopewell, Virginia, by deed from United Health Services, Inc., a
Virginia corporation, dated October 14, 1976, recorded October 15, 1976, in the
Clerk's Office, Circuit Court, City of Williamsburg, Virginia, in Deed Book 54,
page 167.
8
<PAGE>
Lease Agreement
Windham
Legal Description
PARCEL ONE:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hall District of
Albemarle County, Virginia, containing 0.856 acres according to plat entitled
"Plat Showing 0.856 Acre of Land With Improvements Shown, Situated On The
Western Line of State Route No. 240, Lying in Crozet, White Hall District,
Albemarle County, Virginia", made by Harvey L. Parks, Inc., dated March 15,
1989, and recorded in the Clerk's Office of the Circuit Court of Albermarle
County, Virginia, in Deed Book 1086, page 505.
BEGINNING at a rod found at the intersection of the northern property line of
Parcel 62 owned by National Health Care Affiliates, Inc., and the eastern right
of way line of High Street, running from said rod in a northerly direction N 26
degrees 12' 51" E a distance of 57.17' to a rod; thence S 74 degrees 17' 10" E a
distance of 186.00' to a rod; thence S 58 degrees 47' 06" E a distance of 99.11'
to a rod; thence S 65 degrees 06' 06" E a distance of 100.11' to a rod; thence S
37 degrees 06' 06" E a distance of 42.55' to a P.K. Nail found on the northern
line of State Route No. 240; thence along the northern line of State Route No.
240 S 32 degrees 18' 45" W a distance of 62.72' to a point; thence continuing
along the northern line of State Route No. 240 S 29 degrees 27' 54" W a distance
of 40.88' to a point on the northern boundary line of property owned by the VA.
National Bank (Parcel 60); thence N 64 degrees 36' 31" W a distance of 212.70'
to a rod; thence N 25 degrees 40' 17" E a distance of 31.48' to a rod; thence S
64 degrees 21' 49" E a distance of 30.00' to a rod; thence N 25 degrees 38' 11"
E a distance of 10.22' to a rod; thence S 64 degrees 21' 49" E a distance of
32.00" to a rod; thence N 25 degrees 38' 11" E a distance of 30.00' to a rod,
thence N 64 degrees 21' 49" W a distance of 125.00' to a rod; thence S 25
degrees 38' 11" W a distance of 29.16' to a rod; thence N 64 degrees 19' 43" W a
distance of 134.66' to a rod found, being the point and place of beginning,
containing 0.856 acre, more or less, all in Crozet, White Hall District of
Albemarle County, Virginia, as shown on plat of survey by Harvey L. Parks, Inc.,
dated March 15, 1989.
Together with a non-exclusive easement, with maintenance agreement, 10 feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240, recorded in
9
<PAGE>
Lease Agreement
the Clerk's Office of the Circuit Court of Albermarle County, Virginia, in Deed
Book, 779, page 239.
BEING the same property conveyed to the Industrial Development Authority of
Albemarle County, Virginia, by deed from Windham, Incorporated, a Virginia
corporation, dated January 1, 1980, recorded January 29, 1980, in the Clerk's
Office, Circuit Court, Albemarle County, Virginia, in Deed Book 688, page 476,
and leased to Windham, Incorporated by instrument dated January 1, 1980,
recorded in the Clerk's Office, Circuit Court, Albermarle County, Virginia, in
Deed Book 688, page 481. By Articles of Merger recorded May 21, 1984 in the
aforesaid Clerk's Office in Deed Book 799, page 341, Windham, Incorporated
merged into United Service Industries, Inc. By Certificate of Merger issued by
the Commonwealth of Virginia State Corporation Commission on February 10, 1984,
United Service Industries, Inc., a Virginia corporation merged into National
Health Care Affiliates, Inc., a Florida corporation, thereby vesting fee simple
title in the name of National Health Care Affiliates, Inc.
PARCEL TWO:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hall District of
Albemarle County, Virginia, containing 0.2905 acre according to plat entitled
"Plat of 0.2905 Acre Of Land, With Improvements Shown, Situated On The Eastern
Line Of High Street, Lying in Crozet, White Hall District of Albemarle County,
Virginia", made by Harvey L. Parks, Inc., dated March 15, 1989, recorded in the
Clerk's Office of the Circuit Court of Albemarle County, Virginia, in Deed Book
1086, page 507.
BEGINNING at a spike found at the intersection of the southern line of High
Street and the northern property line of Va. National Bank (Parcel 60A), and
running from said spike along the southern line of High Street in a northerly
direction N 26 degrees 12' 51" E a distance of 44.91' to a pipe; thence S 64
degrees 19' 43" E a distance of 134.66' to a rod; thence N 25 degrees 38' 11" E
a distance of 29.16' to a rod; thence S 64 degrees 21' 49" E a distance of
125.00' to a rod; thence S 25 degrees 38' 11" W a distance of 30.00' to a rod;
thence N 64 degrees 21' 49" W a distance of 32.00' to a rod; thence S 25 degrees
38' 11" W a distance of 10.22' to a rod; thence N 64 degrees 21' 49" W a
distance of 30.00' to a rod; thence S 25 degrees 40' 17" W a distance of 31.48'
to a rod; thence N 65 degrees 01' 29" W a distance of 198.11' to a spike found,
being the point and place of beginning, containing 0.2905 acre, more or less,
all in Crozet, White Hall District of Albemarle County, Virginia, further
described as Parcel 62, as shown on plat of
10
<PAGE>
Lease Agreement
survey made by Harvey L. Parks, Inc., dated March 15, 1989, recorded in Deed
Book 1086, page 507.
TOGETHER WITH a non-exclusive easement, with maintenance agreement, 10 feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240, recorded in the Clerk's Office of the Circuit Court of
Albemarle County, Virginia, in Deed Book 779, page 239.
BEING the same real estate conveyed to Central Virginia Health Facilities, Inc.,
a Virginia corporation, by deed of exchange from Julia Sharp Vergara, divorced,
dated January 4, 1979, recorded in the Clerk's Office of the Circuit Court of
Albemarle County, Virginia, in Deed Book 664, page 615, and a portion conveyed
to Central Virginia Health Facilities, Inc., recorded in Deed Book 655, page
191. By Consent of Shareholder, dated June 29, 1979; Plan of Merger of Central
Virginia Health Facilities, Inc., with and into United Service Industries, Inc.,
dated June 30, 1979; and by Certificate of Merger issued by the Commonwealth of
Virginia State Corporation Commission on February 10, 1984, United Service
Industries, Inc., a Virginia corporation merged into National Health Care
Affiliates, Inc., a Florida corporation, thereby vesting fee simple title in the
name of National Health Care Affiliates, Inc., a Florida corporation.
PARCEL THREE:
ALL that certain lot of land situated in Albemarle County, Virginia, in Crozet,
fronting on State Route 240 parallel to the C & O Railroad and bounded on the
south by the land owned by the Industrial Development Authority of Albemarle
County and on the west by High Street, on the east by State Route 240 and on the
north by the C & O Railroad.
BEING a portion of the same property conveyed to The Miller Manual School of
Albemarle by the following deeds from:
(i) Abraham Wayland and Martha T. Wayland, dated September 10,
1894, recorded in the Clerk's Office, Circuit Court, Albemarle
County, Virginia, in Deed Book 102, page 231; and
(ii) R.T.W. Duke, Commissioner of Circuit Court of Albemarle
County, dated May 25, 1887, recorded June 13, 1887, in the
Clerk's Office, Circuit Court, Albemarle County, Virginia, in
Deed Book 88, page 103.
Leased to National Health Care Affiliates by instrument dated January 1, 1979,
recorded in Deed Book 786, page 655.
11
<PAGE>
Lease Agreement
PARCEL FOUR:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hill District of
Albemarle County, Virginia, containing 0.3927 acre according to plat entitled
"Plat Showing 0.3927 Acre Of Land With Improvements Shown Situated On The
Eastern Line Of High Street, Lying in Crozet, White Hill District of Albemarle
County, Virginia", made by Harvey L. Parks, Inc., dated March 15, 1989, recorded
in the Clerk's Office of the Circuit Court of Albemarle County, Virginia, in
Deed Book 1086, page 506.
BEGINNING at a rod found at the intersection of southern line of High Street and
the northern property line of Stanley P. Wilcox (Parcel 56) and running from
said rod in a northerly direction along the southern line of High Street N 32
degrees 06' 32" E a distance of 60.15' to a spike; thence S 57 degrees 40' 33" E
a distance of 102.86' to a rod; thence S 32 degrees 21' 53" W a distance of
48.93' to a P.K. set; thence S 57 degrees 38' 07" E a distance of 109.00' to a
P.K. set; thence N 32 degrees 21' 53" E a distance of 49.01' to a rod; thence S
57 degrees 40' 33" E a distance of 162.60 feet to a P.K. set on the northern
line of State Route No. 240; thence along the northern line of State Route No.
240 S 34 degrees 00' W a distance of 60.33' to a P.K. set; thence N 57 degrees
34' 43" W a distance of 215.56' to a spike set; thence N 57 degrees 44' 44" W a
distance of 156.91' to a rod found, being the point and place of beginning,
containing 0.3927 acre, more or less, all in Crozet, White Hall District of
Albemarle County, Virginia, as shown on plat of survey made by Harvey L. Parks,
Inc., dated March 15, 1989, recorded in Deed Book 1086, page 506.
TOGETHER WITH the right of way of ingress and egress over 10-foot strip as
described in deed recorded in Deed Book 170, page 370, which strip adjoins the
lot hereby conveyed on its southern boundary by instrument recorded in the
Clerk's Office, Circuit Court, Albemarle County, Virginia, in Deed Book 695,
page 232.
TOGETHER WITH perpetual non-exclusive easement, with maintenance agreement, for
vehicular and pedestrian traffic, parking and ingress and egress as recorded in
the Clerk's Office, Circuit Court, Albemarle County, Virginia, in Deed Book 695,
page 237.
TOGETHER WITH a non-exclusive easement, with maintenance agreement, 10-feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240 recorded in the Clerk's Office, Circuit Court, Albemarle County,
Virginia, in
Deed Book 779, page 239.
12
<PAGE>
Lease Agreement
BEING a part of the same real estate conveyed to United Service Industries,
Inc., by the following deeds from:
(i) Virginia National Bank, a national banking association, dated April 25,
1983, recorded June 15, 1983, in the Clerk's Office, Circuit Court, Albemarle
County, Virginia, in Deed Book 766, page 29; and
(ii) Central Fidelity Bank Charlottesville, a Virginia corporation, dated June
13, 1980, recorded June 20, 1980, in the aforesaid Clerk's Office, in Deed Book
695, page 232.
By Certificate of Merger issued by the Commonwealth of Virginia State
Corporation Commission on February 10, 1984, United Service Industries, Inc., a
Virginia corporation merged into National Health Care Affiliates, Inc., a
Florida corporation, thereby vesting fee simple title in the name of National
Health Care Affiliates, Inc.
13
<PAGE>
Lease Agreement
Woodmont
Legal Description
All that certain tract or parcel of land, situate lying and being in Falmouth
District, Stafford County, Virginia, containing 8.770 acres, as shown on plat of
survey shown as Parcels 1 and 2 on plat of survey made by Potts, Minter &
Associates, P.C., dated May 31, 1996, and further described as:
Beginning at a point on the southern line of State Route 607, and from said
point and place of beginning along a curve to the right with a radius of 2754.87
feet and an arc length of 214.97 feet, having a chord bearing South
46(degree)27'37" West and a distance of 214.92 feet to a point; thence along a
curve to the right with a radius of 2277.50 feet, an arc length of 429.29, a
chord bearing South 54(degree)05'44" West, and a distance of 428.65 feet to a
point; thence, North 30(degree)30'14" West 40.00 feet to a point; thence along a
curve to the right with a radius of 2237.50 feet, an arc length of 668.34 feet,
a chord bearing South 68(degree)03'11" West, and a distance of 665.86 feet to a
point; thence, South 76(degree)36'37" West 218.25 feet to a point; thence North
13(degree)23'23" West 362.21 feet to a point; thence, north 66(degree)54'00"
East 209.00 feet to a point; thence, South 23(degree)06'00" East, 55.00 feet to
a point; thence, North 66(degree)54'00" East, 100.00 feet to a point; thence,
North 23(degree)06'00" West, 55.00 feet to a point; thence, North
66(degree)54'00" East, 364.44 feet to a point; thence South 37(degree)25'55"
East, 191.34 feet to a point; thence, along a curve to the left with a radius of
230.00 feet, and an arc length of 370.11 feet to a point; thence along a
non-tangent curve to the left with a radius of 248.41 feet, an arc length of
83.65 feet, a chord bearing North 18(degree)37'39" East 83.27 feet to a point;
thence, North 08(degree)58'45" East, 193.51 feet to a point; thence, along the
centerline of the old Route 607 South 81(degree)01'15" East, 80.01 feet to a
point; thence, continuing along said old Route 607 South 85(degree)03'45" East,
263.09 feet to a point and place of beginning 8.770 acres.
Parcel 1 is the same property conveyed to National Health Care Affiliates, Inc.,
by deed of Industrial Development Authority of Stafford County, Virginia, dated
April 1, 1989, recorded in Deed Book 669, at Page 469, in the Clerk's Office of
the Circuit Court of Stafford County, Virginia.
Parcel 2 is part of the same property conveyed to United Health Services,
Incorporated, by deed from Woodmont, Incorporated, dated November 19, 1975,
recorded in Deed Book 281, page 492 in the aforesaid Clerk's Office. By Articles
of Amendment recorded in Deed Book 549, page 101, United Health Services,
Incorporated
14
<PAGE>
Lease Agreement
changed their name to United Service Industries, Incorporated. By Articles of
Merger recorded in Deed Book 458, page 158, United Service Industries, Inc.
merged into National Health Care Affiliates, Inc.
15
<PAGE>
EXHIBIT A
TO
LEASE AGREEMENT
FORM OF LEASE SUPPLEMENT AND MEMORANDUM OF LEASE AND AGREEMENT
THIS LEASE SUPPLEMENT AND MEMORANDUM OF LEASE AND AGREEMENT dated
_____________, 19__ (this "Lease Supplement") is between MELLON FINANCIAL
SERVICES CORPORATION #4, as Lessor (the "Lessor"), and GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation and a wholly-owned subsidiary of
Genesis Health Ventures, Inc., as Lessee (the "Lessee");
W I T N E S S E T H:
WHEREAS, Lessee and Lessor have heretofore entered into that certain
Amended and Restated Lease and Agreement dated as of October 7, 1996 (as
amended, supplemented, or otherwise modified from time to time, the "Lease").
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings specified in the Lease; and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on each Site Acquisition Closing Date substantially in the form
hereof for the purpose of confirming the acceptance and lease of certain
Site(s), specifying the Rent applicable to such Site(s) and setting forth
certain other matters, all as required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Delivery and Acceptance. Lessor hereby delivers and leases
to, and confirms delivery and lease to, Lessee, and Lessee hereby
accepts delivery and leases, and confirms acceptance of delivery and
lease, from Lessor, under the Lease as hereby supplemented, of the
Site(s) listed on Schedule I hereto. The term "Site" includes, without
limitation, all of the right, title and interest of Lessor
<PAGE>
Lease Supplement
or Lessee in and to the following and any proceeds (including, without
limitation, insurance and condemnation proceeds) thereof:
(A) the real property described in Schedule I attached hereto
(the "Land"); all buildings, structures and other improvements now or
in the future located on the Land (the "Improvements"; the Improvements
and the Land are sometimes collectively referred to herein as the
"Property");
(B) all the estate, right, title, claim or demand whatsoever
of Lessor or Lessee, in possession or expectancy, in and to the
Property or any part thereof;
(C) all right, title and interest of Lessor in and to all of
the fixtures, furnishings and fittings of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently owned or
subsequently acquired by the Mortgagor and now or subsequently attached
to, or contained in or used or usable in any way in connection with any
operation or letting of the Property (all of the foregoing in this
paragraph (C) being referred to as the "Fixtures");
(D) all right, title and interest of Lessor or Lessee in and
to all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings and articles of personal
property of every kind and nature whatsoever, and all appurtenances and
additions thereto and substitutions or replacements thereof (together
with, in each case, attachments, components, parts and accessories)
currently owned or subsequently acquired by Mortgagor and now or
subsequently attached to, or contained in or used or usable in any way
in connection with any operation or letting of the Property, including
but without limiting the generality of the foregoing, all screens,
awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilating, air conditioning and air-cooling apparatus, refrigerating,
and incinerating equipment, escalators, refrigerators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers (excluding software), sprinkler
systems and other fire prevention and extinguishing apparatus and
materials, security systems, motors, engines, machinery, pipes, pumps,
2
<PAGE>
Lease Supplement
tanks, conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (D) being referred
to as the "Equipment");
(E) all right, title and interest of Lessor or Lessee in and
to all substitutes and replacements of, and all additions and
improvements to, the Improvements and the Fixtures and Equipment,
subsequently acquired by Lessor or Lessee or constructed, assembled or
placed by Lessor or Lessee on the Land, immediately upon such
acquisition, release, construction, assembling or placement, including,
without limitation, any and all building materials whether stored at
the Property or offsite, and, in each such case, without any further
lease, mortgage, conveyance, assignment or other act by Lessor or
Lessee;
(F) all right, title and interest of Lessor or Lessee in, to
and under all books and records relating to or used in connection with
the operation of the Property or the Fixtures or any part thereof; and
all general intangibles related to the operation of the Improvements
now existing or hereafter arising; and
(G) all right, title and interest of Lessor or Lessee in and
to (to the extent assignable) (i) all consents, licenses, building
permits, certificates of occupancy and other governmental approvals
relating to construction, completion, occupancy, use or operation of
the Property or any part thereof and (ii) all plans and specifications
relating to the Property.
2. Warranty. Lessee hereby represents and warrants that no
event which would constitute a Casualty or an Event of Taking and no
notice of such Casualty or Event of Taking has been given to Lessee or
any of its Affiliates with respect to the Sites under the Lease has
occurred with respect to the Sites set forth on Schedule I hereto as of
the date hereof. Lessee hereby reaffirms each of the representations
and warranties set forth at Section 4.1 of the Participation Agreement
as if made on the date hereof, except to the extent any such
representation and warranty relates to an earlier date, including the
Sites set forth on Schedule I hereto are free and clear of all Liens
other than Permitted Liens.
3. Term, Applicable Percentage. The term of this Lease
Supplement shall commence on the date hereof and end on the Lease
Termination Date. The Applicable Percentage on each Payment Date is set
forth in the appropriate portion of Schedule II.
3
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Lease Supplement
4. Renewal Terms, Lessee's Cost and Estimated Sales Costs.
With respect to the Sites covered by this Lease Supplement and subject
to the consent of the Participants pursuant to Section 2.10 of the
Participation Agreement, Lessee shall have a five-year renewal option
to be exercised pursuant to Section 6.1 of the Lease. The estimated
sales costs for the Sites are set forth in Schedule II attached hereto.
5. Confirmation. Lessee hereby confirms its agreement, in
accordance with the Lease as supplemented by this Lease Supplement, to
pay Rent to Agent, for the benefit of Lessor, for the Sites leased
hereunder. Nothing herein shall reduce Lessee's obligation to make all
other payments required under the Lease, including those payments to be
made on the last day of the Lease Term pursuant to Article VI of the
Lease.
6. Incorporation into Lease. This Lease Supplement shall be
construed in connection with and as part of the Lease, and all terms,
conditions and covenants contained in the Lease, as supplemented by
this Lease Supplement, shall be and remain in full force and effect and
shall govern the Sites described in Schedule I hereto.
7. References. Any and all notices, requests, certificates and
other instruments executed and delivered concurrently with or after the
execution and delivery of this Lease Supplement may refer to the "Lease
Agreement, dated as of October 7, 1996", or may identify the Lease in
any other respect without making specific reference to this Lease
Supplement, but nevertheless all such references shall be deemed to
include this Lease Supplement, unless the context shall otherwise
require.
8. Recording. Lessor and Lessee agree that this Lease
Supplement shall be recorded at Lessee's sole cost and expense as
required under Section 21.19 of the Lease.
9. Counterparts. This Lease Supplement may be executed in any
number of counterparts, each executed counterpart constituting an
original but all together one and the same instrument.
10. Nature of Transaction. (A) IT IS THE INTENT OF THE PARTIES
HERETO THAT: (i) THE TRANSACTION CONTEMPLATED HEREBY CONSTITUTES AN
OPERATING LEASE FROM LESSOR TO LESSEE FOR PURPOSES OF LESSEE'S
FINANCIAL REPORTING, (ii) THE TRANSACTION CONTEMPLATED HEREBY PRESERVES
OWNERSHIP IN THE SITES TO LESSEE FOR PURPOSES OF FEDERAL AND STATE TAX
AND
4
<PAGE>
Lease Supplement
BANKRUPTCY PURPOSES, (iii) LESSEE, PURSUANT TO THE LEASE, GRANTS A
SECURITY INTEREST OR LIEN, AS THE CASE MAY BE, IN THE SITES AND THE
OTHER COLLATERAL TO LESSOR, (iv) FOR PURPOSES OF FEDERAL AND STATE TAX
AND BANKRUPTCY PURPOSES, THE PAYMENT BY LESSEE OF BASIC RENT SHALL BE
TREATED AS PAYMENTS OF INTEREST, AND THE PAYMENT BY LESSEE OF ANY
AMOUNTS IN RESPECT OF THE LEASE BALANCE SHALL BE TREATED AS REPAYMENTS
OF PRINCIPAL, AND (v) THE MORTGAGE AND ASSIGNMENT OF LEASE CREATE A
LIEN AND SECURITY INTEREST IN LESSOR'S INTEREST IN AND TO THE SITES,
THE LEASE AND THE OTHER OPERATIVE DOCUMENTS, SUBJECT TO CERTAIN LIMITED
EXCEPTIONS. NEVERTHELESS, LESSEE ACKNOWLEDGES AND AGREES THAT NONE OF
LESSOR, AGENT OR ANY LENDER HAS PROVIDED OR WILL PROVIDE TAX,
ACCOUNTING OR LEGAL ADVICE TO LESSEE REGARDING THE OVERALL TRANSACTION
OR MADE ANY REPRESENTATIONS OR WARRANTIES CONCERNING THE TAX,
ACCOUNTING OR LEGAL CHARACTERISTICS OF THE OPERATIVE DOCUMENTS AND THAT
LESSEE HAS OBTAINED AND RELIED UPON SUCH TAX, ACCOUNTING AND LEGAL
ADVICE CONCERNING THE OPERATIVE DOCUMENTS AS IT DEEMS APPROPRIATE.
(B) SPECIFICALLY, WITHOUT LIMITING THE GENERALITY OF
SUBSECTION (A) OF THIS SECTION 10, BUT UNDERSTANDING THAT THE PARTIES'
CHARACTERIZATION IS NOT THE SOLE DETERMINANT OF THE ISSUE, THE PARTIES
HERETO INTEND AND AGREE THAT WITH RESPECT TO THE NATURE OF THE
TRANSACTIONS EVIDENCED BY THIS LEASE IN THE CONTEXT OF THE EXERCISE OF
REMEDIES UNDER THE OPERATIVE DOCUMENTS, RELATING TO AND ARISING OUT OF
ANY INSOLVENCY OR RECEIVERSHIP PROCEEDINGS OR A PETITION UNDER THE
UNITED STATES BANKRUPTCY LAWS OR ANY OTHER APPLICABLE INSOLVENCY LAWS
OR STATUTE OF THE UNITED STATES OF AMERICA OR ANY STATE OR COMMONWEALTH
THEREOF AFFECTING LESSEE, LESSOR OR ANY LENDER OR ANY ENFORCEMENT OR
COLLECTION ACTIONS, THE TRANSACTIONS EVIDENCED BY THE OPERATIVE
DOCUMENTS ARE LOANS MADE BY THE LESSOR AND THE LENDERS AS UNRELATED
THIRD PARTY LENDERS TO LESSEE SECURED BY THE SITES.
11. Grant and Foreclosure on Lessee's Estate.1 Lessee hereby
grants to ____________________, as trustee (together with all successor
trustees, the "Trustee") for the benefit of ______________, IN TRUST,
WITH POWER OF SALE, all of Lessee's right, title and interest in and to
the Sites listed on Schedule I and, upon the occurrence of a Lease
Event of Default, Lessor shall have the power and authority, after
proper notice and lapse of such time as may be required by law, to
cause Trustee to sell such Sites by
- --------
1 To be conformed to requirements of local law for each state.
5
<PAGE>
Lease Supplement
notifying Trustee of that election and depositing with Trustee this
instrument and receipts and evidence of expenditures made and secured
hereby as Trustee may reasonably require. Upon receipt of any such
notice from Lessor, Trustee shall cause to be recorded, published and
delivered to Lessee such Notice of Default and Election to Sell as is
then required by applicable statutory authority and by this instrument,
which notice shall set forth, among other things, the nature of the
breach(es) or default(s), the action(s) required to effect a cure
thereof and the time period within which that cure may be effected. If
no cure is effected within the statutory time limits following
recordation of the Notice of Default and Election to Sell and after
Notice of Sale has been given as required by the above-referenced
statutes, Trustee may without further notice or demand sell and convey
the Sites in accordance with the above-referenced statutes. The Sites
may be sold as a whole or in separate lots, parcels or items and in
such order as Lessor may direct, at public auction to the highest
bidder for cash in lawful money of the United States payable at the
time of sale. Lessor may purchase all or any part of the Sites at such
sale. Lessee acknowledges that sales for cash or on credit to a
wholesaler, retailer or user of the Sites, at a public or private
auction, are all commercially reasonable. Trustee shall deliver to such
purchaser(s) a good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty express or implied. The
recitals in such deed of any matter or fact shall be conclusive proof
of the truthfulness thereof. Any Person, including Lessee, Trustee or
Lessor, may purchase at any sale. After deducting all costs, fees and
expenses of Lessor and Trustee, including costs of evidence of title in
connection with any sale, Lessor shall apply the proceeds of sale, in
the following order of priority, to payment of the following
(collectively, the "Obligations"): (i) first, all amounts expended by
or for the account of Lessor under the terms hereof and not then
repaid, with accrued interest at the Overdue Rate; and (ii) second, all
other amounts then due and owing hereunder including, without
limitation, all Accrued Variable Rent, Supplemental Rent, the full
amount of the Lease Balance as of the date of sale as if this Lease had
been terminated with respect to all of the Sites then subject to this
Lease under Section 6.3, and all other amounts then payable by Lessee
under this Lease and the other Operative Documents, with Lessor having
the right to apply the proceeds of sale to the amounts described above
in this clause (ii) in such order, proportion and priority as Lessor
may elect in its sole and absolute discretion. To the extent permitted
by applicable statutes, Trustee may postpone the sale of all or any
portion of the Sites by
6
<PAGE>
Lease Supplement
public announcement at the time and place of sale, and from time to
time thereafter may again postpone that sale by public announcement or
subsequently noticed sale, and without further notice may make such
sale at the time fixed at the last postponement or may, in its
discretion, give a new notice of sale. A sale of less than all of the
Sites or any defective or irregular sale made hereunder shall not
exhaust the power of sale provided for herein, and subsequent sales may
be made hereunder until all of the Obligations have been satisfied or
the entire Sites sold, without defect or irregularity. No action of
Lessor or Trustee based upon the provisions contained herein or
contained in the applicable statutes, including, without limitation,
the giving of the Notice of Default and Election to Sell or the Notice
of Sale, shall constitute an election of remedies which would preclude
Lessor from pursuing judicial foreclosure before a completed sale
pursuant to the power of sale contained herein. Lessor shall have the
right, with the irrevocable consent of Lessee hereby given and
evidenced by the execution of this instrument, to obtain appointment of
a receiver by any court of competent jurisdiction without further
notice to Lessee, which receiver shall be authorized and empowered to
enter upon and take possession of the Sites, including all personal
property constituting a permanent part of the Site and fixtures thereto
used upon or in connection with the real property herein conveyed (and
any other personal property constituting a part of the Site which
Lessee acquired with the funds of Lessor or the Lenders), to let the
Sites, to receive all the rents, issues and profits, if any, which may
be due or become due in respect to the leasing of the Sites to another
party and apply the rents after payment of all necessary charges and
expenses to reduction of the Obligations in such order, proportion and
priority as Lessor may elect. At the option of Lessor, the receiver
shall accomplish entry and taking possession of the Sites by actual
entry and possession or by notice to Lessee. The receiver so appointed
by a court of competent jurisdiction shall be empowered to issue
receiver's certificates for funds advanced by Lessor for the purpose of
protecting the value of the Sites as security for the Obligations. The
amounts evidenced by receiver's certificates shall bear interest at the
Overdue Rate and may be added to the Obligations if Lessee or a junior
lienholder purchases the Sites at the trustee's sale. Trustee or any
successor acting hereunder may resign and thereupon be discharged of
the trusts hereunder upon thirty (30) days' prior written notice to
Lessor. Regardless of whether Trustee resigns, Lessor may, from time to
time, substitute a successor or successors to any Trustee named herein
or acting hereunder
7
<PAGE>
Lease Supplement
in accordance with any statutory procedure for such substitution; or if
Lessor, in its sole and absolute discretion, so elects, and if
permitted by law, Lessor may substitute such successors or successors
by recording, in the office of the recorder of the county or counties
where a Site is located, a document executed by Lessor and containing
the name of the original Lessee and Lessor hereunder, the book and page
where this instrument (or a memorandum hereof) is recorded (and/or
instrument number, as applicable) and the name of the new Trustee,
which instrument shall be conclusive proof of proper substitution of
such successor Trustee or Trustees, who shall, without conveyance from
the predecessor Trustee, succeed to the rights, powers and duties
hereunder. It is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN
THIS INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE SITES AND
SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT
BY LESSEE UNDER THIS INSTRUMENT.
12. Governing Law. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED
IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
EXCEPT THAT FORECLOSURE UPON THE SITES SUBJECT TO THIS LEASE SUPPLEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE SITE SUBJECT TO
THIS LEASE SUPPLEMENT IS LOCATED.
[remainder of page intentionally left blank]
8
<PAGE>
Lease Supplement
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed and delivered on the day and year first above written.
MELLON FINANCIAL SERVICES
CORPORATION, as Lessor
By___________________________
Name Printed:________________
Title:_______________________
Address:
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
GENESIS ELDERCARE PROPERTIES,
INC., as Lessee
By___________________________
Name Printed:________________
Title:_______________________
Address:
148 West State Street
Kennett Square, PA 19348
Attn: George V. Hager, Jr.
[Conform execution and acknowledgments to applicable state
requirements in state where applicable Site is located]
<PAGE>
Lease Supplement
STATE OF _______________ )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _______________, State of
____________, this ____ day of _______________, 19____, by
___________________________, as _________________________ of GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation, on behalf of the corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
[USE APPROPRIATE NOTARY FORMS FOR APPLICABLE STATE]
10
<PAGE>
Lease Supplement
STATE OF _______________ )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _______________, State of
____________, this ____ day of _______________, 19____, by
___________________________, as _________________________ of MELLON FINANCIAL
SERVICES CORPORATION #4, on behalf of the Corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
[USE APPROPRIATE NOTARY FORMS FOR APPLICABLE STATE]
11
<PAGE>
Lease Supplement
SCHEDULE I
TO
LEASE SUPPLEMENT
Sites
12
<PAGE>
Lease Supplement
SCHEDULE II
TO
LEASE SUPPLEMENT
Applicable Estimated Principal
Site Percentage Sales Costs Amortization Amount
13
Exhibit 10.46
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
Dated as of October 7, 1996
Among
GENESIS ELDERCARE PROPERTIES, INC.
as Lessee,
MELLON FINANCIAL SERVICES CORPORATION #4,
as Lessor
PERSONS NAMED ON SCHEDULE I,
as Lenders,
and
MELLON BANK, N.A.
not in its individual capacity except as expressly
stated herein, but solely as Agent
<PAGE>
TABLE OF CONTENTS
(Participation Agreement)
Page
ARTICLE I - DEFINITIONS........................................................3
ARTICLE II - EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL
PROVISIONS............................................................3
SECTION 2.1. Effectiveness of Agreement..............................3
SECTION 2.2. Agreement to Acquire and Lease and Make
Advances............................................3
SECTION 2.3. Participation by Lenders................................3
SECTION 2.4. Participation by Lessor.................................4
SECTION 2.5. Advance Dates. .........................................4
SECTION 2.7. Payments to Participants...............................12
SECTION 2.8. Nature of Transaction..................................12
SECTION 2.9. Computations...........................................13
SECTION 2.10. Renewal Term...........................................14
SECTION 2.11. Highest Lawful Rate....................................17
ARTICLE III - CONDITIONS TO ADVANCES AND COMPLETION...........................19
SECTION 3.1. Conditions to All Advances.............................19
SECTION 3.2. Conditions to Acquisition or Ground Lease
of Sites...........................................21
SECTION 3.3. Conditions Precedent to Advances for
Construction Costs.................................27
SECTION 3.4. Conditions to Substantial Completion...................29
SECTION 3.5. Conditions Precedent to Final Advances.................31
ARTICLE IV - REPRESENTATIONS AND WARRANTIES...................................33
SECTION 4.1. Representations and Warranties of Lessee...............33
SECTION 4.2. Representations and Warranties of each
Lender.............................................43
SECTION 4.3. Representations and Warranties of
Lessor.............................................45
SECTION 4.4. Representations and Warranties of Agent................46
ARTICLE V - COVENANTS OF LESSEE...............................................48
SECTION 5.1. Further Assurances.....................................48
SECTION 5.2. Consolidation, Merger, Sale, etc.......................48
SECTION 5.3. Corporate Existence....................................50
SECTION 5.4. Construction Matters; Changes..........................50
SECTION 5.5. Guaranties.............................................50
SECTION 5.6. Liens..................................................51
SECTION 5.7. Compliance Certificates................................51
SECTION 5.8. Change of Name or Address..............................52
SECTION 5.9. Environmental Matters..................................52
SECTION 5.10. Investigation by Authorities...........................52
SECTION 5.11. Financial and Other Information........................52
SECTION 5.12. Securities.............................................55
(i)
<PAGE>
SECTION 5.13. Interest Rates.........................................56
SECTION 5.14. Appraisals.............................................56
SECTION 5.15. Environmental Audits...................................56
SECTION 5.16. Additional Compensation in Certain
Circumstances......................................56
ARTICLE VI - OTHER COVENANTS AND AGREEMENTS...................................61
SECTION 6.1. Cooperation with Lessee................................61
SECTION 6.2. Covenants of Lessor and Lenders........................61
SECTION 6.3. Restrictions on and Effect of Transfer by
any Lender.........................................62
SECTION 6.4. Covenants and Agreements of Lenders....................65
SECTION 6.5. Future Lenders.........................................66
SECTION 6.6. Agent under Participation Agreement and
Mortgages..........................................66
SECTION 6.7. Prepayment by Lessor...................................66
SECTION 6.8. Foreclosure against Lessor.............................67
ARTICLE VII - INDEMNIFICATION.................................................67
SECTION 7.1. General Indemnification................................67
SECTION 7.2. General Tax Indemnity..................................68
SECTION 7.3. Withholding Tax Exemption..............................74
SECTION 7.4. Excessive Use Indemnity................................75
SECTION 7.5. Gross Up...............................................75
ARTICLE VIII - THE AGENT......................................................75
SECTION 8.1. Appointment of Agent; Powers and
Authorization to Take Certain Actions..............76
SECTION 8.2. Reliance...............................................77
SECTION 8.3. Action Upon Instructions Generally.....................78
SECTION 8.4. Indemnification........................................79
SECTION 8.5. Independent Credit Investigation.......................79
SECTION 8.6. Refusal to Act.........................................80
SECTION 8.7. Resignation or Removal of Agent;
Appointment of Successor...........................80
SECTION 8.8. Separate Agent.........................................81
SECTION 8.9. Termination of Agency..................................81
SECTION 8.10. Compensation of Agency.................................82
SECTION 8.11. Limitations............................................82
SECTION 8.12. Agent May Be a Participant.............................83
ARTICLE IX - MISCELLANEOUS....................................................83
SECTION 9.1. Survival of Agreements.................................83
SECTION 9.2. No Broker, etc.........................................83
SECTION 9.3. Notices................................................84
SECTION 9.4. Counterparts...........................................84
SECTION 9.5. Amendments.............................................84
SECTION 9.6. Headings, etc..........................................85
SECTION 9.7. Parties in Interest....................................85
SECTION 9.8. GOVERNING LAW..........................................85
(ii)
<PAGE>
SECTION 9.9. Payment of Transaction Costs and Other
Costs..............................................85
SECTION 9.10. Severability...........................................86
SECTION 9.11. Limited Liability of Lessor............................86
SECTION 9.12. Liabilities of the Lenders.............................87
SECTION 9.13. Liabilities of Agent...................................87
SECTION 9.14. Reproduction of Documents..............................87
SECTION 9.15. Consideration for Consents to Waivers and
Amendments.........................................88
SECTION 9.16. Payment Directions.....................................88
SECTION 9.17. Action of and Notices to Lessor under
Loan Agreement.....................................88
SECTION 9.18. Submission to Jurisdiction; Waivers....................89
SECTION 9.19. Final Agreement........................................89
APPENDIX 1 Definitions
APPENDIX 2 Conditions to Document Closing
SCHEDULE I Lenders and Commitments SCHEDULE II Addresses For Notice; Wire
Instructions SCHEDULE III-A NHCA Sites SCHEDULE III-B Identified Developed Sites
SCHEDULE III-C Identified Undeveloped Sites SCHEDULE IV Stock Sellers SCHEDULE
3.2(v)Operative Documents to be Confirmed SCHEDULE 4.1A Governmental Actions
SCHEDULE 4.1B Filings and Recordings SCHEDULE 4.1C Computation under Section 5.9
of 1995 Subordinated
Note Indenture
SCHEDULE 4.1D ERISA Plans
EXHIBIT A Form of Lease and Agreement
Exhibit A - Form of Lease Supplement and
Memorandum of Lease and Agreement
EXHIBIT B-1 Guaranty of Lease
EXHIBIT B-2 Structural Guaranty
EXHIBIT B-3 Form of Confirmation of Guaranty of Lease
EXHIBIT B-4 Form of Confirmation of Structural Guaranty
EXHIBIT C Form of Loan Agreement
Exhibit A - Form of Note
EXHIBIT D-1 Form of Mortgage
EXHIBIT D-2 Form of Deed of Trust
EXHIBIT E-1 Form of Opinion of In-House Counsel to Lessee
EXHIBIT E-2 Form of Opinion of Special Counsel to Lessee
EXHIBIT E-3 Form of Local Counsel Opinion
EXHIBIT E-4 Form of Opinion of Special Counsel to Lessee
regarding "Senior Indebtedness"
EXHIBIT E-5 Form of Local Counsel Questionnaire
EXHIBIT F Form of Officer's Certificate
EXHIBIT G Form of Investor's Letter
(iii)
<PAGE>
EXHIBIT H Form of Assignment of Lease and Agreement and
Lease Supplements and Memoranda of Lease and
Agreement
EXHIBIT H-1 Form of Amendment to Assignment of Lease
EXHIBIT I-1 Form of Pledge Agreement
EXHIBIT I-2 Form of Second Amended and Restated Collateral
Agency Agreement
EXHIBIT J Form of Assignment of Licenses
EXHIBIT K Form of Architect's Certificate (Section 3.4(a))
EXHIBIT L Form of Purchase Agreement Assignment
EXHIBIT M Form of Ground Lease
EXHIBIT N Form of Advance Request
EXHIBIT O Form of Assignment and Assumption by Participant
(iv)
<PAGE>
Participation Agreement
AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of October
7, 1996 (this "Agreement"), is among GENESIS ELDERCARE PROPERTIES, INC., as
Lessee; MELLON FINANCIAL SERVICES CORPORATION #4, as Lessor; the Persons named
on Schedule I hereto (together with their respective permitted successors,
assigns and transferees), as Lenders; and MELLON BANK, N.A., a national banking
association, not in its individual capacity except as expressly stated herein,
but solely as Agent for Lessor and Lenders.
W I T N E S S E T H:
WHEREAS, Lessee, Lessor, Lenders and Agent have entered into this
Agreement for the purpose of providing financing for the acquisition of certain
parcels of real property (each a "Land Interest") and the acquisition or
construction of certain facilities currently located or to be constructed
thereon (each, a "Facility");
WHEREAS, Land Interests on which a Facility has heretofore been
constructed or will be constructed prior to acquisition thereof by Lessor are
identified on Schedule III-A and Schedule III-B (each such Land Interest,
together with such Facility, a "Developed Site"), and each Land Interest on
which a Facility is to be constructed following the acquisition thereof (each
such Land Interest, together with such Facility, an "Undeveloped Site") are
identified on Schedule III-C or may be identified from time to time during the
Construction Period (the Developed Sites and the Undeveloped Sites are referred
to individually as a "Site" and collectively as the "Sites"); and
WHEREAS, (i) Lessor shall purchase the Developed Sites and the Land
Interests relating to the Undeveloped Sites (other than the Non-Acquired Land
Interests) from third party sellers, (ii) Lessor will ground lease from Lessee
each Non-Acquired Land Interest, (iii) Lessee, as Construction Agent, shall
construct Facilities on the Land Interests relating to the Undeveloped Sites and
shall apply Advances from Lessor to pay the costs thereof, and (iv) Lessee shall
lease the Sites from Lessor for the Lease Term pursuant to the Lease in the form
of Exhibit A hereto; and
WHEREAS, Lessee shall sublease the Sites (other than the Sites located
at Tierra Pines Health Care Center, Eagle Crest Nursing Center Atlantic and
Woodlands) set forth on Schedule III-A to Subtenants pursuant to the Subleases
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and may sublease any future Sites to Subtenants pursuant to the Subleases; and
WHEREAS, Lessor shall contribute a portion of the Total Costs through
an equity investment in the Sites (the "Equity Amount"); and
WHEREAS, Lessor wishes to obtain, and the Lenders are willing to
provide, financing (the "Financing") of the remaining portion of the Total
Costs; and
WHEREAS, Lessee has heretofore caused the Guarantors to have executed
and delivered the guaranties (the "Original Guaranties") in the forms of Exhibit
B-1 and Exhibit B-2 attached hereto for the benefit of the Lessor, Lenders and
Agent, which Guaranties have been joined in by NHCA as an additional Guarantor,
and concurrently with the execution and delivery of this Agreement Lessee shall
cause the Guarantors to execute and deliver confirmations of the Guaranties (the
"Confirmations"; herein, the Original Guaranties, as joined in by NHCA and as
confirmed by the Confirmations, are collectively called the "Guaranties") in the
forms of Exhibit B-3 and Exhibit B-4 attached hereto from the Guarantors for the
benefit of Lessor, Lenders and Agent; and
WHEREAS, to secure the Financing, Agent, on behalf of the Lenders, will
have the benefit of a Lien from Lessor on all of Lessor's right, title and
interest in each Site and on substantially all of Lessor's rights against Lessee
under the Lease with respect to each Site; and
WHEREAS, the parties have previously entered into that certain
Participation Agreement dated July 24, 1996 (the "Original Participation
Agreement") and that certain Lease and Agreement dated July 24, 1996 (the
"Original Lease"), each of which the parties hereto desire to amend and restate
as set forth below.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
This Agreement is an amendment and restatement of the Original
Participation Agreement. Any obligations of the Lessee under the Original
Participation Agreement accrued as of the date hereof shall continue in full
force and effect hereunder.
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1 hereto
for all purposes hereof.
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
SECTION 2.1. Effectiveness of Agreement. This Agreement shall become
effective on the date (on or before October 24, 1996) on which all the
conditions precedent thereto set forth in Appendix 2 hereto shall have been
satisfied or waived by the applicable parties as set forth therein. As used
herein, the term "Document Closing Date" shall mean October 7, 1996.
SECTION 2.2. Agreement to Acquire and Lease and Make Advances. As of
the date hereof, Lessor and Lessee shall enter into (i) the Lease pursuant to
which Lessor shall lease the Developed Sites to Lessee, and Lessor and Lessee
shall enter into, and Lessee shall cause to be recorded, for each Developed Site
upon acquisition and each Undeveloped Site upon acquisition of the related Land
Interest the Lease Supplement, and (ii) the Construction Agency Agreement
pursuant to which Lessor shall appoint Lessee as construction agent to construct
a Facility on each of the Undeveloped Sites on the terms and conditions herein
and therein set forth. On each Advance Date, on the terms and conditions herein
set forth, Lessor shall make an Advance for the purposes of (i) acquiring one or
more Sites, (ii) funding a portion of the cost of constructing a Facility on an
Undeveloped Site and/or (iii) funding a portion of the Transaction Costs
allocable to a Site. The Developed Sites include, without limitation, the NHCA
Sites acquired by Lessor pursuant to that certain Participation Agreement dated
as of July 24, 1996 by and among Lessee, Lessor, Agent and the Lenders.
SECTION 2.3. Participation by Lenders. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of each of the parties hereto contained herein or made pursuant
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hereto, on each Advance Date each Lender shall finance, in part, each Advance by
Lessor by making a secured loan to Lessor (in accordance with Lessor's payment
instructions set forth on Schedule II) in an amount in immediately available
funds on such Advance Date equal to such Lender's Commitment Percentage of such
Advance and in the aggregate not more than its Commitment as set forth on
Schedule I hereto. Each loan shall be evidenced by one or more Notes issued to
the Lender(s) under and repayable in accordance with the terms of the Loan
Agreement (which shall be substantially in the form of Exhibit A thereto).
SECTION 2.4. Participation by Lessor. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of each of the parties hereto contained herein or made pursuant
hereto, on each Advance Date Lessor shall acquire an equity interest in the
Overall Transaction by contributing an amount in immediately available funds on
such Advance Date equal to Lessor's Commitment Percentage of the Advance being
made on such Advance Date and in the aggregate not more than the Equity Amount.
In consideration for its contribution of the Equity Amount Lessor shall be
entitled to be paid the Yield on the Equity Amount on each Payment Date.
SECTION 2.5. Advance Dates.
(a) Notices and Closing. At least ten (10) Business Days (in
the case of a Site Acquisition Date), or five (5) Business Days (in all other
cases) prior to each Advance Date, Lessee (in its capacity as Construction
Agent, in the case of clause (ii) below with respect to any Undeveloped Site, in
the case of clause (iii) below and in the case of clause (vi) below if clause
(ii) below shall be applicable to such Advance) or Agent shall deliver to the
other and to the Participants an irrevocable written notice substantially in the
form of Exhibit N (an "Advance Request"), setting forth:
(i) the proposed Advance Date;
(ii) in the case of an Advance to fund the cost of acquisition
of any Site or Group, a statement that a Site or Group is to be
acquired, together with a description of such Site or Group and the
purchase price therefor, and in the case of any Undeveloped Site, (x) a
statement setting forth the Construction Agent's reasonable estimate of
the construction period for the construction of the Facility thereon
and (y) a statement setting forth whether Lessee (in its capacity as
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Construction Agent) elects to pay interest and Yield allocable to such
Site during the applicable Construction Period or elects to have such
interest and Yield constitute Capitalized Interest and Capitalized
Yield, respectively (which election shall be irrevocable for such
Undeveloped Site and the applicable Construction Period therefor);
(iii) in the case of an Advance to fund any portion of the
cost of constructing a Facility on an Undeveloped Site, a description
of the work so funded, the identity of the provider thereof and the
identity of the relevant Site;
(iv) in the case of an Advance to fund any Transaction Costs,
a description of such Transaction Costs and a statement specifying the
Site or Sites to which such Transaction Costs are allocable;
(v) in the case of an Advance for purposes other than those
set forth in clause (iii) above (which shall be funded pursuant to
Section 2.5(j)), wire transfer instructions for the disbursement of
funds; and
(vi) except for any Advance Request solely for Construction
Costs under Section 3.3, the information required by Section 7 of
Exhibit N.
All documents and instruments required to be delivered on the Document Closing
Date and each Site Acquisition Date pursuant to this Agreement shall be
delivered at the offices of Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, Illinois 60603-3441 or at such other location as Agent shall specify.
All documents and instruments required to be delivered on any other Advance Date
pursuant to this Agreement shall be delivered at the offices of Agent at
Plymouth Meeting Executive Campus, 610 West Germantown Pike, Suite 200, Plymouth
Meeting, PA 19462, Attention: Carol Paige. On the scheduled Advance Date, and
subject to the terms and conditions of this Agreement, and upon receipt of funds
by Lessor from the Lenders sufficient therefor, Lessor shall make the requested
Advance.
(b) Commitment Limits. The aggregate amount disbursed by the
Participants hereunder (including all Capitalized Interest and Capitalized
Yield) shall not exceed the aggregate Commitments. The aggregate amount
disbursed by the Participants hereunder with respect to any Site or Facility
shall not exceed the amount allocated to such Site and Facility on Schedule
III-B or Schedule III-C, as applicable; provided, however, that the amount of
the Commitment not allocated to either Developed Sites or Undeveloped Sites on
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Schedule III-B and Schedule III-C, respectively, shall be allocated to Sites
upon the identification of each thereof in the following manner:
(i) Upon the identification by Lessee, as
Construction Agent, of such an unidentified Developed Site or an
unidentified Undeveloped Site, Lessee shall send a written notice of
such identification to Agent, which identification shall include
Lessee's allocation of the amount of the then unallocated Commitments
to Schedule III-B (in the case of a Developed Site) or Schedule III-C
(in the case of an Undeveloped Site);
(ii) The amount allocated to such Site shall be the
least of (x) the amount set forth in Lessee's notice; (y) the Fair
Market Sales Value of such Site (which, in the case of an Undeveloped
Site, shall include the projected value thereof upon completion of the
Facility thereon and the amount described in this clause (y) shall
include the estimated amount of all Advances required to complete the
construction of the Facility, in each case based upon the Plans and
Specifications for such Facility) as established by the Appraisal with
respect to such Site described in Section 3.2(n); and (z) the aggregate
amount of the Commitments which has not then or theretofore been
allocated to any other Site pursuant to this Section 2.5(b);
(iii) The amount allocated to any other unidentified
Site shall be similarly allocated by operation of the provisions of
this Section 2.5(b); and
(iv) Schedule III-B or Schedule III-C shall be deemed
amended to include such Site and the amount of the allocation
determined in accordance with clause (ii) of this Section 2.5(b).
For any Advance Request made by Lessee after the occurrence of
a Lease Event of Default, Agent shall have the right, but shall not be
obligated, to cancel such Advance Request prior to the honoring of such Advance
Request.
(c) Appraised Value Limitations. In no event shall the
aggregate amount disbursed by the Participants in respect of any Site exceed the
appraised value of such Site as of the Site Acquisition Date set forth in the
Appraisal thereof delivered pursuant to Section 3.2(n).
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(d) Required Dates. There may not be more than one Advance
Date in any calendar month (other than Advance Dates constituting Site
Acquisition Dates), and each Advance Date specified in an Advance Request shall
be the numerical day of the applicable calendar month which corresponds to the
date of the initial Advance Date; provided, however, that if such numerically
corresponding day is not a Business Day (or if such calendar month has no
numerically corresponding day), the Advance Date shall be the next succeeding
Business Day unless such day occurs in a different calendar month, in which case
the Advance Date shall be the immediately preceding Business Day. Any provision
in this Section 2.5(d) to the contrary notwithstanding, any Site Acquisition
Date shall be a permitted Advance Date, but only in respect of the Advance
attributable to the acquisition of the applicable Site.
(e) Obligations Several. The obligations of the parties hereto
or elsewhere in the Operative Documents shall be several and not joint; and no
party shall be liable or responsible for the acts or defaults of any other party
hereunder or under any other Operative Document.
(f) Termination of Commitment. Notwithstanding anything in
this Agreement to the contrary, no party hereto shall be obligated to make any
fundings pursuant to this Agreement after 5:00 P.M., New York time, on October
24, 1996 (for the initial advance) and October 7, 1998 (for any subsequent
advance), and no Advance Date may occur following such latter date.
(g) Failure of a Participant to Fund. If Agent determines that
any Participant (a "Defaulting Participant") will not make available the amount
(the "Defaulted Amount") which would constitute its portion of the Advance
specified in an Advance Request, Agent shall promptly notify each other
Participant (each, a "Non-Defaulting Participant") and specify the additional
amounts required to be funded by each Non-Defaulting Participant. Each
Non-Defaulting Participant, as soon as practical after receipt of notice but not
before the Advance Date, shall transfer to Agent, in immediately available
funds, its pro rata share of the Defaulted Amount, determined in the same
proportion that such Non-Defaulting Participant's Commitment bears to the
aggregate Commitments of all Non-Defaulting Participants; provided that such
amount, together with all amounts previously funded by each Non-Defaulting
Participant, shall not exceed the Non-Defaulting Participant's Commitment. If
the Defaulted Amount cannot be fully funded by the Non-Defaulting Participants,
Agent shall so notify the Non-Defaulting Participants and give to all
Non-Defaulting
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Participants the opportunity to increase their respective Commitments by notice
in writing to Agent; provided that should the aggregate proposed increased
Commitments by one or more Non-Defaulting Participants exceed the Defaulted
Amount, Agent shall increase the Commitments of the participating Non-Defaulting
Participants on a pro-rata basis in accordance with the respective amounts by
which such Non-Defaulting Participants have offered to participate, it being
understood that in no event shall the aggregate amount funded by any Participant
exceed the amount of such Participant's Commitment, after giving effect to any
increase in such Commitment pursuant to this sentence.
In the event of any funding of all or a portion of the Defaulted Amount
by the Non-Defaulting Participants, the following rules shall apply
notwithstanding any other provision in any Operative Document:
(i) The Commitment of the Defaulting Participant shall
be decreased in an amount equal to the total
aggregate increase, if any, in the Commitments of
the Non-Defaulting Participants pursuant to this
Section 2.5(g) and the Commitment Percentages of
the Participants shall be revised accordingly;
(ii) A Defaulting Participant shall be obligated to
fund any Advances occurring after its default
based upon its revised Commitment Percentage, if
the Commitment Percentages are revised in
accordance with the immediately preceding clause
(i); and to the extent that the Commitment
Percentage of any Defaulting Participant shall not
be so revised, Agent may thereafter call upon such
Defaulting Participant to fund a share of one or
more future Advances in an amount greater than
such Defaulting Participant's Commitment
Percentage so that the aggregate amount disbursed
by such Defaulting Participant shall equal (after
giving effect to such Advance or Advances) its
Commitment Percentage of the aggregate amount of
all Advances then and theretofore made by all
Participants;
(iii) A Defaulting Participant shall not have the right
to fund its Defaulted Amount without the written
consent of Agent and Lessee and then only to the
extent such Defaulted Amount has not been funded by
the Non-Defaulting Participants in a manner
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that resulted in a decrease in the Defaulting
Participant's Commitment Percentage;
(iv) If and to the extent that the Defaulted Amount is
not funded by the Non-Defaulting Participants,
Agent may delete funds from the Advance Request so
that the total Advance specified in the Advance
Request equals the aggregate revised fundings for
the Advance Date;
(v) The Defaulting Participant shall not be
responsible for any consequential damages suffered
by any Lessee or any of Lessee's Affiliates as a
result of its failure to so fund; and
(vi) Until the Defaulting Participant cures its
default, the right of the Defaulting Participant
to receive any payments made under the Notes or
otherwise in accordance with the Operative
Documents shall be subordinate in all respects to
the right of the Non-Defaulting Participants to
receive payments of amounts due under the Notes or
otherwise in accordance with the Operative
Documents, and no such payments shall be made to
the Defaulting Participant until each Non-
Defaulting Participant shall have received all
such sums then due to it.
(h) Postponement of Advance Date. In the event that any
Participant shall make the funding requested pursuant to any Advance Request and
the relevant Advance Date shall not have occurred on the date specified in such
Advance Request, Lessee (in its capacity as Construction Agent to the extent
such Advance Request was made by Lessee in such capacity) shall pay Lessor
damages equal to interest on the amount funded by each Participant at the
Assumed Interest Rate for the period from the date of each such Participant's
Advance to the date such Advance is returned to such Participant or such Advance
Date shall have occurred, less any interest earned by Lessor (or Agent) on
behalf of the Participants by investing such funded amounts (which damages
Lessor will remit to the appropriate Participant(s)); provided that this
provision shall not be construed to require Lessor (or Agent) to invest such
funds in interest-bearing accounts. Such damages shall be due and payable by
Lessee upon the occurrence of such postponed Advance Date and such payment shall
be an additional condition precedent to such Advance Date; provided, however,
that no additional Advance Request shall be required to be given if an Advance
Date is postponed and thereafter timely consummated; and provided, that if such
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Advance Date shall not have occurred by the third (3rd) Business Day following
the funding by the Participants in respect thereof, then all such damages shall
be due and payable on such date, and Lessor (or Agent on its behalf, as the case
may be) shall refund to each Participant all amounts funded by such Participant
and all accrued interest allocable to such Participant.
(i) Notes; Notations. Upon the consummation of each Advance,
each Lender may make a notation on the grid attached to such Lender's Note
indicating the amount of the Loan advanced by such Lender on such Advance Date,
and the Agent, on behalf of Lessor and the Lenders, shall make a notation on its
records indicating the amount of the Loan advanced by each Lender and the
portion of the Equity Amount so advanced by Lessor on such Advance Date. In
addition, on each Payment Date during any Construction Period, with respect to
the amount of Capitalized Interest and Capitalized Yield due for Advances made
in connection with Undeveloped Sites, in the event an Advance Request is made to
pay such Capitalized Interest and Capitalized Yield (it being understood that
Lessor shall cause such Capitalized Interest and Capitalized Yield to be paid by
operation of such Advance Request, if duly included in the Advance Request made
by Lessee in its capacity as Construction Agent, or in lieu of including such
payment in such Advance Request, Lessee in its capacity as Construction Agent
may elect to pay such Capitalized Interest and Capitalized Yield from its own
funds in order to avoid having Lessor default in the payment thereof and avoid
having such amounts included in the Lease Balance; provided, however, that such
election to include or exclude Capitalized Interest and Capitalized Yield in the
Advance Request must be made as described in Section 2.5(a)) each Lender shall
make a notation on the grid attached to such Lender's Note indicating the amount
of Capitalized Interest on such Lender's Note during the Interest Period ending
on such Payment Date (which Capitalized Interest shall thereby be added to the
principal amount of such Note). Lessor shall make a notation on its records
indicating the amount of Capitalized Yield on the Equity Amount during the
Interest Period. Each Participant is hereby authorized to record the date and
amount of each Advance made by such Participant, each continuation thereof, the
date and amount of each payment or repayment of principal or Equity Amount
thereof (as the case may be) and the length of each Interest Period with respect
thereto, on the grid annexed to and constituting a part of each Note held by
such Participant or the records of Agent, as applicable, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided, however that the failure to make any such
recordation or any error in such recordation shall not affect the obligation of
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Lessor under any Note or the obligation of Lessee to pay Rent.
(j) Construction Advances. Lessor shall establish and maintain
at Agent a deposit account in the name of the Construction Agent into which any
Advances made in order to fund any portion of the cost of constructing a
Facility on an Undeveloped Site shall be directly paid. So long as no Lease
Event of Default exists Lessor shall grant Construction Agent a power of
attorney to withdraw funds from such account for the performance of its agency
duties under the Construction Agency Agreement.
(k) Initial Interest and Yield on Advances. Interest and Yield
on each Advance shall be determined by reference to the Prime Rate or LIBO Rate,
whichever is applicable, for the period from the date of such Advance until the
commencement of the next succeeding Interest Period.
SECTION 2.6. Facility Fee; Commitment Fee; Commitment Reduction. (a) On
the Document Closing Date, Lessee shall pay to Agent, for the account of each
Participant, a fully-earned, non-refundable Facility Fee. Lessee shall pay to
Agent, for the account of each Participant, a fully-earned, non-refundable
Commitment Fee (the "Commitment Fee") determined on an amount equal to the daily
unused portion of the aggregate Commitments during the period (the "Commitment
Period") commencing on the Document Closing Date and ending on the second
anniversary of the Document Closing Date, calculated using a rate per annum
(based on a year of 360 days and actual days elapsed) equal to the Commitment
Fee Factor for such day, on the amount (not less than zero) equal to the amount
by which
(i) the amount of such Participant's Commitment
(after taking into account any reductions pursuant to Section 2.6(b)
below) on such day, exceeds
(ii) the aggregate funded principal amount of such
Participant's Loans or Equity Amount, as applicable.
As used herein, the "Commitment Fee Factor" for a given day shall be determined
as set forth in Section 2.10 of the Credit Agreement. The Commitment Fee shall
be due and payable for the preceding quarter (x) on each Regular Payment Date
(as defined in the Credit Agreement) in the Commitment Period, (y) on the date,
if any, of each reduction of the amount of the Commitment on the amount so
reduced and (z) on the first Business Day after October 7, 1998. From time to
time upon receipt, Agent will promptly deliver to the Participants their pro
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rata portions of such Facility Fee and Commitment Fee in accordance with their
respective Commitments.
(b) At the option of Lessee, from time to time, exercisable by written
notice to Lessor and Agent, Lessee may request Agent to reduce the aggregate
unused portion of the Participants' Commitments and Agent shall notify the
Participants of such request and the Participants shall each reduce the unused
portion of their respective Commitments, subject to the following provisions:
(i) Such notice from Lessee shall specify the aggregate amount of
such reduction for all Participants, which amount shall be
$1,000,000 or an integral multiple thereof;
(ii) Such notice shall specify the effective date of such
reduction, such effective date to be a date not earlier than
five Business Days after the date of such notice;
(iii) The remaining unused portion of the Commitments, after giving
effect to such reduction, shall be sufficient to fully fund
the remaining acquisition and construction costs to be funded
under this Agreement and the other Operative Documents, and
Lessee shall so certify in such notice; and
(iv) Any reduction of the unused portions of Commitments shall be
made pro rata among the Participants based upon the respective
amounts of the Commitments.
SECTION 2.7. Payments to Participants. The parties to this Agreement
hereby agree that any payment required to be made by Lessee to Lessor or any of
the Lenders, or by Lessor to Lenders out of amounts paid by Lessee to Lessor,
pursuant to any Operative Document may be made directly to Agent on behalf of
the applicable Participants by Lessee in lieu of the corresponding payment
required to be made by Lessee to such Participants, or by Lessor to Lenders out
of amounts payable by Lessee to Lessor, pursuant to any Operating Document. Such
payment by Lessee to Agent shall be deemed to constitute (a) the required
payment from Lessee to Lessor or any other applicable Participant and (b) the
corresponding payment by Lessor to the Lenders. Agent shall promptly (and in any
case, within one Business Day) remit to each of the Participants its respective
share of any such amounts.
SECTION 2.8. Nature of Transaction. (a) It is the intent of the
parties hereto that: (i) the transaction contemplated hereby constitutes an
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operating lease from Lessor to Lessee for purposes of Lessee's financial
reporting, (ii) the transaction contemplated hereby preserves ownership in the
Sites to Lessee for purposes of Federal and state tax and bankruptcy purposes,
(iii) Lessee, pursuant to the Lease, grants a security interest or lien, as the
case may be, in the Sites and the other Collateral to Lessor, (iv) for purposes
of Federal and state tax and bankruptcy purposes, the payment by Lessee of the
portions of Basic Rent described in clauses (i) and (ii) of the definition
thereof shall be treated as payments of interest, and the payment by Lessee of
the portions of Basic Rent described in clause (iii) of the definition thereof
and any other amounts in respect of the Lease Balance shall be treated as
repayments of principal, and (v) the Mortgage and Assignment of Lease create a
lien and security interest in the Collateral, subject to certain limited
exceptions. Nevertheless, Lessee acknowledges and agrees that none of Lessor,
Agent or any Lender has provided or will provide tax, accounting, health care
regulatory or legal advice to Lessee regarding the Overall Transaction or made
any representations or warranties concerning the tax, accounting, regulatory or
legal characteristics of the Operative Documents and that Lessee has obtained
and relied upon such tax, accounting, regulatory and legal advice concerning the
Operative Documents as it deems appropriate.
(b) Specifically, without limiting the generality of
subsection (a) of this Section 2.8, but understanding that the parties'
characterization is not the sole determinant of the issue, the parties hereto
intend and agree that with respect to the nature of the transactions evidenced
by the Lease in the context of the exercise of remedies under the Operative
Documents, relating to and arising out of any insolvency or receivership
proceedings or a petition under the United States bankruptcy laws or any other
applicable insolvency laws or statute of the United States of America or any
State or Commonwealth thereof affecting Lessee, Lessor or any Lender or any
enforcement or collection actions, the transactions evidenced by the Operative
Documents are loans made by the Lenders as unrelated third party lenders to
Lessee secured by the Sites.
SECTION 2.9. Computations. For all purposes under the Operative
Documents, all computations of interest, Yield, Facility Fee, Commitment Fees
and other accrued amounts (including the Overdue Rate) shall be made on the
basis of actual number of days elapsed in a 360-day year (or in the case of
calculations based upon the Prime Rate, on the basis of actual number of days
elapsed in a 365 (366) day year), except as otherwise specifically provided in
any Operative Document.
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SECTION 2.10. Renewal Term.
(a) Lessee's Renewal Request. Pursuant to Section 6.1 of the Lease, so
long as no Lease Payment/Bankruptcy Default or Lease Event of Default shall have
occurred and be continuing at the time Lessee delivers the Renewal Request and
at the commencement of the Renewal Term, Lessee may request that Agent, Lessor
and the Lenders extend the Lease and the Financing for the Renewal Term (such
request by Lessee is herein called the "Renewal Request"). In the event Lessee
makes such request, within thirty (30) days, Agent will prepare a proposal
setting forth the terms and conditions upon which Lessor and each Lender may
agree to extend the Lease for the Renewal Term, to present to Lessee, Lessor and
each Lender. Within fifteen (15) days of its receipt of Agent's proposal, Lessee
shall inform Agent in writing of whether Agent's proposal is acceptable to
Lessee, such approval by Lessee being in Lessee's sole discretion. Failure of
Lessee to inform Agent in writing of its approval or rejection within fifteen
(15) days of its receipt of Agent's proposal shall be deemed to constitute
Lessee's rejection thereof, in which event, Lessee's Renewal Request shall be
deemed void and of no force or effect.
(b) Agent's Solicitation of Lessor and Lenders. If Lessee shall approve
of Agent's proposal in writing, Agent shall solicit approval from each of Lessor
and the Lenders of such proposal; provided, that neither Lessor nor any Lender
shall be required to approve a proposal submitted by Agent. Within thirty (30)
days of solicitation by Agent, Lessor and each Lender shall indicate its
approval or rejection of the proposal submitted by Agent, such approval by
Lessor and each Lender being in such party's sole discretion. Failure of Lessor
or any Lender to indicate its approval or rejection within thirty (30) days of
solicitation shall be deemed to constitute such party's rejection thereof. If
Lessor or any Lender rejects (or is deemed to have rejected) Agent's proposal to
extend the Lease and the Financing for the Renewal Term (such Lessor or Lender,
in either case, is herein called a "Non-Renewing Participant"), then within
five (5) Business Days after the expiration of the aforementioned 30-day period,
Lessee shall be required to take one of the following actions:
(i) Lessee may elect to cancel its Renewal Request, in which event,
Lessee shall not have any right to extend the Lease and the
Financing for the Renewal Term. Lessee shall make such election
by written notice delivered to Agent not later than the end of
such five (5) Business Day period. In the event that Lessee
desires then to elect the Sale Option, Lessee shall make such
election in
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its notice cancelling its Renewal Request delivered pursuant to
the preceding sentence, and failing such election of the Sale
Option, Lessee shall be deemed to have irrevocably waived such
Sale Option and elected the Purchase Option.
(ii) Lessee may elect to replace the Non-Renewing Participant with
another Person which will constitute a replacement Lessor or
Lender (a "Replacement Participant") upon expiration of the Basic
Term, provided that Lessee certifies that the agreement between
Lessee and the Replacement Participant to become a Replacement
Participant is not based on terms more favorable to the
Replacement Participant than terms available to the other
Participants (except for Lessee's payment of the Replacement
Participant's legal fees and expenses). Lessee shall make such
election by written notice delivered to Agent not later than the
end of such five (5) Business Day period, which notice shall
identify the Replacement Participant. The date of expiration of
the Basic Term shall be treated as the Final Maturity Date with
respect to the Non-Renewing Participant, and on such date Lessee
shall cause the Replacement Participant to purchase in
immediately available funds all of the interest of the
Non-Renewing Participant in the Sites or the Notes, as
applicable, and the Operative Documents, for cash at a price
equal to: (x) in the case of Lessor, the aggregate outstanding
Equity Amount and accrued but unpaid Yield, plus all other
amounts then due and owing to Lessor, or (y) in the case of a
Lender, the aggregate outstanding amount of principal and accrued
but unpaid interest then outstanding on the Notes then held by
the Non-Renewing Participant, plus all other amounts then due and
owing to such Non-Renewing Participant. Any such transfer of a
Non-Renewing Participant's interests shall comply with the
provisions of Section 6.3 of this Agreement, except those
provisions that require a Non- Renewing Participant to pay its
own costs and expenses in connection with such transfer. If
Lessee fails (for any reason, including a default by the
Replacement Participant) to cause the Replacement Participant to
pay any such amounts when due pursuant to the preceding sentence,
the Lease shall not be renewed for the Renewal Term, Lessee shall
not be entitled to the Renewal Term, and such date of expiration
of the Basic Term shall be deemed the Final Maturity Date with
respect to all Participants. Each Replacement Participant shall
be subject to each of the terms and conditions of this Agreement
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and each of the other Operative Documents imposed upon Lenders
(or upon Lessor in the case of a Replacement Participant for
Lessor), and shall make the representations, warranties and
covenants and perform its obligations required hereunder and
thereunder. Specifically, without limitation, a Person shall not
become a Replacement Participant unless Agent consents to the
Replacement Participant (such consent not to be unreasonably
withheld), the Non-Renewing Participant shall have been replaced
under and in accordance with the Credit Agreement as well and
Agent shall receive prior to such Person becoming a Replacement
Participant the Non- Renewing Participant's written assignment
and the Replacement Participant's written assumption of the Non-
Renewing Participant's rights and obligations under the Operative
Documents and the Credit Agreement, such assignment and
assumption to be substantially in the form of Exhibit O hereto
and to otherwise be in form and substance reasonably acceptable
to Agent as it relates to this Agreement, and in form and
substance required by the Credit Agreement as it relates thereto.
If Lessee shall fail to duly elect either of the options under clauses (i) and
(ii) above within the applicable five (5) Business Day period, Lessee shall be
deemed to have made its election under clause (i) above and shall be deemed to
have elected the Purchase Option.
If at any time after Lessee shall have made a Renewal Request and prior
to the commencement of the Renewal Term, a Lease Event of Default shall have
occurred, then Lessee's rights under this Section 2.10 shall automatically
terminate and Lessee shall not be entitled to the Renewal Term.
Any provision in this Section 2.10 to the contrary notwithstanding, in
the event Lessee, Lessor and the renewing and replacement Lenders accept Agent's
proposal to renew the Lease and the Financing for the Renewal Term, then all
renewing and replacement Lenders must extend the Financing upon the same terms
and conditions; and if the foregoing condition shall not be satisfied, Lessee
shall not be entitled to the Renewal Term.
Lessee hereby agrees to pay all reasonable costs and expenses
(including reasonable legal fees and expenses) incurred by Agent, the then
existing Participants (including any Non-Renewing Participants) and any
Replacement Participants in connection with the provisions of this Section 2.10;
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provided, however, that Lessee shall not be responsible for any legal fees and
expenses of more than two counsel for all of Agent and the Participants
(including, without limitation, special Credit Agreement counsel) and any
special local counsel required by Agent. Lessee shall not be responsible for the
legal fees and expenses of other counsel for the Non-Renewing Participants and
Replacement Participants unless Lessee and such parties mutually agree on the
amount of such fees and expenses to be paid by Lessee.
SECTION 2.11. Highest Lawful Rate. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of (a) Lessee to Lessor under this
Agreement and the Lease, (b) Lessor to the Lenders under this Agreement, the
Notes and the Loan Documents and (c) either Lessee or Lessor or any other party
under any other Operative Document, shall be subject to the limitation that
payments of interest or of other amounts constituting interest under Applicable
Laws and Regulations shall not be required to the extent that receipt thereof
would be in excess of the Highest Lawful Rate (as defined below), or otherwise
contrary to provisions of law applicable to the recipient limiting rates of
interest which may be charged or collected by the recipient. Accordingly, if the
transactions or the amount paid or otherwise agreed to be paid for the use,
forbearance or detention of money under this Agreement, the Lease, the Loan
Documents and any other Operative Document would exceed the Highest Lawful Rate
or otherwise be usurious under Applicable Laws and Regulations (including
without limitation the federal and state laws of the United States of America,
or of any other jurisdiction whose laws may be mandatorily applicable) with
respect to the recipient of any such amount then, in that event, notwithstanding
anything to the contrary in this Agreement, the Lease, the Loan Documents, or
any other Operative Document, it is agreed as follows as to the recipient of any
such amount:
(a) the provisions of this Section 2.11 shall govern and
control over any other provision in this Agreement, the Lease, the Loan
Documents, and any other Operative Document and each provision set
forth therein is hereby so limited;
(b) the aggregate of all consideration which constitutes
interest under Applicable Laws and Regulations that is contracted for,
charged or received under this Agreement, the Lease, the Loan
Documents, or any other Operative Document shall under no circumstances
exceed the maximum amount of interest allowed by Applicable Laws and
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Regulations of the Commonwealth of Pennsylvania, excluding any
conflicts law (or, if and to the extent required by the Applicable Laws
and Regulations of any state in which any Site is located, the
Applicable Laws and Regulations of such state), it being the intention
of the parties that the Applicable Laws and Regulations of the
Commonwealth of Pennsylvania, excluding any conflicts laws, shall
govern the determination of the Highest Lawful Rate (such maximum
lawful interest rate, if any, with respect to such Lender herein called
the "Highest Lawful Rate"), and all amounts owed under this Agreement,
the Lease, the Loan Documents and any other Operative Document shall be
held subject to reduction and (i) the amount of interest which would
otherwise be payable to the recipient hereunder and under the Lease,
the Loan Documents and any other Operative Document, shall be
automatically reduced to the amount allowed under Applicable Laws and
Regulations and (ii) any unearned interest paid in excess of the
Highest Lawful Rate shall be credited to the payor by the recipient
(or, if such consideration shall have been paid in full, refunded to
the payee);
(c) all sums paid, or agreed to be paid for the use,
forbearance and detention of the money under this Agreement, the Lease,
the Loan Documents, or any other Operative Document shall, to the
extent permitted by Applicable Laws and Regulations, be amortized,
prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest
is uniform throughout the full term thereof;
(d) if at any time the interest, together with any other fees,
late charges and other sums payable pursuant to or in connection with
this Agreement, the Lease, the Loan Documents, and any other Operative
Document executed in connection herewith or therewith, and deemed
interest under Applicable Laws and Regulations, exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of
interest and any such fees, charges and sums to accrue to the recipient
of such interest, fees, charges and sums pursuant to the Operative
Documents shall be limited, notwithstanding anything to the contrary in
the Operative Documents to that amount which would have accrued at the
Highest Lawful Rate for the recipient, but any subsequent reductions,
as applicable, shall not reduce the interest to accrue pursuant to the
Operative Documents below the recipient's Highest Lawful Rate until the
total amount of interest payable to the recipient (including all
consideration which constitutes interest) equals the amount of interest
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which would have been payable to the recipient (including all
consideration which constitutes interest), plus the amount of fees
which would have been received but for the effect of this Section 2.11.
ARTICLE III
CONDITIONS TO ADVANCES AND COMPLETION
SECTION 3.1. Conditions to All Advances. The obligation of each
Participant to perform its obligations on any Advance Date shall be subject to
the fulfillment to the reasonable satisfaction of (including, with respect to
writings, such writings being in form and substance reasonably satisfactory to
Agent or, where expressly provided below, the Required Lenders), or the waiver
in writing by, Agent (at the direction of Required Lenders) of the conditions
precedent set forth in this Section 3.1 (in addition to the conditions precedent
set forth in Section 3.2 or 3.3, as applicable) on or prior to such Advance Date
(except that the obligation of any party hereto shall not be subject to such
party's own performance or compliance):
(a) Advance Request. Lessee (as Lessee or as Construction
Agent) shall have delivered an Advance Request conforming with the requirements
of Section 2.5 in respect of the proposed Advance Date. For any Advance Request
for the acquisition of any Site or Group (other than an Advance Request for an
Undeveloped Site), the amount of such Advance shall not be less than $3,000,000;
and for any Advance Request for the acquisition of any Undeveloped Site or for
construction costs, the aggregate amount of all Advances and expected Advances
for the acquisition of such Undeveloped Site and construction of the related
Facility shall not be less than $5,000,000.
(b) Performance. Each party to any Operative Document shall
have performed and complied with all agreements and conditions contained herein
and in any other Operative Document to which it is a party required to be
performed or complied with by it on or prior to such Advance Date. Without
limiting the foregoing, each Participant shall have funded the full amount to be
funded by such Participant on such Advance Date, as described in Article II.
(c) Consents and Approvals. All material Governmental Actions
and other approvals and consents required to be taken, given or obtained, as the
case may be, by or from any Authority or another Person, or by or from any
trustee or holder of any Indebtedness or obligation of Lessee, that are
necessary or, in the reasonable opinion of Agent or counsel to Agent, advisable
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in connection with the execution, delivery and performance of the Operative
Documents by all other parties hereto, shall have been taken, given or obtained
as the case may be (subject to the provision of Section 4.1(o) that no required
building or use related permit, approval or consent material to the use and
operation of any Site need be obtained prior to the date on which such permit,
approval or consent is or becomes necessary), shall be in full force and effect
and the time for appeal with respect to any thereof shall have expired (or, if
an appeal shall have been taken, the same shall have been dismissed) and shall
not be subject to any pending proceedings or appeals (administrative, judicial
or otherwise).
(d) Representations and Warranties True; Absence of Defaults
and Material Adverse Effect. Each representation and warranty of Lessee
contained herein or in any other Operative Document shall be true and correct in
all material respects as though made on and as of such Advance Date, except that
any such representation or warranty which is expressly made only as of a
specified date need be true only as of such date. No material Lease Default and
no Lease Event of Default shall have occurred and be continuing. Since the
Document Closing Date, no Material Adverse Effect shall have occurred.
(e) [INTENTIONALLY OMITTED.]
(f) Officer's Certificate of Lessor. On each Advance Date,
Agent shall have received, with sufficient counterpart originals for Agent to
distribute to all Participants, an Officer's Certificate of Lessor, dated such
Advance Date, stating that (A) each and every representation and warranty of
Lessor contained in the Operative Documents to which it is a party is true and
correct in all material respects on and as of such Advance Date as though made
on and as of such Advance Date, except to the extent such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects as of
such earlier date, (B) it has duly performed and complied with all agreements
and conditions herein and in any other Operative Document required to be
performed or complied with by it on or prior to such Advance Date and (C) each
Operative Document to which it is a party is in full force and effect with
respect to it.
(g) Transaction Costs. Lessee shall have paid all Transaction
Costs invoiced through such Advance Date to the parties to whom such Transaction
Costs are payable (or shall have requested payment thereof pursuant to the
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Advance Request). Payments shall be made by wire transfer of immediately
available funds, with such wire transfer being made to the account specified on
Schedule II in the case of payments to any of the parties listed on Schedule II.
(h) Proceedings Satisfactory, Etc. All proceedings taken in
connection with such Advance Date and all documents relating thereto shall be
reasonably satisfactory to Agent and counsel to the Participants, and Agent and
counsel to the Participants shall have received copies of such documents as
Agent or such counsel may reasonably request in connection therewith (with
sufficient copies for Agent to distribute to Lessor and all Participants), all
in form and substance reasonably satisfactory to Agent and such counsel.
(i) Taxes. All taxes, charges, fees and costs, if any, payable
in connection with the execution, delivery, recording and filing of the
Operative Documents and the transactions contemplated to be consummated on each
Advance Date shall have been paid in full, or arrangements for such payment
shall have been made to the satisfaction of Agent.
SECTION 3.2. Conditions to Acquisition or Ground Lease of Sites. The
obligation of each Participant to perform its obligations on any date on which
any Site or Group is to be acquired by Lessor and on the date on which any
Non-Acquired Land Interest is to be ground leased to Lessor by Lessee or made
subject to the Construction Agency Agreement (each, a "Site Acquisition Date")
shall in each case be subject to the fulfillment to the reasonable satisfaction
of (including, with respect to writings, such writings being in form and
substance reasonably satisfactory to Agent or, where expressly provided below,
the Required Lenders), or the waiver in writing by, Agent (at the direction of
Required Lenders) of the conditions precedent set forth in this Section 3.2 (in
addition to the conditions precedent set forth in Section 3.1) on or prior to
such Advance Date (except that the obligation of any party hereto shall not be
subject to such party's own performance or compliance):
(a) Filings and Recordings. All filings or recordings
enumerated and described in Schedule 4.1B hereof, as well as all other filings
and recordings necessary or advisable, including precautionary financing
statements, in the opinion of Agent or counsel to Agent, to perfect the rights,
titles and interests of Lessor, the Lenders and Agent intended to be created by
the Operative Documents shall have been made, or shall have been arranged to be
made promptly thereafter, in the appropriate places
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or offices, including any recordings and filings necessary to create, perfect,
preserve and protect (i) Lessor's interest in the Land Interests, the Facilities
and any other property and interests included in the Collateral and the
Participants' and Agent's rights under the Operative Documents and (ii) a first
mortgage lien on all Land Interests and Facilities included in the Collateral,
subject in both cases, to Permitted Exceptions and the rights of Lessee under
the Lease. All recording and filing fees and taxes with respect to any
recordings or filings made pursuant to this Section 3.1(a) shall have been paid
in full, and reasonably satisfactory evidence thereof shall have been delivered
to Agent, or arrangements for such payment shall have been made to the
satisfaction of Agent. Notwithstanding anything to the contrary contained in
this Section 3.1(a), if, as a result of a state's law, significant mortgage or
intangible taxes are payable upon recordation, at the request of Lessee, Lessor
and Agent will endeavor to minimize the taxes paid in connection with this
transaction and will cooperate with Lessee in realizing an alternative approach
acceptable to Agent based on the advice of local counsel, that will minimize
taxes payable while at the same time not adversely affecting the Lessor, the
Agent or the Lenders.
(b) Opinions of Counsel; Local Counsel Questionnaires. Agent
has received, with sufficient counterpart originals for Agent to distribute to
Lessor and each Participant, opinions of counsel addressed to Agent, Lessor, and
the Lenders substantially in the forms of Exhibits E-1, E-2, E-3 and E-4 with
respect to the Operative Documents executed and delivered in connection with
such Advance Date and the perfection and validity of the Participants' security
interests in the Land Interest being purchased on such Advance Date and the
Facility thereon (or to be constructed thereon), with such qualifications and
limitations as are acceptable to Agent and counsel to the Participants, and the
responses of local counsel to the local counsel questionnaire set forth as
Exhibit E-5. Each local counsel shall be subject to the prior approval of Agent
not to be unreasonably withheld.
(c) Survey. Lessee shall have delivered, or shall have caused
to be delivered, to Agent, with sufficient counterpart originals for Agent to
distribute to each Participant, and counsel to the Participants an ALTA survey
of the Site in a form satisfactory to the Title Insurance Company and showing no
state of facts unsatisfactory (in the reasonable exercise of its judgment) to
Agent and counsel to the Participants, which survey shall be certified to Lessor
and Agent.
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(d) Title Insurance. Lessor shall have received from the Title
Insurance Company its ALTA 1992 (or, with respect to any Site located in the
State of Texas, TLTA) owner's policy of title insurance, reasonably acceptable
in form and substance to Agent (the "Lessor's Policy") (or a final hand-marked
original thereof signed by the Title Insurance Company containing all of the
provisions to be included in such policy by the Title Insurance Company, in
which case Lessor shall receive a clean, final original of such policy within
thirty (30) days), insuring that Lessor has good and marketable title to (or, in
the case of any Non-Acquired Land Interest, a good and marketable ground
leasehold estate in) the Land Interest being purchased by (or ground leased to,
as the case may be) Lessor on such Advance Date, subject to the Lease and such
other exceptions to title as are reasonably acceptable to Agent, together with
complete, legible copies of all encumbrances, maps and surveys of record. Agent,
for the benefit of the Lenders shall have received from the Title Insurance
Company its ALTA 1992 form of loan policy of title insurance (the "Loan Policy";
together with the Lessor's Policy, the "Title Policies"), reasonably acceptable
in form and substance to Agent and the counsel for the Lenders, insuring the
creation under the Mortgage in favor of Agent and the Lease in favor of Lessor
of a valid first priority mortgage lien against the Land Interest (or, in the
case of a Non-Acquired Land Interest, against Lessor's ground leasehold estate
in such Non-Acquired Land Interest), subject to such exceptions to title as are
reasonably acceptable to Agent and the counsel for the Lenders, together with
complete, legible copies of all encumbrances, maps and surveys of record. The
Title Policies shall be dated as of the applicable Site Acquisition Date, shall
be in an amount equal to the Fair Market Sales Value of such Site as of the Site
Acquisition Date (assuming in the case of an Undeveloped Site that the Facility
had already been constructed thereon) and, to the extent permitted under
Applicable Laws and Regulations and to the extent applicable to each type of
policy, shall (x) contain affirmative endorsements as to mechanics' liens,
usury, doing business, zoning (with express parking coverage), easements and
rights-of-way, comprehensive coverage, encroachments, rights of access and
survey matters, (y) delete the creditors' rights exclusion and the general
exceptions to coverage, and (z) contain such other endorsements reasonably
requested by Agent; provided in each case such endorsements are available at
commercially reasonable rates.
(e) Environmental Audit. Not less than five (5) Business Days
prior to such Site Acquisition Date, Agent shall have received an Environmental
Audit for such Site, which shall be in form and substance acceptable to Agent,
Lessor and the Required Lenders in their sole and absolute discretion.
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(f) Zoning. In the event that, with respect to a Developed
Site, an ALTA 3.1 Zoning Endorsement (with express parking coverage), and with
respect to an Undeveloped Site, an ALTA 3.0 Zoning Endorsement, was not obtained
in connection with the Title Policies for such Site, Agent on behalf of the
Participants shall receive a copy of the applicable zoning ordinance, special
use permit or other Governmental Action covering the Site, and such evidence as
Agent may reasonably require (including without limitation the written
certification of Lessee's certified professional engineer or registered
architect or any other person satisfactory to Agent or a zoning letter from the
applicable Authority, in each case in form and substance reasonably satisfactory
to Agent) that the zoning of the Site is satisfactory and compatible with the
Facility located or to be constructed thereon.
(g) Purchase Agreement, Deed and Bill of Sale; Ground Lease.
As to any Land Interest other than a Non-Acquired Land Interest, Agent shall
have received (i) a fully executed Purchase Agreement regarding the acquisition
of such Land Interest and the Facility, if any, or other improvements, if any,
located on such Site, together with (x) an Officer's Certificate of Lessee to
the effect that such Purchase Agreement is complete and includes all existing
amendments, modifications and riders, and (y) a Purchase Agreement Assignment
from Lessee to Lessor, (ii) a Deed conveying to Lessor such Land Interest and
the Facility, if any, or other improvements, if any, located on such Site and
(iii) a Bill of Sale conveying any portion of any such Facility or improvements
which do not or may not constitute real estate under Applicable Law (provided
that no Bill of Sale shall be required if the form of Deed used purports to
convey title to the items which would otherwise be conveyed in the Bill of Sale
and if such Deed is in fact sufficient under applicable law to convey title to
such items). As to any Non-Acquired Land Interest, Agent shall have received a
Ground Lease granting to Lessor a ground leasehold estate on such Non-Acquired
Land Interest, duly executed and delivered by Lessee, as ground lessor, and
Lessor, as ground lessee.
(h) Lease Supplement. Agent shall have received, with
sufficient counterpart originals for Agent to distribute to each Participant,
original counterparts of the Lease Supplement executed by Lessee and Lessor with
respect to such Site or Group; provided that only Agent shall receive and retain
the one original thereof marked as the sole original counterpart for UCC
purposes.
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(i) Mortgage. Agent shall have received a Mortgage duly
executed by Lessor with respect to such Site.
(j) Supplement to Assignment of Lease. Agent shall have
received a Supplement to the Assignment of Lease duly executed by Lessor with
respect to such Site.
(k) Construction Agency Supplement. It shall be a condition to
such Advance that the Construction Agency Agreement be in full force and effect
and no Construction Agency Event of Default shall have occurred and be
continuing. With respect to each Undeveloped Site to be acquired by Lessor on
such Site Acquisition Date and with respect to each Non-Acquired Land Interest
to be ground leased to Lessor on such Site Acquisition Date which relates to an
Undeveloped Site, each Participant and Agent shall receive a Construction Agency
Agreement Supplement with respect to the Facility to be constructed on such
Site, fully executed by Lessee, as Construction Agent, and Lessor.
(l) Filings and Recordations. Agent shall have received
evidence reasonably satisfactory to it that each of the Deed (except in the case
of the Non-Acquired Land Interests), the Lease Supplement (if not excluded from
recording requirements as provided herein), the Mortgage, the Assignment of
Lease and the Supplement to Assignment of Lease delivered on any Site
Acquisition Date and, with respect to the Non-Acquired Land Interests, the
Ground Lease relating thereto shall have been or are being recorded with the
appropriate Authorities in the order in which such documents are listed in this
clause (except where recording has been waived in connection with Section
3.2(a)), and the UCC Financing Statements with respect to the Facility being
acquired or constructed shall have been or are being filed with the appropriate
Authorities.
(m) Insurance. Insurance complying with the provisions of
Article XI of the Lease shall be in full force and effect as evidenced by
certificates of insurance, broker's reports or insurance binders delivered to
Lessor in form and substance reasonably satisfactory to Agent.
(n) Appraisal. Not less than ten (10) Business Days prior to
such Site Acquisition Date, Agent shall have received and will deliver to each
Participant an appraisal (the "Appraisal") which will establish (by the use of
appraisal methods satisfactory to Agent and Lessor) that, as of the date such
Site becomes subject to the Lease, the Site (which, in the case of an
Undeveloped Site, Fair Market Sales Value shall include the projected value
thereof
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upon completion of the Facility thereon based upon the Plans and Specifications
for such Facility) will have a Fair Market Sales Value of not less than the
amount allocated to such Site on Schedule III-B or Schedule III-C or, in the
case of any unidentified Site, the amount determined pursuant to Section 2.5(b).
The Appraisal will also establish the Fair Market Sales Value of such Site as of
the end of the Base Term, the Renewal Term and the Extended Renewal Term. The
Appraisal will be prepared in accordance with the Financial Institutions Reform
Recovery and Enforcement Act of 1989 and will be performed by an independent
appraisal company chosen by Agent.
(o) FIRPTA Affidavit. Lessee shall have caused the seller of
the Land Interest to be acquired on such Site Acquisition Date (or Lessee
itself, as ground lessor, in the case of each Non-Acquired Land Interest) to
deliver to Agent either (i) a FIRPTA Affidavit in customary form or (ii) in the
case of a seller but not Lessee, if such seller is a "foreign person" as defined
in Section 1445 of the Code, evidence that a portion of the sales price to be
paid to such seller has been withheld, if so required, in accordance with the
provisions of the Code and the Regulations.
(p) No Event of Loss, Condemnation or Event of Taking. No
Event of Loss shall have occurred in respect of any Site to be acquired on the
Site Acquisition Date. No action shall be pending or threatened by an Authority
to initiate a Condemnation or an Event of Taking in respect of any Site to be
acquired on the Site Acquisition Date.
(q) Appraised Value Limitation; 25% Test. The appraised value
of the Land Interest of any Site or Group to be acquired shall not exceed
twenty-five percent (25%) of the forecasted Fair Market Sales Value of such Site
or Group (on an "as-built" basis, assuming the construction of a Facility on
each Site and each Site included in a Group).
(r) Good Standing. Lessee shall have delivered to Agent a
certificate issued by the office of the secretary of state of the jurisdiction
in which any Land Interest to be acquired or Non-Acquired Land Interest to be
ground leased is located indicating that Lessee is a foreign corporation (or
Pennsylvania corporation, in the case of any Land Interest or Non-Acquired Land
Interest located in Pennsylvania) in good standing under the laws of such
jurisdiction.
(s) Outside Deadline. Notwithstanding anything to the contrary
herein or in any other Operative Document, no Site Acquisition Date for any Site
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or Non-Acquired Land Interest shall occur after the earlier of (i) October 7,
1998 and (ii) in the case of an Undeveloped Site, a date which results in the
period from such date to the second anniversary of the Document Closing Date
being shorter than the construction period applicable to such Undeveloped Site
as specified in the Advance Request for the acquisition of such Undeveloped Site
in accordance with Section 2.5(a).
The Site Acquisition Date for the Sites set forth on Schedule I of the Lease
(the "NHCA Sites") was July 24, 1996.
(t) Location of Site. In the event that the Site or
Non-Acquired Land Interest shall be located in a state other than the state in
which an existing Site or Non-Acquired Land Interest is located or the
Commonwealth of Pennsylvania, Lessor and Agent shall have approved of the State
for purposes of the acquisition of such Site or the ground leasing of such
Non-Acquired Land Interest.
(u) Confirmation of Certain Operative Documents. As a
condition to the earlier to occur of (i) the first advance after the date hereof
to acquire any Site or Group or (ii) the entering into a ground lease by Lessor,
Lessee shall deliver to Lessor and Agent such written confirmations of the
Mortgages and the other documents set forth on Schedule 3.2(u) constituting
Operative Documents under the Original Participation Agreement as Lessor and
Agent shall reasonably request, together with such updates of counsel opinions
(including local counsel opinions) and title insurance endorsements relating
thereto as Lessor and Agent shall reasonably request (all in form and substance
reasonably satisfactory to Lessor and Agent).
(v) Conditions to Initial Ground Lease. As a condition to the
first ground lease to be entered into by Lessor, Lessee shall deliver to Lessor
a form of ground lease in form and substance acceptable to Lessor and Agent,
together with a written confirmation agreement among Lessee, Lessor and Agent
confirming that such form of ground lease shall constitute the form of ground
lease to be attached hereto as Exhibit M. In such case, all references
thereafter to this Agreement shall be deemed to mean this Agreement together
with such confirmation agreement and form of ground lease, whether or not such
reference expressly so provides.
SECTION 3.3. Conditions Precedent to Advances for Construction Costs.
The obligation of each Participant to perform its obligations on any Advance
Date for the payment of costs of construction of a Facility shall be subject to
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the fulfillment to the reasonable satisfaction of (including, with respect to
writings, such writings being in form and substance reasonably satisfactory to
Agent or, where expressly provided below, the Required Lenders), or the waiver
in writing by, Agent (at the direction of Required Lenders) of the conditions
precedent set forth in this Section 3.3 (in addition to the conditions precedent
set forth in Section 3.1 and 3.2, as applicable) on or prior to such Advance
Date (except that the obligation of any party hereto shall not be subject to
such party's own performance or compliance):
(a) Building Plans and Architect's Agreement; Assignment.
Agent shall have received, upon request, the first page of a copy of the Plans
and Specifications signed, and all other pages thereof initialed by Lessee, as
Construction Agent, and Construction Agent's general contractor (if any) and, if
required by a Participant, a copy of Construction Agent's agreement with the
Architect, if any. Prior to the first Advance under this Section 3.3 with
respect to any Facility, Agent shall receive an assignment from Lessee in favor
of Lessor of Lessee's interest, as Construction Agent, in the Plans and
Specifications and the Architect's Agreement relating to such Facility, in the
form required by the Construction Agency Agreement, and either (i) attached
thereto is the Architect's written consent to such assignment, in the form
required by the Construction Agency Agreement, or (ii) included in such
assignment is a certification of Lessee that the applicable Architect's
Agreement includes a provision in substance identical to such consent.
(b) Construction Contract; Assignment. Agent shall have
received, upon request, a copy of the general construction contract (if any) and
a copy of each Major Construction Document entered into by Construction Agent or
by Construction Agent's general contractor, as the case may be. Prior to the
first Advance under this Section 3.3 with respect to any Facility, Agent shall
receive an assignment from Lessee in favor of Lessor of the general construction
contract (if any) relating to such Facility and the Permits related thereto, in
the form required by the Construction Agency Agreement, and either (i) attached
thereto is the contractor's written consent to such assignment, in the form
required by the Construction Agency Agreement, or (ii) included in such
assignment is a certification of Lessee that the applicable general construction
contract includes a provision in substance identical to such consent.
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(c) Assurance of Completion. In the event that at any time or
from time to time, there is unavailable sufficient unfunded Commitment allocated
to such Site to fully pay for the completion of construction of such Facility,
Lessee, as Construction Agent, shall contribute its own funds to pay costs of
such construction prior to making any further request for any Advance to pay for
such construction until the remaining unfunded Commitment allocated to such Site
is sufficient to fully pay for the completion of such construction without
further contributions from Lessee.
(d) Construction Progress Information. In the event that
either (i) mechanics' liens (excluding Permitted Liens) with an aggregate amount
claimed which equals or is greater than $500,000 are filed against any Site or
(ii) five (5) or more mechanics' liens (excluding Permitted Liens) are filed
against any Site, Lessee, as Construction Agent, shall promptly (and in any
event not later than the delivery of the next following Advance Request) furnish
to Agent, and shall thereafter continue to furnish to Agent as a condition to
each Advance with respect to such Site, notice of the amount and nature of each
such mechanics' lien claim and such additional details concerning construction
of the Facility as Agent shall require, including (x) receipted invoices, bills
of sale or unconditional partial releases of lien (on forms approved by the
Participants) from each materials dealer, laborer and contractor employed by
Construction Agent for all work completed or materials supplied through such
date for which payment is being requested; and (y) receipted invoices, bills of
sale or unconditional partial releases of lien (on forms approved by the
Participants) from each materials dealer, laborer and subcontractor employed by
parties other than Construction Agent for work completed or materials provided
no more than 30 days prior to the Advance Date.
SECTION 3.4. Conditions to Substantial Completion. The Completion of
any Facility shall be deemed to have occurred upon the satisfaction of the
following conditions with respect to such Facility, and with respect to each
Facility, Lessee shall provide the following to the satisfaction of (including,
with respect to writings, such writings being in form and substance reasonably
satisfactory to Agent or, where expressly provided below, the Required Lenders),
or the waiver in writing by, Agent (at the direction of Required Lenders),
within 60 days of substantial completion of such Facility and prior to the final
Advance with respect to such Facility under Section 3.5:
(a) Architect's Certificate. Construction Agent shall have
furnished to Agent, with sufficient counterpart originals for Agent to
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distribute to all Participants, a certificate of the Architect substantially in
the form of Exhibit K (or such other form reasonably acceptable to Agent) dated
at or about the Completion Date and stating that the Facility has been completed
substantially in accordance with the Plans and Specifications and such Facility
is ready for occupancy; (ii) such Facility, as so completed, complies in all
material respects with all Applicable Laws and Regulations, and certifying that
attached thereto is a true and correct copy of the "as-built" Plans and
Specifications for such Facility (which may be in the form of the initial Plans
and Specifications for such Facility, with all change orders attached), and
(iii) all licenses, permits and approvals of any Authority affecting the Site,
including a final, unconditional certificate of occupancy have been obtained
from the necessary Authorities; provided, that the certificate of occupancy may
be a temporary certificate of occupancy, in which event, Lessee, as Construction
Agent, hereby covenants to (x) obtain a final, unconditional certificate of
occupancy within sixty days after substantial completion of the applicable
Facility and (y) promptly (and in any event prior to disbursement of the final
Advance pursuant to Section 3.5 with respect to such Site) deliver to Agent a
true, correct and complete copy of such final, unconditional certificate of
occupancy, certified by Lessee, as Construction Agent.
(b) Construction Agent's Certificate; As-Built Survey; Title
Insurance Endorsements. Construction Agent shall have furnished to Agent true,
correct and complete copies, certified by the Construction Agent, of the
following:
(i) an "as-built" ALTA survey of the Site,
certified to Agent and Lessor, showing the location of the completed
Facility, the location of all points of access to the Site and the
location of all easements affecting the Site and certifying that there
are no encroachments of the Facility onto any easements affecting the
Site or onto any adjoining property and that all applicable setback
requirements and other restrictions have been complied with;
(ii) a date-down endorsement, dated not earlier
than the date of substantial completion of the Facilities, to the
applicable Title Insurance Policy (or, if not available under the
applicable state law, then such other evidence of the lack of recorded
and unrecorded mechanics' liens affecting (or inchoate rights thereto
which could affect) the Site as Agent may reasonably request); and
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(iii) in the event that the applicable Title
Insurance Policy is required to include an ALTA 3.0 zoning endorsement
pursuant to the provisions of Section 3.2(f), a ALTA 3.1 Zoning
Endorsement (with express parking coverage).
(c) Construction Completion. The construction of the Facility
shall have been completed substantially in accordance with the Plans and
Specifications for such Facility and all Applicable Laws and Regulations, and
such Facility shall be ready for occupancy and operation. All fixtures and other
property contemplated under such Plans and Specifications to be incorporated
into or installed in such Facility shall have been incorporated or installed
free and clear of all Liens except for Permitted Liens and Liens in favor of
Lessor or Agent.
(d) Lessee Certification. Lessee, as Construction Agent, shall
have furnished Lessor and Agent with a certification of Lessee, as Construction
Agent, to the effect that:
(i) The representations and warranties of Lessee
with respect to such Site set forth in Section 4.1(i) are true and
correct as of the Completion Date for such Facility in all material
respects. All amounts owing to third parties for the construction of
the Facility have been paid in full (other than contingent obligations
for which Lessee, as Construction Agent, has made adequate reserves,
including amounts funded to the Construction Agent pursuant to Section
3.5(a)).
(ii) No changes or modifications were made to the
related Plans and Specifications after the related Site Acquisition
Date that materially and adversely effect the value, utility or
economic useful life of such Site.
(e) Searches. Agent shall have received a report, as of a
current date, prepared by a search company reasonably satisfactory to Agent, of
judgment liens, tax liens and Uniform Commercial Code filings with respect to
Lessee and the Site filed of record with the applicable State filing offices in
the jurisdiction where such Site is located and the State in which Lessee has
its principal place of business.
SECTION 3.5. Conditions Precedent to Final Advances. The obligation of
each Participant to perform its obligations on any Advance Date for the payment
of the final disbursement of construction costs of a Facility (following the
Completion of construction thereon and the expiration of the Construction Period
with respect to such Facility) shall be subject to the satisfaction
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of (including, with respect to writings, such writings being in form and
substance reasonably satisfactory to Agent or, where expressly provided below,
the Required Lenders), or the waiver in writing by, Agent (at the direction of
Required Lenders) of the conditions precedent set forth in this Section 3.5 (in
addition to the conditions precedent set forth in Section 3.1, 3.2 and 3.3, as
applicable) on or prior to such Advance Date (except that the obligation of any
party hereto shall not be subject to such party's own performance or
compliance):
(a) Funding of Punchlist Amount. Provided that no Lease Event
of Default shall have occurred and be continuing, within thirty (30) days after
Completion of a Facility and prior to the termination date of the Commitments as
set forth in Section 2.5(f), Lessee, as Construction Agent, may request in
writing that Lessor request that the Participants fund the remaining cost to
complete all "punchlist" items for such Facility (the "Punchlist Amount"), in
which event, Agent, on behalf of Lessor, shall make such request of the
Participants. Such request by Lessee shall include Lessee's certification of the
Punchlist Amount. In such event, the Participants shall make an Advance in an
amount equal to the lesser of (x) the Punchlist Amount and (y) the remaining
unfunded portion of the aggregate Commitments applicable to such Facility under
Section 2.5(b). Any Advance made under this Section 3.5(a), not to exceed
$250,000, shall be paid to Construction Agent. The amount of any Advance so
funded to Construction Agent shall be deemed advanced by the Participants
hereunder and under the other Operative Documents as of the date so funded, and
the Lease Balance shall be increased by such amount on the date so funded by the
Participants. Lessee, as Construction Agent, shall cause all punchlist items to
be completed within thirty (30) days after the expiration of the Construction
Period for such Facility. Advances so funded shall be used by Lessee, as
Construction Agent, as needed, to fund the costs of construction of the Facility
for which the Advance was made.
(b) Repayments of Unused Advances. In the event any portion of
an Advance funded pursuant to Section 3.5(a) is not used by Lessee, as
Construction Agent, to pay the costs of construction of the Facility in
connection with which such Advance was made, then Lessee, as Construction Agent,
shall have the obligation to cause any such excess funds to be remitted to Agent
on the first Payment Date not less than one hundred twenty (120) days after the
expiration of the Construction Period for such Facility, in which event, Lessor
shall apply such amounts to repayment of the Notes and the Equity Amount pro
rata, and the Lease Balance shall be adjusted accordingly.
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(c) Lessee Certification. Upon completion of the punchlist
items for any Facility, Lessee, as Construction Agent, shall furnish Lessor and
Agent with a certification of Lessee, as Construction Agent, to the effect that:
(i) The representations and warranties of Lessee
with respect to the applicable Site set forth in Section 4.1(i) are
true and correct as of the date of completion of all such punchlist
items. All amounts owing to third parties for the construction of the
Facility have been paid in full (other than contingent obligations for
which Lessee has made adequate reserves).
(ii) No changes or modifications were made to the
related Plans and Specifications after the date of the certification
from Lessee specified in Section 3.4(d) that have had a Material
Adverse Effect on the value, use or useful life of such Site.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of Lessee. As of the date
hereof, Lessee makes the representations and warranties set forth in this
Section 4.1 to each of the other parties hereto.
(a) Due Organization, etc. Lessee is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and Lessee has full corporate power and authority
to conduct its business as presently and presently proposed to be conducted, to
own or hold under lease its properties, to enter into and perform its
obligations under each of the Operative Documents to which it is or is to be a
party and each other agreement, instrument and document to be executed and
delivered by it on or before the Document Closing Date in connection with or as
contemplated by each such Operative Document to which it is or is to be a party,
and it is duly qualified as a foreign corporation authorized to do business and
is in good standing in every jurisdiction in which its failure to be so
qualified would have a Material Adverse Effect. Lessee is a single purpose
corporation wholly-owned by Genesis, the sole purpose of which is to enter into
and perform its obligations under the transactions contemplated by the Operative
Documents and hold its rights in and to the Sites.
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(b) Authorization; No Conflict. The execution and delivery by
Lessee of each of the Operative Documents to which it is or is to be a party,
and the performance by Lessee of its obligations under such Operative Documents,
have been duly authorized by all necessary corporate action (including any
necessary stockholder action) on its part, and do not and will not: (i)
contravene any Applicable Laws and Regulations currently in effect applicable to
or binding on it or the Sites; (ii) violate any provision of its charter or
bylaws; (iii) result in a breach of or constitute a default under any indenture,
loan or credit agreement, or any other agreement or instrument to which Lessee
is a party or by which Lessee or its properties may be bound or affected, which
breaches or defaults would have, individually or in the aggregate, a Material
Adverse Effect; (iv) result in, or require, the creation or imposition of any
Lien of any nature upon or with respect to any of the properties now owned or
hereafter acquired by Lessee (other than the security interests created pursuant
to the Operative Documents); or (v) require any Governmental Action by any
Authority, except for (A) the filings and recordings listed on Schedule 4.1B to
perfect the rights of Lessor, the Lenders and Agent intended to be created by
the Operative Documents, and (B) those Governmental Actions required with
respect to Lessee or any of its Affiliates listed on Schedule 4.1A, each of
which have been duly effected and are, or on the initial Advance Date will be,
in full force and effect; and Lessee is not in default under or in violation of
its charter or bylaws. The Lease (including all amendments and supplements
thereto including, without limitation, any amendments which may increase the
amount of the lease financing facility) is a "Credit Facility" within the
meaning of the 1995 Indenture, constitutes "Senior Indebtedness" within the
meaning of the 1993 Indenture and, from and after the execution and delivery of
the 1996 Indenture and the issuance of the notes thereunder, is or will
constitute "Senior Indebtedness" within the meaning thereof, and attached as
Schedule 4.1C are correct and complete computations demonstrating compliance by
Genesis with Section 5.9 of the 1995 Indenture after giving effect as
Indebtedness under such Indenture to the obligations of Lessee and Guarantors
under or in connection with the Operative Documents.
(c) Enforceability, etc. Each Operative Document to which
Lessee is or is to be a party constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with the terms
thereof, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and by general
equitable principles.
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(d) Litigation. There is no action, proceeding or
investigation pending or, to Lessee's knowledge, threatened which questions the
validity of the Operative Documents to which Lessee is or is to be a party or
any action taken or to be taken pursuant to the Operative Documents to which
Lessee is or is to be a party, and there is no action, proceeding or
investigation pending or, to Lessee's knowledge, threatened which, if adversely
determined, would have a Material Adverse Effect.
(e) Taxes. Lessee has filed or caused to be filed all United
States Federal and all other material tax returns that are required to be filed
by Lessee, and has paid or caused to be paid all taxes shown to be due and
payable on such returns or on any assessment received by Lessee to the extent
that such taxes have become due and payable except to the extent that taxes due,
but unpaid, are being contested in good faith by Lessee by appropriate action or
proceeding and, to the extent (if any) that such taxes are not due and payable,
Lessee has established or caused to be established reserves that are adequate
for the payment thereof in accordance with GAAP.
(f) Rights in Respect of the Sites. Lessee is not a party to
any contract or agreement to sell any interest in the Sites or any part thereof
other than pursuant to or in accordance with this Agreement and the Lease.
(g) No Lease Default, Loss, etc. As of each Advance Date: no
Lease Default, Lease Event of Default, Event of Loss, Condemnation or Casualty
has occurred and is continuing; there is no action pending or, to the best of
Lessee's knowledge, threatened by an Authority to initiate a Condemnation; no
condition exists that constitutes, or with the giving of notice or lapse of time
or both would constitute an event of default by Lessee under any material
indenture, mortgage, chattel mortgage, deed of trust, lease, conditional sales
contract, loan or credit arrangement or other material agreement or instrument
to which Lessee is a party or by which Lessee or any of its properties may be
bound which individually or in the aggregate with all such events of default
could have a Material Adverse Effect.
(h) Chief Executive Office of Lessee. The principal place of
business and chief executive office, as such terms are used in Section 9-103(3)
of the UCC, of Lessee are each located at 148 West State Street, Kennett Square,
Pennsylvania 19348. Lessee does not do business in more than one county in the
Commonwealth of Pennsylvania; provided, that if Lessee shall hereafter commence
doing business in more than one county in the Commonwealth of Pennsylvania, it
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shall cause to be made all filings and recordings described in Section 3.2(a) in
light of such change in Lessee's business.
(i) Compliance With Law. With respect to each Site for which a
Facility has been completed or acquired, except as otherwise set forth in the
Environmental Audit of such Site provided to Lessor and Agent pursuant to
Section 3.2(e) prior to Lessor's acquisition of such Site, (i) Lessee has at all
times complied and is in material compliance with and will comply with all
Applicable Laws and Regulations, including all Environmental Laws, (ii) each
Site and the use thereof by Lessee and its agents, assignees, employees,
invitees, lessees, licensees and tenants complies in all material respects with
all Applicable Laws and Regulations (including all zoning and land use laws and
Environmental Laws) and Insurance Requirements, except for any violations which
would not have, individually or in the aggregate, a Material Adverse Effect on
Lessee or any Site; and (iii) such Facility on such Site do not encroach in any
material manner onto any adjoining land (except as permitted by express written
easements or as insured by appropriate title insurance). With respect to each
Site for which a Facility has not been completed, the related Plans and
Specifications have been or will be prepared in accordance with Applicable Laws
and Regulations (including applicable Environmental Laws and building, planning,
zoning, subdivision and fire codes, laws, rules and regulations) and such
Facility and the other improvements to be constructed on such Site will not,
encroach in any manner onto any adjoining land (except as permitted by express
written easements or as insured by appropriate title insurance). Except as
otherwise set forth in the Environmental Audit of such Site, with respect to
each Site, there are no underground storage tanks at such Site and Lessee shall
not cause or permit any underground storage tanks to be constructed or located
at any Site. Lessee will not direct Lessor to acquire any Site pursuant to
Section 2.2 unless (x) such Site and operation and condition thereof shall
comply with all Applicable Laws and Regulations, including all Environmental
Laws, except for any violations which would not have, individually or in the
aggregate, a Material Adverse Effect on Lessee or any Site, and (y) no condition
regarding Hazardous Materials exists on or with respect to such Site except as
otherwise set forth in the Environmental Audit of such Site.
(j) Investment Company Act. Lessee is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
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(k) Public Utility Holding Company. Lessee is not subject to
regulation as a "holding company," 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.
(l) Licenses, Registrations and Permits. Except as set forth
on the Environmental Audit, all material licenses, approvals, authorizations,
consents, permits (including building, demolition and environmental permits,
licenses, approvals, authorizations and consents), easements and rights-of-way,
including proof and dedication, (collectively, the "Permits") required for (x)
the use, treatment, storage, transport, disposal or disposition of any Hazardous
Material on, at, under or from each Site during the construction of the Facility
thereon, (y) construction of each Facility in accordance with the related Plans
and Specifications and the Construction Agency Agreement and (z) the use and
occupancy of the Sites and for the operation thereof (including a certificate or
certificates of occupancy for such Site or other legally equivalent permission
to occupy such Site) have either been obtained from the appropriate Authorities
having jurisdiction or from private parties, as the case may be, or will be
obtained from the appropriate Authorities having jurisdiction or from private
parties, as the case may be, prior to commencing any such construction or use
and operation, as applicable, except for those which will not cause a Material
Adverse Effect. Lessee shall deliver to Agent, upon request, true, correct and
complete copies of all Permits issued prior to the date that this representation
is made or remade, as the case may be. Lessee, as Construction Agent, and its
contractors have assigned to Lessor all of their respective interests in all
such Permits, whether heretofore or hereafter issued.
(m) Nature, Condition and Use of Sites. Each Site to be
acquired on a Site Acquisition Date consists of either a Land Interest on which
a Facility exists on the Site Acquisition Date or a Land Interest on which a
Facility will be constructed pursuant to the Construction Agency Agreement. Such
Land Interest is located in the United States (but not in California). No
notices, complaints or orders of violation or non-compliance or liability of any
nature whatsoever have been issued or, to Lessee's knowledge, threatened by any
Authority with respect to the Sites or any present or intended future use
thereof, except for such violations and instances of non-compliance as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on any Site, and Lessee is not aware of any circumstances which
could give rise to the issuance of any such notices, complaints or orders. Upon
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Completion of each Facility in accordance with the related Plans and
Specifications or upon acquisition of each Facility on a Developed Site, (A)
there will be no material defects to such Facility including the plumbing,
heating, air conditioning and electrical systems thereof and (B) all water,
sewer, electric, gas, telephone and drainage facilities required to adequately
service such Facility for its intended use will be available pursuant to
adequate permits (including any that may be required under applicable
Environmental Laws).
(n) Utility Services. Each Site has available all material
utilities necessary for use and operation of the Facility thereon for its
primary intended purposes and means of access between such Facility and public
highways for pedestrians and motor vehicles. All utilities serving each Site, or
proposed to serve such Site in accordance with the related Plans and
Specifications, are located in, and vehicular access to the Facility on such
Site is provided by, either public rights-of-way abutting such Site or by
Appurtenant Rights.
(o) Use and Operation of Sites. All material agreements,
easements and other rights, public or private, which are necessary to permit the
lawful use and operation of the Sites as Lessee intends to use the Sites under
the Lease and which are necessary to permit the lawful intended use and
operation of all presently intended utilities, driveways, roads and other means
of egress and ingress to and from the same (including certificates of occupancy)
have been obtained and are in full force and effect (or with respect to Sites
for which a Facility has not yet been completed will be obtained and be in full
force and effect on or prior to the completion thereof) and Lessee has no actual
knowledge of any pending modification or cancellation of any of the same; upon
acquisition of a Site the use of such Site does not (and the intended use of
such Site by Lessee under the Lease will not) depend on any variance, special
exception or other approval, permit, license or consent of any Authority that
has not been obtained for its continuing legal use; and all required building
and use related permits, approvals, licenses and consents material to the
construction, use and operation of each Site will have been issued and be in
full force and effect on or prior to the date such permits, approvals, licenses
and consents are or become necessary; and all utilities required for the
operation of a Site, as Lessee intends to use such Site under the Lease, will be
available as of the Site Acquisition Date on which a Developed Site is to be
purchased or on or prior to the date the Facility on an Undeveloped Site is to
be completed.
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(p) Securities Act. Neither Lessee nor anyone authorized to
act on its behalf (including, without limitation, any of the Guarantors) has,
directly or indirectly, in violation of Section 5 of the Securities Act or any
state securities laws, offered or sold any interest in the Notes, the Sites or
the Lease, or in any security or lease the offering of which, for purposes of
the Securities Act or any state securities laws, would be deemed to be part of
the same offering as the offering of the aforementioned securities or leases, or
solicited any offer to acquire any of the aforementioned securities or leases.
(q) Title. Neither Lessee nor any of its Affiliates has taken
or caused to be taken any action which would have a material adverse effect on
Lessor's title to the Sites from that indicated in the Title Policies delivered
pursuant to Appendix 2 or Section 3.2(d). Neither Lessee nor any of its
Affiliates has created, consented to, incurred or suffered to exist any Lien
upon any of the Sites other than Permitted Liens.
(r) Federal Reserve Regulations. Neither Lessee, whether as
Lessee or as Construction Agent, nor any Affiliate of Lessee will, directly or
indirectly, use any of the proceeds of the sale of the Notes or of the purchase
by Lessor of the Sites for the purpose of purchasing or carrying any "margin
security" or "margin stock" within the meaning of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System, respectively, or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry a margin security or margin stock or for any other purpose
which might cause any of the transactions contemplated by this Agreement or any
other Operative Document to constitute a "purpose credit" within the meaning of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System,
or for the purpose of purchasing or carrying any security, and neither Lessee,
whether as Lessee or as Construction Agent, nor any Affiliate of Lessee has
taken or will otherwise take or permit any action by Lessee, whether as Lessee
or as Construction Agent, or any of its Affiliates in connection with any of the
transactions contemplated by any of the Operative Documents which would involve
a violation of Regulation G, T, U, or X, or any other regulation of the Board of
Governors of the Federal Reserve System.
(s) ERISA.
(i) A copy of the most recent Annual Report (5500
Series Form) including all attachments thereto as filed with the
Internal Revenue Service for each Plan (if any) relating to Lessee or
Genesis or any other Guarantor has been provided to the Agent and
Lessor and fairly presents the funding status of such Plan N Health
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status. There has been no material deterioration in any Plan's funding
status since the date of such Annual Report. Schedule 4.1D hereto sets
forth a list of all Plans and Multiemployer Plans relating to the
Lessee or Genesis or any other Guarantor, and all information available
to Lessee or Genesis or any other Guarantor with respect to the direct,
indirect or potential withdrawal liability to any Multiemployer Plan of
Lessee or Genesis or any other Guarantor or any Controlled Group
Member. Copies have been provided to Agent of all of the documents
provided to Genesis pursuant to Section 4.16 of the Stock Purchase
Agreement and the representations contained in Section 4.16(d) and (e)
are, to the best knowledge of Lessee and Genesis, true, correct and
complete. Except as set forth in such Schedule 4.1D, none of Lessee or
Genesis or any other Guarantor has or (after giving effect to the
consummation of the transactions contemplated by the Stock Purchase
Agreement) will have any liability (contingent or otherwise) in excess
of $100,000 for or in connection with, and none of their respective
properties is subject to a Lien in connection with, any Pension-Related
Event. Neither Lessee nor Genesis nor any other Guarantor nor any
Controlled Group Member (both as of the applicable Advance Date and
after giving effect to the consummation of the transactions
contemplated by the Stock Purchase Agreement) has or (after giving
effect to the consummation of the transactions contemplated by the
Stock Purchase Agreement) will have any liability (contingent or
otherwise) for or in connection with, any Postretirement Benefits.
(ii) Neither Lessee, nor any Controlled Group
Member, presently maintains, participates in, or contributes to, a Plan
(A) which is subject to Title IV of ERISA, but is not a Multiemployer
Plan whose assets do not at least equal the present value of its
accrued benefits based on the actuarial methods and assumptions
included in the most recent actuarial valuation reports, (B) which is a
Multiemployer Plan for which Lessee or any Controlled Group Member has
received notice that the plan is in reorganization or insolvent, (C)
for which material actions, lawsuits or claims have been asserted, or
(D) for which penalties or taxes have been imposed under Sections
502(i) and 502(l) of ERISA or Section 4975 of the Code. Neither Lessee
nor any Controlled Group Member has in the immediate six year period
had a complete or partial withdrawal from any Multiemployer Plan and
the liability to which Lessee or any Controlled Group Member would
become subject under ERISA were there to be a complete withdrawal from
all Multiemployer Plans to which Lessee and its Controlled Group
Members contribute is not in excess of $500,000.
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(iii) The execution and delivery of this Agreement,
including the issuance and sale of the Notes and the consummation of
the transactions contemplated hereby and thereby under the Operative
Documents, will not involve any prohibited transactions, within the
meaning of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975 of the Code. The representation by
Lessee in the preceding sentence is made in reliance upon and subject
to the correctness of the representation by each of the Lenders in
Section 4.2(e) and the representation by Lessor in Section 4.3(i).
(t) Financial Information.
(i) Audited Financial Statements. Lessee has
heretofore furnished to Agent and each Lender the consolidated balance
sheet of Genesis and its Consolidated Subsidiaries (including Lessee)
as of September 30, 1995 and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the fiscal
year then ended, as examined and reported on by KPMG Peat Marwick,
independent certified public accountants for Lessee and Genesis, who
delivered an unqualified opinion in respect thereof. Such financial
statements (including the notes thereto), fairly present, in conformity
with GAAP, the consolidated financial position of Genesis and its
Consolidated Subsidiaries as of such date and their consolidated
results of operations and changes in financial position for such fiscal
year.
(ii) Interim Financial Statements. Lessee has
heretofore furnished to Agent and each Lender interim consolidated
balance sheets of Genesis and its Consolidated Subsidiaries as of June
30, 1996 and the related consolidated statements of income, cash flows
and changes in stockholders' equity for the portion of Genesis's fiscal
year ended at the end of such quarter. Such financial statements fairly
present, in conformity with GAAP, the consolidated financial position
of Genesis and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and changes in financial position
for such fiscal quarter, subject to normal year-end auditing
adjustments and except that such financial statements do not contain
all of the footnote disclosures required by GAAP.
(iii) Since June 30, 1996 there has been no
Material Adverse Effect.
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(u) No Other Filings. Except for the filings and recordings
listed in Schedule 4.1B (which filings or recordings shall have been duly made
on the applicable Advance Date, or shall have been arranged to be made promptly
thereafter (including the payment of any fees or taxes relating to any of the
foregoing) in a manner satisfactory to Agent), no other filings or recordings
are necessary to validly and effectively convey to Lessor and Agent such
interests in the Site and the Collateral as contemplated by the Operative
Documents, in each case free and clear of all Liens, other than Permitted Liens.
(v) Zoning. Each Site complies in all material respects with
all applicable zoning and subdivision laws, ordinances, regulations and
restrictive covenants, and all requirements thereof necessary for the use,
occupancy and operation of such Site have been, or upon completion of the
Facility thereon will be, satisfied in all material respects, and the current
use and intended use under the Lease of such Site is a conforming use in each
case, except for violations which would not create a Material Adverse Effect.
(w) Disclosure. The information disclosed in writing by Lessee
or any of its Affiliates (or any Person authorized or employed by any such
Person as agent or otherwise) to the Lenders in connection with the negotiation
of the Operative Documents and the transactions contemplated thereby, when taken
as a whole with all other written disclosures to such parties, do not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, misleading.
There is no particular fact of which Lessee or any of its
Affiliates has knowledge that has not been disclosed by Lessee or any of its
Affiliates (or by any Person authorized or employed by Lessee or any of its
Affiliates as agent or otherwise) in writing to the Lenders that, as far as
Lessee or any of its Affiliates can reasonably foresee, is reasonably likely to
have a Material Adverse Effect.
(x) Appraisal Data. The information provided by Lessee and its
Affiliates to the Appraiser and forming the basis for the conclusions set forth
in each Appraisal, taken as a whole, was true and correct in all material
respects and did not omit any information known and available to Lessee
necessary to make the information provided not materially misleading.
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(y) Subjection to Government Regulation. None of Agent, Lessor
nor any Lender will become (i) solely by reason of entering into the Operative
Documents or consummation of the transactions contemplated thereby (other than
upon exercise of remedies under the Lease or upon the expiration thereof)
subject to ongoing regulation of its operations by any Authority having
jurisdiction, or be required to hold any license, permit or approval, solely by
reason of Lessee's business activities or the nature of the Sites; or (ii)
except for regulation the applicability of which depends upon the existence of
facts in addition to the ownership of, or the holding of any interest in, the
Sites or any interest therein upon the exercise of remedies under the Lease or
upon the expiration thereof, subject to ongoing regulation of its operations by
any Authority having jurisdiction, or be required to hold any license, permit or
approval, solely by reason of Lessee's business activities or the nature of the
Sites.
SECTION 4.2. Representations and Warranties of each Lender. Each Lender
represents and warrants severally and only as to itself to each of the other
parties hereto as follows:
(a) Due Organization, etc. It is duly organized and validly
existing under the laws of the jurisdiction of its organization and has full
corporate power and authority to enter into and perform its obligations as
Lender under each Operative Document to which it is or is to be a party and each
other agreement, instrument and document to be executed and delivered by it on
or before each Advance Date in connection with or as contemplated by each such
Operative Document to which it is or is to be a party.
(b) Authorization; Enforceability, etc. This Agreement and
each other Operative Document to which it is or is to be a party have been or
will be, duly authorized, executed and delivered by or on behalf of it and are,
or upon execution and delivery will be, legal, valid and binding obligations of
it, enforceable against it in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by general equitable
principles.
(c) No Conflict. Neither the execution and delivery of the
Operating Documents, nor the consummation of the transactions contemplated
thereby, nor compliance by it with any of the terms and provisions thereof (i)
requires any approval of its stockholders or approval or consent of any trustee
or holders of any of its indebtedness or obligations, (ii) contravenes or will
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contravene any Applicable Laws and Regulations currently in effect applicable to
or binding on it (except no representation or warranty is made as to any
Applicable Laws and Regulations to which it or the Sites, directly or
indirectly, may be subject because of the lines of business or other activities
of Lessee) or (iii) results in any breach of or constitutes any default under,
any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional
sales contract, loan or credit arrangement, other material agreement or
instrument, corporate charter, by-laws or other agreement or instrument to which
it is a party or by which it or its properties may be bound or affected.
(d) Lessor Liens. Each Site is free and clear of all
Lessor Liens attributable to such Lender.
(e) ERISA. It is purchasing its interest in the Note(s) with
assets that are not assets of any Plan (or its related trust) which is subject
to Title I of ERISA or Section 4975 of the Code.
(f) Investment in Notes. It is acquiring the Notes for its own
account for investment and not with a view to any distribution (as such term is
used in Section 2(11) of the Securities Act) thereof, and if in the future it
should decide to dispose of its interest in the Notes, it understands that it
may do so only in compliance with the Securities Act and the rules and
regulations of the SEC thereunder and any applicable state securities laws.
Neither it nor anyone authorized to act on its behalf has taken or will take any
action which would subject the issuance or sale of any Note or any interest in
the Sites, the Collateral or the Lease to the registration requirements of
Section 5 of the Securities Act. No representation or warranty contained in this
Section 4.2(f) shall include or cover any action or inaction of Lessee or any
Affiliate thereof whether or not purportedly on behalf of any Lender or any of
its Affiliates. Subject to the foregoing and subject to the provisions of
Article VI hereof, it is understood among the parties that the disposition of
each Lender's property shall be at all times within its control.
(g) Credit Agreement. It holds an interest under the
Credit Agreement equivalent to its percentage of the Notes.
(h) Provisions regarding Transfers and Participations. Except
as may be waived by the Lenders under Section 9.5 (without the need for any
consent of Lessee or any other party), each Lender hereby acknowledges that it
has read, understands and intends to comply with the provisions of Sections 6.3
and 6.4 in connection with transfers and participations, including,
specifically, the requirement therein that any transfer of any Note or any
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interest in any Operative Document or any grant of a participation in a Note
shall be accompanied by a pro rata transfer or grant, as the case may be, of
such Lender's interest under the Credit Agreement, in compliance with all
applicable requirements of the Credit Agreement.
SECTION 4.3. Representations and Warranties of Lessor.
Lessor hereby represents and warrants to Lessee, Agent and Lenders
as set forth in this Section 4.3.
(a) Chief Executive Office. Lessor's chief executive office
and principal place of business and the place where the documents, accounts and
records relating to the Overall Transaction are kept is located at One Mellon
Bank Center, Rm 151-4444, Pittsburgh, PA 15258-0001, Attention: Leasing Group.
(b) Due Organization, etc. Lessor is a corporation duly
organized and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania and has full corporate power and authority to
execute, deliver and perform its obligations as Lessor under each Operative
Document to which it is or is to be a party and each other agreement, instrument
and document to be executed and delivered by it in connection with or as
contemplated by each such Operative Document to which it is or is to be a party.
(c) Authorization; Enforceability, etc. This Agreement and
each other Operative Document to which Lessor is or is to be a party have been
or will be, duly authorized, executed and delivered by or on behalf of Lessor
and are, or upon execution and delivery will be, legal, valid and binding
obligations of Lessor, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general equitable principles.
(d) No Conflict. Neither the execution and delivery thereof,
nor the consummation of the transactions contemplated thereby, nor compliance by
it with any of the terms and provisions thereof (i) requires any approval of its
stockholders or approval or consent of any trustee or holders of any of its
indebtedness or obligations, (ii) contravenes or will contravene any Applicable
Laws and Regulations currently in effect applicable to or binding on it (except
no representation or warranty is made as to any Applicable Laws and Regulations
to which it or the Sites, directly or indirectly, may be subject because of the
lines of business or other activities of Lessee) or (iii) results in any breach
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of or constitutes any default under, any indenture, mortgage, chattel mortgage,
deed of trust, lease, conditional sales contract, loan or credit arrangement,
other material agreement or instrument, corporate charter, by-laws or other
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected.
(e) Lessor Liens. Each Site is free and clear of all Lessor
Liens attributable to Lessor.
(f) Litigation. There is no action, proceeding or
investigation pending or, to Lessor's knowledge, threatened which questions the
validity of the Operative Documents to which Lessor is or is to be a party or
any action taken or to be taken pursuant to the Operative Documents to which
Lessor is or is to be a party, and there is no action, proceeding or
investigation pending or, to Lessor's knowledge, threatened which, if adversely
determined, would have a Material Adverse Effect.
(g) Use of Proceeds. The Proceeds shall be used solely in
accordance with the terms and provisions of the Operative Documents.
(h) Financial Information. Lessor (i) holds assets other than
the Sites and unrelated to this transaction and (ii) was not created at the
request of Lessee in connection with the transactions contemplated by the
Operative Documents.
(i) ERISA. Lessor is purchasing its interest in the Sites with
assets that are not assets of any Plan (or its related trust) which is subject
to Title I of ERISA or Section 4975 of the Code.
SECTION 4.4. Representations and Warranties of Agent. Mellon Bank,
N.A., in its individual capacity, hereby represents and warrants to Lessor and
Lenders as set forth in this Section 4.4.
(a) Organization and Authority. Agent is a national banking
association duly organized and validly existing in good standing under the laws
of the United States of America and has the requisite power and authority to
enter into and perform its obligations under the Operative Documents.
(b) Authorization; Binding Effect. The Operative Documents to
which Agent is or will be a party have been or will be, on the date required to
be delivered hereby, duly authorized,
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executed and delivered by Agent, and this Participation Agreement is, and such
other Operative Documents are, or, when so executed and delivered by Agent will
be, valid, legal and binding agreements of Agent, enforceable against Agent in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
(c) Non-Contravention. Neither the execution and delivery by
Agent of the Operative Documents to which it is or will be a party, either in
its individual capacity, as Agent, or both, nor compliance with the terms and
provisions thereof, conflicts with, results in a breach of, constitutes a
default under (with or without the giving of notice or lapse of time or both),
or violates any of the terms, conditions or provisions of: (i) the articles of
organization or by-laws of Agent; (ii) any bond, debenture, note, mortgage,
indenture, agreement, lease or other instrument to which Agent, either in its
individual capacity, as Agent, or both, is now a party or by which it or its
property, either in its individual capacity, as Agent, or both, is bound or
affected, where such conflict, breach, default or violation would be reasonably
likely to materially and adversely affect the ability of Agent, either in its
individual capacity, as Agent or both, to perform its obligations under any
Operative Document to which it is or will be a party, either in its individual
capacity, as Agent, or both; or (iii) any of the terms, conditions or provisions
of any law, rule, regulation, order, injunction or decree of any Authority
applicable to it in its individual capacity, as Agent, or both, where such
conflict, breach, default or violation would be reasonably likely to materially
and adversely affect the ability of Agent, either in its individual capacity, as
Agent or both, to perform its obligations under any Operative Document to which
it is or will be a party.
(d) Absence of Litigation, etc. There is no litigation
(including derivative actions), arbitration or governmental proceedings pending
or, to the best knowledge of Agent, threatened against it which would be
reasonably likely to adversely affect Agent's ability to perform its obligations
under the Operative Documents to which it is party.
(e) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or registration
with, any Authority, is or will be required in connection with the execution and
delivery by Agent of the Operative Documents to which it is a party or the
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performance by Agent of its obligations under such Operative Documents.
ARTICLE V
COVENANTS OF LESSEE
SECTION 5.1. Further Assurances. Lessee, at its own cost and expense,
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as any Lender, Lessor or Agent
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Agreement and the other Operative Documents and
the Overall Transaction. Lessee, at its own cost and expense, will cause all
financing statements (including precautionary financing statements), fixture
filings and other documents, to be recorded or filed at such places and times in
such manner, and will take all such other actions or cause such actions to be
taken, as may be necessary or as may be reasonably requested by any Lender,
Lessor or Agent in order to establish, preserve, protect and perfect the title
of Lessor to the Sites and Lessor's and Lenders' rights under this Agreement and
the other Operative Documents and to perfect, preserve and protect the first and
prior Lien of the Mortgage on the Collateral. Without limiting the foregoing,
Lessee shall furnish to Lessor and Agent, by the ninetieth day (but not earlier
than the 180th day) prior to the fifth anniversary of the Document Closing Date,
and if the Renewal Term is entered into, by the ninetieth day (but not earlier
than the 180th day) prior to the expiration of the Renewal Term, an opinion of
counsel with respect to the continued perfection of the security interests
created pursuant to the Operative Documents. Lessee will maintain in full force
and effect all Permits. Upon any transfer of the Sites, whether pursuant to any
provision of the Operative Documents (including Article VI of the Lease) or
after the occurrence of a Lease Event of Default or otherwise, Lessee, at its
own cost and expense, will cause to be promptly and duly taken, executed,
acknowledged and delivered all such further acts, documents and assurances as
any Lender, Lessor or Agent reasonably may request from time to time in order to
cause the Permits to be transferred or reissued in the name of the Person
acquiring the Sites.
SECTION 5.2. Consolidation, Merger, Sale, etc.
(a) Lessee shall not consolidate with any Person, merge with
or into any Person or convey, transfer or lease to any Person (except as
permitted by Section 12.1 of the Lease) all or substantially all of its assets
in any single transaction (or
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series of related transactions), unless, immediately after giving effect to such
transaction, the conditions set forth in clauses (i) through (v) shall have been
satisfied:
(i) The Person formed by such consolidation with or
into which Lessee shall be merged or the Person which shall acquire by
conveyance, transfer or lease all or substantially all of the assets of
Lessee (the "Surviving Company"), if other than Lessee immediately
prior to such transaction, shall be a corporation that is organized
under the laws of the United States of America, a state thereof or the
District of Columbia;
(ii) the Surviving Company shall be a single
purpose, wholly-owned direct or indirect subsidiary of Genesis, the
sole purpose of which is to enter into (or assume) and perform its
obligations under the transactions contemplated by the Operative
Documents and hold its rights in and to the Sites;
(iii) the Surviving Company, if other than Lessee
immediately prior to such transaction, shall execute and deliver to
each of the parties hereto an agreement, in form and substance
reasonably satisfactory to Lessor and Agent, containing the assumption
by the Surviving Company of the due and punctual payment, performance
and observation of each obligation, covenant and agreement of Lessee
under this Agreement and each other Operative Document to which,
immediately prior to such transaction, Lessee was a party;
(iv) no Lease Payment/Bankruptcy Default or Lease
Event of Default (including as a result of the breach of Section 3 of
either of the Guaranties) shall have occurred and be continuing or
would occur as a result thereof and no Event of Loss shall have
occurred or would occur as a result thereof;
(v) the title of Lessor to the Sites and Lessor's
and Lenders' rights under this Agreement and the other Operative
Documents and the first and prior Lien of the Mortgage on the
Collateral shall not be adversely affected; and
(vi) Lessee shall have delivered to Agent, on
behalf of Lessor and the Lenders, an Officer's Certificate and an
opinion of counsel reasonably satisfactory to each such Person stating
that such transaction complies with this Section 5.2, that all
conditions to the consummation of such transaction have been fulfilled
and that all Governmental Actions required in connection with such
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transaction have been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than Lessee immediately prior thereto, shall succeed to, and be
substituted for, and may exercise every right and power of, Lessee immediately
prior to such transaction under this Agreement and each other Operative Document
to which Lessee was a party immediately prior to such transaction, with the same
effect as if the Surviving Company had been named herein and therein.
Notwithstanding the foregoing provisions of this Section 5.2, no conveyance,
transfer or lease of all or substantially all of the assets of Lessee shall
release Lessee from its payment or other obligations under this Agreement or any
other Operative Document without the written consent of Lessor and Agent.
SECTION 5.3. Corporate Existence. Subject to Section 5.2, Lessee shall
at all times maintain its existence as a corporation in good standing under the
laws of the Commonwealth of Pennsylvania and shall use commercially reasonable
efforts to preserve and keep in full force and effect its franchises material to
its business. Lessee shall remain a single purpose corporation, the sole purpose
of which is to enter into and perform its obligations under the transactions
contemplated by the Operative Documents and hold its rights in and to the Sites.
SECTION 5.4. Construction Matters; Changes. Lessee, as Construction
Agent, may execute, without any consent of the Participants, any change order,
modification or addition to a Facility to be built on an Undeveloped Site prior
to its completion, so long as such change order, modification or addition does
not materially and adversely affect the value, utility or economic useful life
of the Facility, as built, in accordance with the Plans and Specifications
delivered by Lessee to the Participants in connection with the initial Advance
in respect of the construction of such Facility and so long as each such change
order, modification or addition does not exceed $100,000 individually and
$500,000 in the aggregate.
SECTION 5.5. Guaranties. Concurrently with the execution and delivery
of this Agreement, Lessee shall cause the Guarantors to execute and deliver
Confirmations of the Guaranties, which Confirmations are attached hereto as
Exhibit B-3, which confirm the guaranty of all obligations of Lessee under the
Lease and other Operative Documents, and Exhibit B-4, which confirm the guaranty
(subject to certain limitations therein) payment of all amounts
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funded by Lessor and Lenders pursuant to the investment of the Equity Amount and
the Financing.
SECTION 5.6. Liens. Lessee shall not incur, suffer or permit to exist
any Lien on any of the Sites other than Permitted Liens.
SECTION 5.7. Compliance Certificates.
(a) Lease Defaults. Lessee shall furnish, following the
Document Closing Date and until the termination of the Lease, to Lessor, Agent
and each Lender a certificate of Lessee signed by a Responsible Officer of
Lessee promptly after Lessee obtains knowledge that there exists a Lease Default
or Lease Event of Default, which such certificate shall describe such Lease
Default or Lease Event of Default in reasonable detail, with a statement of
Lessee's action with respect thereto taken or proposed to be taken.
(b) Annual Certificates. Within 90 days after the close of
each fiscal year, Lessee shall deliver to Lessor, Agent and each Lender a
certificate of Lessee signed by a Responsible Officer of Lessee to the effect
that the signer is familiar with or has reviewed the relevant terms of this
Agreement, the Lease and each other Operative Document to which Lessee is a
party and has made, or caused to be made under his or her supervision, a review
of the transactions contemplated hereby and thereby and the condition of the
Sites during the preceding fiscal year, and that such review has not disclosed
the existence during such fiscal year of any condition or event which
constitutes a Lease Event of Default, an Event of Loss, Condemnation (except as
described therein) or Casualty (except as described therein), nor does the
signer have knowledge, after due inquiry, of the existence as of the date of
such certificate, of any condition or event which constitutes a Lease Default, a
Lease Event of Default, an Event of Loss, Condemnation or Casualty or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto.
(c) Quarterly Certificates. Within 45 days after the close of
each fiscal quarter (including the fourth fiscal quarter), Lessee shall deliver
to Lessor, Agent and each Lender a certificate of Lessee signed by a Responsible
Officer of Lessee to the effect that the signer is familiar with or has reviewed
the relevant terms of this Agreement, the Lease and each other Operative
Document to which Lessee is a party, which shall include the calculations
necessary to confirm compliance with the financial covenants set forth in
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Section 5.9 of the 1995 Indenture and any similar provisions in the Indenture.
SECTION 5.8. Change of Name or Address. Lessee shall provide Lessor,
each Lender and Agent thirty (30) days prior written notice of (i) any change in
name, identity or corporate structure or the address of its chief executive
office and principal place of business or the office where it keeps its records
concerning its accounts and the Sites, or (ii) any change with respect to its
places of business whereby it will thereafter have a place of business in only
one county in the Commonwealth of Pennsylvania (if prior thereto, it shall have
had places of business in more than one county in the Commonwealth of
Pennsylvania) or will thereafter have no place of business in the Commonwealth
of Pennsylvania.
SECTION 5.9. Environmental Matters. (a) Lessee shall comply at all
times with all Applicable Laws and Regulations affecting a Site, the
non-compliance of which would have a Material Adverse Effect on such Site and
shall maintain at any Site only such minimum quantities of Hazardous Materials,
if any, as are necessary for the operation of any Site or held for resale by
Lessee, and in all events, such Hazardous Materials shall be held in compliance
with all Applicable Laws and Regulations; (b) Lessee shall not cause or permit
the installation of any underground storage tanks at any Site; and (c) Lessee
shall maintain and comply with appropriate and customary written operations and
maintenance plans (including, without limitation, for asbestos-containing
materials) for the Sites.
SECTION 5.10. Investigation by Authorities. Lessee shall deliver to
Lessor, each Lender and to Agent promptly upon Lessee's receiving written notice
of the intent by any Authority to (x) take an action which would constitute a
Condemnation or an Event of Taking, (y) investigate any Site for a material
violation of any Applicable Laws and Regulations on or at such Site, including
any Environmental Law, under which liability may be imposed upon Lessor, any
Lender or Agent or under which liability having a Material Adverse Effect may be
imposed on Lessee or (z) investigate any Site (other than routine fire,
life-safety and similar inspections) for any violation of Applicable Laws and
Regulations under which criminal liability may be imposed upon Lessor, any
Lender or Agent or under which liability having a Material Adverse Effect may be
imposed on Lessee.
SECTION 5.11. Financial and Other Information. Lessee shall
deliver to Agent, with sufficient counterpart originals for Agent to distribute
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to Lessor and each Lender, the following financial and other information:
(a) Annual Statements. As soon as practicable, and in any
event within ninety (90) days after the close of each fiscal year of Lessee, a
consolidated balance sheet of Genesis and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of, income,
cash flows and changes in stockholders' equity for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year.
Such statements shall be accompanied by an opinion of KPMG Peat Marwick or other
certified public accountants of nationally recognized standing selected by
Lessee and satisfactory to Agent (the "Independent Accounting Firm"). Such
opinion shall be without qualifications that are of "going concern" or like
nature or that relate to a limited scope of examination. Such opinion in any
event shall contain a written statement of such accountants substantially to the
effect that (i) such accountants examined such financial statements in
accordance with generally accepted auditing standards and accordingly made such
tests of accounting records and such other auditing procedures as such
accountants considered necessary under the circumstances and (ii) in the opinion
of such accountants such financial statements present fairly the financial
position of Genesis and its Consolidated Subsidiaries as of the end of such
fiscal year and the results of their operations and their cash flows and changes
in stockholders' equity for such fiscal year, in conformity with GAAP.
Concurrently with the delivery of the financial statements referred to above in
this paragraph, Lessee shall furnish to the Agent, with sufficient counterpart
originals for Lessor and each Lender, (1) unaudited statements of income, cash
flows and changes in stockholders' equity for each of (x) Genesis and the
Restricted Subsidiaries on a consolidated basis and (y) the Unrestricted
Entities on a consolidated basis, for such fiscal year, (2) and a balance sheet
of each of (x) Genesis and the Restricted Subsidiaries on a consolidated basis
and (y) the Unrestricted Entities on a consolidated basis, all in reasonable
detail, setting forth in comparative form the corresponding figures for the
preceding year, and (3) a certification, without qualification, of the
Independent Accounting Firm of the certificate delivered by Lessee pursuant to
Section 5.7(c) as of the last fiscal quarter of such fiscal year. Such unaudited
financial statements shall be certified by a Responsible Officer of Genesis as
presenting fairly the financial position of the subject entities as of the end
of such fiscal year and the results of their operations and their cash flows and
changes in stockholders' equity for such fiscal year, in conformity with GAAP.
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(b) Quarterly Statements. As soon as practicable, and in any
event within forty-five (45) days after the close of each of the first three
fiscal quarters of each fiscal year of Genesis, (1) the consolidated statements
of income, cash flows and changes in stockholder's equity for each of (x)
Genesis and its Consolidated Subsidiaries, (y) Genesis and its Restricted
Subsidiaries on a consolidated basis and (z) the Unrestricted Entities on a
consolidated basis as of the close of such fiscal quarter and for the period
from the beginning of such fiscal year to the end of such fiscal quarter and (2)
unaudited balance sheets of each of such groups of entities as of the close of
such fiscal quarter, setting forth in each case in comparative form the figures
for the corresponding quarter of, and the corresponding portion of Genesis's
preceding fiscal year, all certified (subject, in the case of such quarterly
financial statements, to normal year-end auditing adjustments) by a Responsible
Officer of Genesis as to fairness of presentation and preparation in accordance
with GAAP applied on a basis consistent with those used in preparing the
financial statements referred to in Section 5.11(a) hereof (subject to such
changes in accounting principles as shall be described in such certificate and
shall have been approved in writing attached to such certificate by Genesis's
independent accountants);
(c) Compliance Certificates. As soon as practicable, and in
any event within forty-five (45) days after the close of each of the first three
fiscal quarters of each fiscal year of Genesis and ninety (90) days after the
close of each fiscal year of Genesis, a compliance certificate for Genesis and
its Consolidated Subsidiaries. Such certificates shall be certified by a
Responsible Officer of Genesis as presenting fairly the compliance of Genesis
and each Subsidiary with the Financial Covenants as of the end of such fiscal
quarter for the year to date or fiscal year, as the case may be, in conformity
with GAAP (exclusive of principles of consolidation), subject (in the case of
quarterly reports) to normal and recurring year-end audit adjustments. The
compliance certificate shall also include the certification required by Section
5.7(c).
(d) Shareholder Mailings. Promptly upon the mailing thereof to
the shareholders of Genesis generally, copies of all financial statements,
reports and proxy statements so mailed;
(e) Supplemental Environmental Information. Promptly upon
receipt thereof, copies of all environmental audits and updates regarding the
environmental condition of any of the Sites; and
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(f) Genesis's Total Funded Debt/Cash Flow Ratio. Lessee shall
deliver to Agent within forty-five (45) Business Days after the end of each
fiscal quarter (including the fourth fiscal quarter) an Officer's Certificate of
Genesis setting forth Genesis's Total Funded Debt/Cash Flow Ratio (as defined in
the definition of Applicable Margin) as of the last day of the immediately
preceding fiscal quarter of Genesis and setting forth in reasonable detail the
manner in which such ratio was calculated and any other related information
requested by Agent; provided that if at any time Lessee shall fail to deliver
such Officer's Certificate on or before the date such information is required to
be delivered, then for purposes of Section 2.7 of the Loan Agreement, Genesis's
Total Funded Debt/Cash Flow Ratio shall be deemed to be greater than 4.5 for the
applicable Interest Period(s); and provided, further, that if, when delivered,
such Officer's Certificate sets forth a Total Funded Debt/Cash Flow Ratio which
is less than that determined in accordance with the foregoing proviso, the
amounts calculated under said Section 2.7 using such deemed Total Funded
Debt/Cash Flow Ratio shall be revised as of the next fiscal quarter using
Genesis's actual Total Funded Debt/Cash Flow Ratio for such Interest Period(s),
except to the extent that the Officer's Certificate for such subsequent fiscal
quarter shall indicate a change in the Total Funded Debt/Cash Flow Ratio from
that set forth in the delinquent Officer's Certificate.
(g) Other. With reasonable promptness, unless disclosure
thereof is prohibited by Applicable Laws and Regulations and subject to
appropriate confidentiality undertakings with respect thereto, such other data
and information (financial or otherwise) which is either maintained in the
ordinary course of Lessee's business or can be obtained or derived without undue
burden to Lessee as to the business of Lessee or as to any Site as from time to
time may be reasonably requested in writing by Agent after a Lease Default or
Lease Event of Default shall have occurred and be continuing.
SECTION 5.12. Securities. Lessee shall not, nor shall it permit anyone
authorized to act on its behalf to, take any action which would subject the
issuance or sale of the Notes, any Site or the Lease, or in any security or
lease the offering of which, for purposes of the Securities Act or any state
securities laws, would be deemed to be part of the same offering as the offering
of the aforementioned securities or leases to the registration requirements of
Section 5 of the Securities Act or any state securities laws.
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SECTION 5.13. Interest Rates. With respect to each determination of an
interest rate pursuant to the Loan Agreement, Lessee agrees to be bound by
Section 2.7 of the Loan Agreement.
SECTION 5.14. Appraisals. Lessee will pay all costs of any Appraisal of
any or all of the Sites which Agent may from time to time require; provided,
however, that Lessee shall only be obligated to pay for appraisals of any Site
once every three years and at any time while a Lease Event of Default shall have
occurred and is continuing; and provided, further, that prior to the occurrence
of a Lease Event of Default, Agent will not require an Appraisal the costs of
which are payable by Lessee under this Section 5.13 unless the Agent, in its
reasonable judgment, determines that such an Appraisal is necessary based upon
the Agent's concern regarding the diminution in value of the applicable Site or
based upon bank regulatory requirements.
SECTION 5.15. Environmental Audits. For each Site, Lessee will deliver
to Agent, upon Agent's request, but not more often than annually, or at any time
upon request while a Lease Event of Default shall have occurred and is
continuing, an Environmental Audit in form and substance satisfactory to Agent,
which (with Agent's consent) may be updates of previously furnished
Environmental Audits; provided, that prior to the occurrence of a Lease Event of
Default, Agent will not require an Environmental Audit under this Section 5.14
unless the Agent, in its reasonable judgment, determines that such an
Environmental Audit is necessary based upon the Agent's concern regarding the
environmental condition of the applicable Site or based upon bank regulatory
requirements. If Lessee shall fail to so deliver any such Environmental Audit,
Agent may obtain such an Environmental Audit and Lessee will pay all reasonable
costs and expenses thereof.
SECTION 5.16. Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc. If any Applicable Laws and
Regulations or guideline or interpretation or application thereof by any
Authority charged with the interpretation or administration thereof or
compliance with any request or directive of any Authority (whether or not having
the force of Applicable Laws and Regulations) now existing or hereafter adopted:
(i) subjects Lessor or any LIBOR Office to any tax
or changes the basis of taxation with respect to this
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Participation Agreement, the Lease, the Notes, the Loans or payments by
the Lessee or Genesis of Basic Rent, the Lease Balance, principal,
interest, commitment fee or other amounts due from any such party
hereunder or under the Lease (except for taxes on the overall net
income or overall gross receipts of Lessor or such LIBOR Office imposed
by the jurisdictions (federal, state and local) in which Lessor's
principal office or LIBOR Office is located),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or
commitments to extend credit extended by, assets (funded or contingent)
of, deposits with or for the account of, or other acquisitions of funds
by, Lessor or any LIBOR Office (other than requirements expressly
included herein in the determination of the LIBO Rate hereunder),
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by,
Lessor or any LIBOR Office, or (B) otherwise applicable to the
obligations of Lessor or any LIBOR Office under this Participation
Agreement, the Lease or any of the other Operative Documents, or
(iv) imposes upon any Lender or any LIBOR Office
any other condition or expense with respect to this Participation
Agreement, the Lease, the Notes or any of the other Operative Documents
or its making, maintenance or funding of any Loan or any security
therefor, and the result of any of the foregoing is to increase the
cost to, reduce the income receivable by, or impose any expense
(including loss of margin) upon any Lender, any LIBOR Office or, in the
case of clause (iii) hereof, any Person controlling a Lender, with
respect to this Agreement, the Notes or the issuance, making,
maintenance or funding of any Loan (or, in the case of any capital
adequacy or similar requirement, to have the effect of reducing the
rate of return on such Lender's or such controlling Person's capital,
taking into consideration Lessor's or such controlling Person's
policies with respect to capital adequacy) by an amount which Lessor
deems to be material (Lessor being deemed for this purpose to have
made, maintained or funded each portion of the Equity Amount bearing
interest based upon LIBO Rate from a Corresponding Source of Funds),
Lessor may from time to time notify the Agent and Lessee, of the amount
determined in good faith (using any averaging and attribution methods)
by Lessor (which determination shall be conclusive) to be necessary
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to compensate Lessor or such LIBOR Office for such increase, reduction
or imposition. Such amount shall be due and payable by Lessee to Lessor
30 days after such notice is given, together with an amount equal to
interest on such amount from the date two Business Days after the date
demanded until such due date at the Prime Rate plus the Applicable
Margin (calculated on the basis of a year of 360 days and actual days
elapsed). A certificate by Lessor as to the amount due and payable
under this Section 5.16(a) from time to time and the method of
calculating such amount shall be conclusive.
(b) Funding Breakage. In addition to all other amounts payable
hereunder, if and to the extent for any reason any part of any portion of the
Equity Amount bearing Yield based upon the LIBO Rate becomes due (by
acceleration or otherwise), or is paid, prepaid or converted to Equity Amount
bearing Yield based upon the Prime Rate (whether or not such payment, prepayment
or conversion is mandatory or automatic and whether or not such payment or
prepayment is then due), on a day other than the last day of the corresponding
LIBO Period, Lessee shall pay Lessor an amount determined as provided below in
this Section 5.16(b).
Furthermore, in addition to all other amounts payable hereunder, if
Standard Notice has been given for the conversion to or renewal of any portion
of the Equity Amount to Equity Amount bearing Yield based upon the LIBO Rate or
for the making of any Advance which shall bear Yield based upon the LIBO Rate or
for the selection of a LIBO Period for any Equity Amount bearing Yield based
upon the LIBO Rate shall be applicable in whole or in part and (x) Lessee
attempts to revoke (expressly, by later inconsistent notices or otherwise) such
Standard Notice or (y) (A) an applicable condition precedent is not satisfied
and (B) such conversion or renewal does not take place as specified in such
Standard Notice or (z) (A) an applicable condition precedent is not satisfied
and (B) the portion of such Advance to bear Yield based upon the LIBO Rate is
not made as specified in such Standard Notice, then in each case Lessee shall
pay Lessor an amount determined as provided below in this Section 5.16(b) if
Lessor has delivered to Lessee and the Agent a certificate stating that Lessor
has incurred costs as a result of the events described in this sentence.
"Funding Breakage Date" shall mean, in a case described in the first
sentence of this Section 5.16(b), the date that any part of any Equity Amount
bearing Yield based upon the LIBO Rate becomes due, or is paid, prepaid or
converted, as described in such sentence, or in a case described in the second
sentence of this Section 5.16(b), the date for the conversion to or renewal of
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Equity Amount bearing Yield based upon the LIBO Rate, or for the making of a
Advance, specified in the Standard Notice described in such sentence. In a case
described in the first sentence of this Section 5.16(b), "Adjusted Contract
Rate" for a particular amount of Equity Amount shall mean the rate of Yield
(including the Applicable Margin) applicable to such amount on the Funding
Breakage Date, less the Applicable Margin, and in a case described in the second
sentence of this Section 5.16(b), "Adjusted Contract Rate" for a particular
principal amount of to-be-made Advances shall mean the rate of Yield (including
the Applicable Margin) which would have applied to such amount on the Funding
Breakage Date absent the failure to renew, convert or borrow, less the
Applicable Margin. "Redeployment Rate" shall mean (x) so long as no
determination by Lessor described in Section 2.11 of the Loan Agreement (mutadis
mutandis) is then applicable, a Yield rate per annum equal to the LIBO Rate
(without the Applicable Margin) determined by the Agent for the applicable
amount using as the LIBO Period a period as equal as practicable to the
Redeployment Period (as hereinafter defined) or (y) if any determination by
Lessor described in Section 2.11 of the Loan Agreement (mutadis mutandis) is
then applicable, a Yield rate per annum equal to the Treasury Rate, in each case
as of or as soon as practicable after the Funding Breakage Date. In each case,
the amount determined as being payable pursuant to this Section 5.16(b) may be
referred to as the "Funding Breakage Indemnity." The calculation of the Adjusted
Contract Rate and the Redeployment Rate shall be made on the assumption that the
LIBO Rate Reserve Percentage shall remain constant throughout the applicable
LIBO Period; in the event that such assumption proves to be inaccurate and
Lessor would have received greater indemnification absent such assumption, then
Lessor shall be entitled to receive such additional indemnification on demand.
The Agent shall calculate Lessor's Funding Breakage Indemnity
as follows:
(i) For each portion of the Equity Amount owing to
Lessor which so became due, or which was so paid, prepaid or converted,
or as to which such Equity Amount were to have been renewed or
converted to Equity Amount bearing Yield based upon the LIBO Rate, or
which was to be disbursed (to the extent applicable to such
to-be-borrowed Advances), the Agent shall calculate the product (the
"Future Value Amount") of
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(1) the amount of such portions of the Equity Amount
multiplied by (2) the greater of (x) zero or (y) the Adjusted Contract Rate
minus the Redeployment Rate, in each case for such amount, multiplied by (3) the
number of days from and including the Funding Breakage Date to but not including
the last day of such LIBO Period (or scheduled LIBO Period in the case of a
failure to renew, convert or borrow) (the "Redeployment Period"), divided by
360.
(ii) The Agent shall then determine the present
value as of the Funding Breakage Date (discounted at the Treasury Rate
as of such Funding Breakage Date, and calculated on the basis of a year
of 365 or 366 days, as the case may be, and the actual number of days
in the Redeployment Period) (each a "Present Value Amount") of each
Future Value Amount (assuming for this purpose that each Future Value
Amount is payable on the last day of the corresponding Funding Period
(or scheduled Funding Period in the case of a failure to renew, convert
or borrow)).
(iii) The Agent finally shall total Lessor's
Present Value Amounts for all of its affected portions of the Loans,
and this total shall be the amount of the Funding Breakage Indemnity to
be paid by Lessee to Lessor.
Such Funding Breakage Indemnity shall be due and payable on demand. In addition,
Lessee shall, on the due date for payment of any Funding Breakage Indemnity, pay
to Lessor an additional amount equal to interest on such Funding Breakage
Indemnity from the Funding Breakage Date to but not including such due date at
the Prime Rate plus the Applicable Margin (calculated on the basis of a year of
360 days and actual days elapsed). The amount payable to Lessor under this
Section 5.16(b) shall be determined in good faith by the Agent, and such
determination shall be conclusive.
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ARTICLE VI
OTHER COVENANTS AND AGREEMENTS
SECTION 6.1. Cooperation with Lessee. Lessor, Agent and each Lender
shall, to the extent reasonably requested by Lessee (but without assuming
additional liability on account thereof), at Lessee's expense, cooperate to
allow Lessee to (a) perform its covenants contained in Section 5.1, including at
any time and from time to time, upon the reasonable request of Lessee, to
promptly and duly execute and deliver any and all such further instruments,
documents and financing statements (and continuation statements related thereto)
as Lessee may request in order to perform such covenants and (b) further
Lessee's requirements as lessee of the Sites, including to file any statement
with respect to any tax abatements or other requirements.
SECTION 6.2. Covenants of Lessor and Lenders.
(a) Discharge of Liens. Lessor covenants that it will not
create or permit to exist at any time, and will, at its own cost and expense,
promptly (and in any event, within 90 days) take such action as may be necessary
duly to discharge, or to cause to be discharged, all Lessor Liens attributable
to it unrelated to the transactions contemplated by the Operative Documents.
Notwithstanding the foregoing, Lessor shall not be required to so discharge any
such Lessor Lien while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall not involve
any meaningful danger of the impairment of the Lien of the Mortgages or of the
sale, forfeiture or loss of, and shall not interfere with the use or disposition
of, any part of the Sites or the Lease or title thereto or any interest therein
or the payment of Rent; provided, however, that Lessor shall discharge or bond
over any such Lessor Lien attributable to it unrelated to the transactions
contemplated by the Operative Documents, whether or not subject to contest as
provided above, upon the purchase of any Site by Lessee pursuant to the Lease.
(b) Change of Principal Place of Business. Lessor shall give
prompt notice to Lessee and Agent, if Lessor's principal place of business or
chief executive office, or the office where the records concerning the accounts
or contract rights relating to the Sites or the Overall Transaction are kept,
shall cease to be located at One Mellon Bank Center, Rm 151-4444, Pittsburgh, PA
15258-0001, Attention: Leasing Group or if it shall change its name or identity.
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(c) Loan Agreement. As between Lessor and Lessee, Lessor and
each Lender hereby agree that, so long as the Lease is in effect, Lessor shall
not consent to or permit any amendment of the terms and provisions of the Loan
Agreement, the Mortgages or any Note, whether or not any Lease Event of Default
shall have occurred and be continuing, if any such amendment or action would
have the effect of increasing the obligations of Lessee or decreasing the rights
of Lessee, in each case without the prior written consent of Lessee, except that
without such consent, Lessor may waive performance by Agent of obligations to
Lessor the non-performance of which does not materially adversely affect Lessee.
(d) Depreciation. From the date hereof unless and until
Lessor's interest in the Sites is unencumbered by the Lease, neither Lessor nor
any Lender shall claim any federal or state tax attributes or benefits
(including depreciation) relating to the Sites unless required to do so by an
appropriate taxing authority or after a clearly applicable change in Applicable
Laws and Regulations or as a protective response to a proposed adjustment by an
Authority; provided, however, that if an appropriate taxing authority shall
require Lessor to claim any such federal or state tax attributes or benefits,
such Person shall promptly notify Lessee thereof and shall permit Lessee to
contest such requirement in a manner similar to the contest rights provided in,
and subject to any applicable limitation to a contest contained in, Section
7.2(b) hereof.
(e) Transfer by Lessor. Lessor shall not transfer its interest
in the Sites (other than a transfer pursuant to the provisions of the Operative
Documents) without the consent of Agent and, so long as no Lease Event of
Default shall have occurred and be continuing, Lessee, each such consent not to
be unreasonably withheld. The foregoing limitation shall not be applicable to
the transfer of any stock or other ownership interests in Lessor, nor of any
assets of Lessor other than its rights in the Sites.
(f) No Voluntary Bankruptcy. Lessor shall not (i) commence any
case, proceeding or other action under any existing or future law of any
jurisdiction (domestic or foreign) relating to bankruptcy, insolvency,
reorganization, arrangement, winding up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial benefit of its creditors.
SECTION 6.3. Restrictions on and Effect of Transfer by any Lender. No
Lender shall assign, convey or otherwise transfer
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(including pursuant to a participation) all or any portion of its right, title
or interest in, to or under any of the Operative Documents or any Note, unless
the provisions of this Section 6.3 are satisfied. With respect to any
assignment, conveyance or other transfer, other than a loan participation, the
conditions set forth in clauses (a) through (g) of this Section 6.3 are
applicable. With respect to any loan participation, the conditions set forth in
Section 6.4 shall be applicable.
(a) Required Notice and Effective Date. Any Lender desiring to
effect a transfer of its interest shall give written notice of each such
proposed transfer to Lessee and Agent at least ten (10) Business Days prior to
such proposed transfer (other than with respect to transfers of a Lender's
interest on the Document Closing Date, notice of which may be given on the
Document Closing Date), setting forth the name of such proposed transferee, the
percentage or interest to be retained by such Lender, if any, and the date on
which such transfer is proposed to become effective. All reasonable
out-of-pocket costs incurred by Agent and Lessor in connection with any such
disposition by a Lender under this Section 6.3 shall be borne by such Lender. In
the event of a transfer under this Section 6.3, any expenses incurred by the
transferee in connection with its review of the Operative Documents and its
investigation of the transactions contemplated thereby shall be borne by such
transferee or the relevant Lender, as they may determine, but shall not be
considered costs and expenses which Lessee is obligated to pay or reimburse
under Section 9.9.
(b) Required Consent; Securities Laws. No Lender may make any
such assignment, conveyance or transfer unless (i) Lessee and Agent shall have
consented to the transfer and the transferee, such consents not to be
unreasonably withheld, and (ii) the applicable Lender and transferee shall have
complied with all applicable securities laws with respect to such transfer.
(c) Employee Benefit Plans. No Lender may make any such
assignment, conveyance or transfer (including pursuant to a participation) to or
in connection with any arrangement or understanding in any way involving any
employee benefit plan (or its related trust), as defined in Section 3(3) of
ERISA, or with the assets of any such plan (or its related trust), as defined in
Section 4975(e)(1) of the Code (other than a governmental plan, as defined in
Section 3(32) of ERISA).
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(d) Representations and Warranties. Notwithstanding anything
to the contrary set forth above, no Lender may assign, convey or transfer its
interest to any Person, unless such Person shall have delivered to Agent and
Lessee a certificate confirming the accuracy of the representations and
warranties set forth in Section 4.2 with respect to such Person (other than as
such representation or warranty relates to the execution and delivery of
Operative Documents) and confirmation of such Person's commitment to acquire a
corresponding interest in the Credit Agreement.
(e) Amounts. Any assignment of Notes shall be in a face
principal amount which, together with the amount of the Credit Agreement such
assignee will hold after giving effect to such assignment, is equal to or
greater than $10,000,000 or the entire amount of the Note being transferred.
Unless Agent otherwise approves, the applicable Lender shall assign to the
transferee an interest in the Credit Agreement corresponding in percentage to
the interest in the Notes which such Lender is transferring to the transferee,
and such transfer and the transferee shall have satisfied all conditions under
the Credit Agreement for the transferee to become a successor party thereto.
(f) Assumption of Obligations. Upon satisfaction of all
applicable conditions set forth in this Section 6.3 and the consummation of the
transfer (other than a loan participation), the obligations of the transferring
Lender under the Operative Documents shall be proportionately released and
reduced to the extent of such transfer. Upon any such transfer as above
provided, the transferee shall be deemed to be bound by all obligations (whether
or not yet accrued) under, and to have become a party to, all Operative
Documents to which its transferor was a party, shall be deemed the pertinent
"Lender" for all purposes of the Operative Documents and shall be deemed to have
made that portion of the payments pursuant to this Agreement previously made or
deemed to have been made by the transferor represented by the interest being
conveyed; and each reference herein and in the other Operative Documents to the
pertinent "Lender" shall thereafter be deemed a reference to the transferee, to
the extent of such transfer, for all purposes. Upon any such transfer, Agent
shall deliver to Lessor and Lessee new Schedules I and II to this Participation
Agreement, revised to reflect the relevant information for such new Lender and
the Commitment of such new Lender (and the revised Commitment of the transferor
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Lender if it shall not have transferred its entire interest).
(g) Affidavit. If a new Note is to be issued upon transfer,
the transferring Lender shall have the transferee and Lessor execute an
affidavit to the Note, affirming that the Note was executed and delivered
outside of the State of Florida.
(h) Effect. From and after any transfer of its Notes in
accordance with this Section 6.3 (other than a loan participation) the
transferring Lender shall be released, to the extent assumed by the transferee,
from its liability and obligations hereunder and under the other Operative
Documents relating to the Sites to which such transferor is a party in respect
of obligations to be performed on or after the date of such transfer. Upon any
transfer by a Lender as above provided, any such transferee shall be deemed a
"Lender" for all purposes of such documents and each reference herein to a
Lender shall thereafter be deemed a reference to such transferee for all
purposes, except as the context may otherwise require. Notwithstanding any
transfer as provided in this Section 6.3, the transferor shall be entitled to
all benefits accrued and all rights vested prior to such transfer, including
rights to indemnification under this Agreement or any other Operative Document.
(i) Documentation; Agent's Fee. Each such transfer (including,
without limitation, a loan participation) shall be subject to the requirement
that (i) the transferee (or loan participant, as applicable) shall have executed
and delivered to Agent, Lessee and Lessor a letter in substantially the form of
the Investor's Letter attached hereto as Exhibit G, and (ii) the applicable
Lender and transferee shall have executed and delivered such other documents,
certificates and opinions of counsel which Lessee or Agent shall reasonably
request to confirm the satisfaction of the conditions of this Section 6.3. The
applicable Lender or transferee shall pay to Agent for each transfer: (i) a fee
of $3,000, and (ii) the reasonable fees and expenses of counsel to Agent. The
obligations of the applicable Lender and the transferee under the immediately
preceding sentence shall be joint and several.
SECTION 6.4. Covenants and Agreements of Lenders.
(a) Participations. Each Lender covenants and agrees that it
will not grant participations in its Notes to any Person (a "Loan Participant")
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"Loan Participant") unless the conditions of clauses (a) through (g) and clause
(i) of Section 6.3 shall have been satisfied. In the event of any such sale by a
Lender of a participating interest to a Loan Participant, such Lender's
obligations under this Agreement and under the other Operative Documents shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of its Note for all
purposes under this Agreement and under the other Operative Documents, and
Lessor, Agent and, except as set forth in Section 6.4(b), Lessee shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and under the other Operative
Documents. Notwithstanding any such loan participation, no Loan Participant
shall have any right to vote with respect to the transactions contemplated by
the Operative Documents other than with respect to changes in principal amount
of the Note in which such Loan Participant has a participation, the interest
rate payable under such Note and the stated maturity date of such Note.
(b) Transferee Indemnities. Each Loan Participant shall be
entitled to the benefits of Sections 2.11 and 2.12 of the Loan Agreement with
respect to its Notes or participation in the Loans outstanding from time to
time; provided, that no Loan Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender would have
been entitled to receive in respect of the amount of the Notes or participation
transferred by such transferor Lender to such Loan Participant had no such
transfer or participation occurred.
SECTION 6.5. Future Lenders. Each Lender, by its acceptance of its Note
or Notes, shall be deemed to be bound by and, upon compliance with the
requirements of Section 6.4, will be entitled to all of the benefits of the
provisions of this Agreement.
SECTION 6.6. Agent under Participation Agreement and Mortgages. For
purposes of this Agreement and the Mortgages, the parties hereto agree that
Agent shall be the agent of the Lenders, with Agent's duties and obligations
hereunder and thereunder being subject to the limitations, and Agent being
entitled to the rights, set forth in Article VII of the Loan Agreement. The
foregoing provisions of this Section 6.6 shall not limit the provisions of
Article 8 of this Participation Agreement or the rights and obligations of Agent
as Agent for all of the Participants pursuant to said Article 8.
SECTION 6.7. Prepayment by Lessor. Except as expressly permitted by the
Operative Documents, each Lender acknowledges and
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agrees that Lessor may not voluntarily prepay the Notes, or any part thereof,
without the written consent of Lessee; provided, however, that Lessor may
prepay, or cause to be prepaid, all or any portion of the Notes at any time
during the continuance of a Lease Event of Default.
SECTION 6.8. Foreclosure against Lessor. If Lessor's interest in the
Sites is foreclosed by reason of a Loan Event of Default while no Lease Event of
Default shall have occurred and be continuing, Lessee shall not be responsible
for any costs or expenses incurred by Agent in connection with such foreclosure
or as a result thereof.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. General Indemnification. Lessee agrees, whether or not any
of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless on an
after-tax basis (in accordance with Section 7.5) each Indemnitee from and
against any and all Claims that may be imposed on, incurred by or asserted
against such Indemnitee (whether because of action or omission, negligent or
otherwise, by such Indemnitee or otherwise), whether or not such Indemnitee
shall also be indemnified as to any such Claim by any other Person and whether
or not such Claim arises or accrues prior to the Document Closing Date or after
the Lease Termination Date, in any way relating to or arising out of (a) any of
the Operative Documents or any of the transactions contemplated thereby or any
investigation, litigation or proceeding in connection therewith, and any
amendment, modification or waiver in respect thereof; or (b) any Site or any
part thereof or interest therein; or (c) the acquisition, mortgaging, design,
construction, preparation, installation, inspection, delivery, non-delivery,
acceptance, rejection, purchase, ownership, possession, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer or title, redelivery, use, financing,
refinancing, operation, condition, sale (including any sale pursuant to Section
6.3 of the Lease or any sale pursuant to Article XVIII of the Lease), return or
other disposition of all or any part of any interest in the Sites or the
imposition of any Lien (or incurrence of any liability to refund or pay over any
amount as a result of any Lien) thereon, including, without limitation: (i)
Claims or penalties arising from any violation of law, including Applicable Laws
and Regulations, or in tort (strict liability or otherwise), (ii) loss of or
damage to the environment (including investigation costs, clean-up costs,
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response costs, remediation and removal costs, costs of corrective action, costs
of financial assurance, and all other damages, costs, fees and expenses, fines
and penalties, including natural resource damages), or death or injury to any
Person, and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by or
under Environmental Laws, (iii) latent or other defects, whether or not
discoverable by Lessee or any Indemnitee, (iv) any Claims resulting from the
existence or Release of any Hazardous Materials at or from any Site and (v) any
Claim for patent, trademark, tradename or copyright infringement, provided that
the matters in this clause (c) shall be without duplication of any matter for
which indemnification is provided pursuant to the Environmental Indemnity; (d)
the offer, issuance, sale or delivery of the Notes; (e) the breach or alleged
breach by Lessee of any representation or warranty, covenant or agreement made
by it or deemed made by it in any Operative Document; (f) the transactions
contemplated hereby or by any other Operative Document, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any
prohibited transaction described in Section 4975(c) of the Code or (g) any other
agreement entered into or assumed by Lessee in connection with any Site
(including, in each case, matters based on or arising from the negligence of any
Indemnitee).
Lessee shall not be required to indemnify under this Section 7.1 for
(1) as to an Indemnitee, any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee, as determined by a court of
competent jurisdiction or to the extent resulting from the breach of
representations, warranties or covenants of such Indemnitee (including, in the
case of clause (f) of this Section 7.1, the representation of such Lender set
forth in Section 4.2(e) and the covenant of such Lender set forth in Section
6.3(c)), (2) any Claims in respect of Taxes (such Claims to be subject to
Section 7.2), other than a payment necessary to make payments under this Section
7.1 on an after-tax basis, provided, that this clause (2) does not apply to any
taxes or penalties included in Claims against which the Indemnitee is provided
an indemnification under clause (f) of this Section 7.1 and (3) as to an
Indemnitee, any Claim resulting from Lessor Liens which such Indemnitee is
responsible for discharging under the Operative Documents. In the event that the
indemnification provided for herein is prohibited by Applicable Laws and
Regulations, Lessee will contribute to a Claim to the maximum extent permitted
by law.
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SECTION 7.2. General Tax Indemnity.
(a) Tax Indemnity. Lessee shall pay, defend and, on written
demand, indemnify and hold each Indemnitee harmless (on an after-tax basis in
accordance with Section 7.5) from and against, any and all Taxes, howsoever
imposed, on or with respect to any Indemnitee, the Sites or any portion thereof,
any Operative Document or Lessee or any sublessee or user of a Site by any
Authority in connection with or in any way relating to (i) the acquisition,
mortgaging, design, construction, preparation, installation, inspection,
delivery, non-delivery, acceptance, rejection, purchase, ownership, possession,
rental, lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, transfer of title, redelivery,
use, financing, refinancing, operation, condition, sale, return or other
application or disposition of all or any part of the Sites or the imposition of
any Lien (or incurrence of any liability to refund or pay over any amount as a
result of any Lien) thereon, (ii) Basic Rent or Supplemental Rent or the
receipts or earnings arising from or received with respect to the Sites or any
part thereof, or any interest therein or any applications or dispositions
thereof, (iii) any other amount paid or payable pursuant to the Notes or any
other Operative Documents, (iv) the Sites or any part thereof or any interest
therein, (v) all or any of the Operative Documents, any other documents
contemplated thereby and any amendments and supplements thereto, and (vi)
otherwise with respect to or in connection with the transactions contemplated by
the Operative Documents; provided, however, that the indemnification obligation
of this Section 7.2(a) shall not apply to (i) Taxes which are based upon or
measured by the Indemnitee's net income (including taxes based on minimum taxes
or capital gains), or which are expressly in substitution for, or relieve
Indemnitee from, any actual Tax based upon or measured by Indemnitee's net
income; (ii) any Tax or imposition to the extent, but only to such extent, it
relates to any act, event or omission that occurs after the termination of the
Lease and the discharge of all of Lessee's obligations under the Operative
Documents which were matured at the time of such termination (but not any Tax or
imposition that relates to any period prior to the discharge of all of Lessee's
obligations under the Operative Documents which were matured at the time of such
termination) unless such termination is the result of a Lease Event of Default
or the Site has been transferred to Lessee; (iii) any interest or penalties
imposed on an Indemnitee as a result of the failure of such Indemnitee to comply
with its obligations set forth in Section 7.2(d) unless such failure results
from the failure of Lessee to comply with its obligations set forth in Section
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7.2(d); (iv) any Taxes which are imposed on an Indemnitee as a result of a
breach of a covenant or representation by such Indemnitee in any Operative
Document (unless caused by the Lessee's breach of its representation, warranties
or covenants) or is a result of the gross negligence or willful misconduct of
such Indemnitee itself (as opposed to gross negligence or willful misconduct
imputed to such Indemnitee), but not Taxes imposed as a result of ordinary
negligence of such Indemnitee; (v) Taxes based upon the voluntary transfer,
assignment or disposition by Agent, Lessor or any Lender of any interest in any
of the Sites (other than a transfer pursuant to the exercise of remedies under
the Operative Documents, transfers pursuant to the exercise of the Sale Option
or Purchase Option, a transfer to Lessee or otherwise pursuant to the Lease) or
any involuntary transfer of any interest in any of the Sites resulting from the
bankruptcy or insolvency of the Agent, Lessor or any Lender (other than in
connection with the existence of a Lease Event of Default or a Credit Agreement
Event of Default); (vi) any gift, inheritance, franchise or estate Taxes (vii)
taxes and impositions that are imposed by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and that are based upon
or measured by the net income or net receipts (including any minimum taxes,
withholding taxes or taxes on or measured by capital, net worth, excess profits
or items of tax preference or taxes that are capital stock, franchise or doing
business taxes); (viii) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of the
Participation Agreement; (ix) any Taxes or impositions that are enacted or
adopted by their express terms as a substitute for any Tax that would not have
been indemnified against pursuant to the terms of Section 7.2(a) of the
Participation Agreement; (x) any Taxes or impositions to the extent that such
Taxes are actually reimbursed to the Lessor by another Person other than an
Affiliate of the Lessor; (xi) in the event of a voluntary transfer, assignment
or disposition, or any involuntary transfer of any interest in any of the Sites
resulting from the bankruptcy or insolvency of Lessor (other than in connection
with the existence of a Lease Event of Default or a Credit Agreement Event of
Default), any Tax or imposition imposed on a direct or indirect transferee,
successor or assign of the Lessor to the extent of the excess of such Taxes over
the amount of such Taxes that would have been imposed had there not been a
transfer by the original Lessor of an interest arising under the Operative
Documents, unless a Lease Event of Default shall have occurred and be
continuing; and (xii) any Taxes or impositions imposed on the Lessor that are a
result of the Lessor not being considered a "United States person" as defined in
Section 7701(a)(30) of the Code. Notwithstanding the
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proviso of the preceding sentence, Lessee shall pay or reimburse, and indemnify
and hold harmless, any Indemnitee which is not incorporated under the laws of
the United States, or a state thereof, and which has complied with Section 7.3,
from any deduction or withholding of any United States Federal, state or local
income tax. All indemnities contained in this Section 7.2(a) are expressly made
for the benefit of, and shall be enforceable by, each Indemnitee.
(b) Contests. Lessee shall pay on or before the time or times
prescribed by law any Taxes (except any Taxes excluded by the proviso to Section
7.2(a)); provided, however, that Lessee shall be under no obligation to pay any
such Tax so long as the payment of such Tax is not delinquent or is being
contested by a Permitted Contest. If any claim or claims is or are made against
any Indemnitee for any Tax which is subject to indemnification as provided in
Section 7.2(a), Indemnitee shall as soon as practicable, but in no event more
than 20 days after receipt of formal written notice of the Tax or proposed Tax,
notify Lessee and if, in the reasonable opinion of Lessee and (in the case of
any Tax which may reasonably be expected in the aggregate to exceed $50,000) tax
counsel acceptable to the Indemnitee, there exists a basis to contest such Tax
which satisfies the requirements of ABA Formal Opinion 85-352 (and if the
provisos of the definition of "Permitted Contest" continues to be satisfied and
so long as no Lease Event of Default exists), Lessee at its expense may, to the
extent permitted by Applicable Laws and Regulations, contest such Tax, and
subsequently may appeal any adverse determination, in the appropriate
administrative and legal forums; provided that in all other circumstances, upon
notice from Lessee to such Indemnitee that there exists a basis to contest any
such Tax which satisfies the requirements of ABA Formal Opinion 85-352 (as
supported by an opinion of tax counsel to Lessee acceptable to the Indemnitee),
the Indemnitee, at Lessee's expense, shall contest any such Tax. Lessee shall
pay all expenses incurred by the Indemnitee in contesting any such Tax
(including all reasonable attorneys' and accountants' fees, including the
allocated costs of internal counsel), upon demand by the Indemnitee. Lessee
shall have the right to participate in the conduct of any proceedings controlled
by the Indemnitee to the extent that such participation by such Person does not
interfere with the Indemnitee's control of such contest and Lessee shall in all
events be kept informed, to the extent practicable, of material developments
relative to such proceedings. The Indemnitee shall have the right to participate
in the conduct of any proceedings controlled by Lessee and the Indemnitee shall
in all events be kept informed, to the extent practicable, of material
developments relative to such proceedings.
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The Indemnitees agree that a contested claim for which Lessee would be required
to make a reimbursement payment hereunder will not be settled or compromised
without Lessee's prior written consent (which consent shall neither be
unreasonably delayed nor withheld), unless the provisos of the definition of
"Permitted Contest" would not continue to be satisfied. Indemnitee shall
endeavor to settle or compromise any such contested claim in accordance with
written instructions received from Lessee, provided that: (x) Lessee on or
before the date the Indemnitee executes a settlement or compromise pays the
contested Tax to the extent agreed upon or makes an indemnification payment to
the Indemnitee in an amount acceptable to the Indemnitee; and (y) the settlement
or compromise does not, in the reasonable opinion of the Indemnitee materially
adversely affect the right of such Lessor to receive Rent or the Lease Balance
or any other payment pursuant to the Operative Documents, or involve a material
risk of sale, forfeiture or loss of any Site or any interest therein or any
matter described in the provisos to the definition of "Permitted Contest". The
failure of an Indemnitee to timely contest a claim against it for any Tax which
is subject to indemnification under Section 7.2(a) and for which it has an
obligation to Lessee to contest under this Section 7.2(b) in the manner required
by Applicable Laws and Regulations where Lessee has timely requested that such
Indemnitee contest such claim shall relieve Lessee of its obligations to such
Indemnitee under Section 7.2(a) with respect to such claim to the extent such
failure results in the loss of an effective contest. If Applicable Laws and
Regulations require the payment of a contested Tax as a condition to, or
regardless of, its being contested, and Lessee chooses to contest such Tax or to
direct the Indemnitee to contest such Tax in accordance with this Section, then
Lessee shall provide the Indemnitee with the funds to pay such Tax, such
provision of funds to be deemed a non-interest bearing loan by Lessee to the
Indemnitee to be repaid by any recovery of such Tax from such contest and any
remaining unpaid amount not recovered to offset Lessee's obligation to indemnify
the Indemnitee for such Tax. Lessee shall indemnify the Indemnitee on a
grossed-up basis (in accordance with Section 7.5) for and against any adverse
tax consequences of such interest-free loan. In the event that the Indemnitee
receives a refund (or like adjustment) in respect of any Tax for which the
Indemnitee has been reimbursed by Lessee, the Indemnitee shall immediately remit
the amount of such refund (or like adjustment) to Lessee, net of all costs and
expenses incurred by such Indemnitee.
(c) Payments. Any Tax indemnifiable under Section 7.2(a) shall
be paid directly to the applicable taxing authority if direct payment is
practicable and permitted. If direct payment to the applicable taxing authority
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is not permitted or is otherwise not made, any amount payable to an Indemnitee
pursuant to Section 7.2(a) shall be paid within thirty (30) days after receipt
of a written demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the amount so payable, but not before
the date that the relevant Taxes are due. Any payments made pursuant to Section
7.2(a) directly to the Indemnitee entitled thereto or Lessee, as the case may
be, shall be made in immediately available funds at such bank or to such account
as specified by the payee in written directions to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of
the payee by certified mail, postage prepaid at its address as set forth in this
Participation Agreement. Upon the request of any Indemnitee with respect to a
Tax that Lessee is required to pay, Lessee shall furnish to such Indemnitee the
original or a certified copy of a receipt for Lessee's payment of such Tax or
such other evidence of payment as is reasonably acceptable to such Indemnitee.
Taxes imposed with respect to the Property for a billing period during which the
Lease expires or terminates (provided that the Lessee surrenders possession of
the Property to Lessor) shall be adjusted and prorated on a daily basis between
the Lessee and the Lessor, whether or not such Imposition is imposed before or
after such expiration or termination and each party shall pay or reimburse the
other for each party's pro rata share thereof. At Lessee's request, the amount
of any indemnification payment by Lessee pursuant to subsection (a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to Lessee and the Indemnitee. The fees and expenses of such
independent public accounting firm shall be paid by Lessee unless such
verification shall result in an adjustment in Lessee's favor of 5% or more of
the payment as computed by the Indemnitee, in which case such fee shall be paid
by the Indemnitee. In no event shall Lessee have the right to review the
Indemnitee's tax returns or receive any other confidential information from the
Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within 30 days of Lessee's request for verifications and
the computations of the accounting firm shall be final, binding and conclusive
upon Lessee and the Indemnitee. The parties agree that the sole responsibility
of the independent public accounting firm shall be to verify the amount of a
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payment pursuant to this Participation Agreement and that matters of
interpretation ofthis Participation Agreement are not within the scope of the
independentaccounting firm's responsibilities.
(d) Reports. If any report, return or statement is required to
be filed with respect to any Taxes that are subject to indemnification under
Section 7.2(a), Lessee shall, if Lessee is permitted by Applicable Laws and
Regulations, timely prepare and file such report, return or statement; provided,
however, that if Lessee is not permitted by Applicable Laws and Regulations to
file any such report Lessee will promptly so notify the appropriate Indemnitee,
in which case the Indemnitee will file any such report after preparation thereof
by Lessee. Lessee will deliver any such return, together with immediately
available funds for payment of any Tax due, to such Indemnitee at least ten (10)
days in advance of the date such return or payment is due.
SECTION 7.3. Withholding Tax Exemption. On or before the first date on
which any payment is due under any Note for the account of any Lender not
incorporated under the laws of the United States or a state thereof, such Lender
agrees that it will have delivered to each of Lessee, Lessor and Agent (i) two
valid, duly completed copies of United States Internal Revenue Service Form 1001
or 4224, certifying in either case that such Lender is entitled to receive
payments under the Operative Documents without deduction or withholding of any
United States 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 a Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, further undertakes to deliver to each of Lessee, Lessor and
Agent two additional copies of such form on or before the date that such form
expires (currently, three successive calendar years for Form 1001 and one
calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Lessee, Lessor or Agent, in each case certifying that such Lender
is entitled to receive payments under the Operative Documents without deduction
or withholding of any United States Federal income taxes, unless any change in
treaty, law or regulation 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 Lessee, Lessor and Agent that it
is not capable of receiving payments without any withholding of United States
Federal income tax.
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SECTION 7.4. Excessive Use Indemnity. In the event that at the end of
the Lease Term: (a) Lessee elects the Sale Option; and (b) after paying to
Lessor all amounts due under Section 6.3 of the Lease, including Proceeds and
the aggregate Applicable Percentage Amount, Lessor does not have sufficient
funds to reduce the Lease Balance to zero, then Lessee shall promptly pay over
to Lessor the shortfall unless Lessee delivers a report from an independent
appraiser in form and substance satisfactory to Lessor and the Agent which
establishes that the decline in value in the Sites from the aggregate amount
anticipated for such date in the Appraiser's report delivered with respect to
each Site on or about the applicable Site Acquisition Date was not due to the
excessive use of any Facility or any Site, failure to maintain any Facility or
any Site, modifications or restorations which reduce the value of any Facility
or any Site, any adverse change in the environmental condition of any Facility
or any Site, any easements granted pursuant to Section 8.3 of the Lease or
Section 3.4 of the Construction Agency Agreement which reduce the value of any
Facility or Site or any other cause or condition within the power of Lessee to
control or affect differing from ordinary wear and tear.
SECTION 7.5. Gross Up. If an Indemnitee shall not be entitled to a
corresponding and equal deduction with respect to any payment or Tax which
Lessee is required to pay or reimburse under any other provision of this Article
VII (each such payment or reimbursement under this Article VII, an "original
payment") and which original payment constitutes income to such Indemnitee, then
Lessee shall pay to such Indemnitee on demand the amount of such original
payment on a grossed-up basis such that, after subtracting all Taxes imposed on
such Indemnitee with respect to such original payment by Lessee (including any
Taxes otherwise excluded by Section 7.2(b) and assuming for this purpose that
such Indemnitee was subject to taxation at the highest Federal marginal rates
applicable to widely held corporations for the year in which such income is
taxable and at an assumed state and local income tax rate of 9.5%, such payments
shall be equal to the original payment to be received or paid (net of any
credits, deductions or other tax benefits then actually recognized that arise
from the payment by such Indemnitee of any amount, including taxes, for which
the payment to be received is made).
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ARTICLE VIII
THE AGENT
SECTION 8.1. Appointment of Agent; Powers and Authorization
to Take Certain Actions.
(a) Each Participant irrevocably appoints and authorizes Agent
to act as its agent hereunder, with such powers as are specifically
delegated to Agent by the terms hereof, together with such other powers
as are reasonably incidental thereto. Each Participant authorizes and
directs Agent to, and Agent agrees for the benefit of the Participant,
that, on the Document Closing Date it will accept the Operative
Documents and thereafter, it will accept all documents to be delivered
to Agent on behalf of the Participants or the Lenders under the
Operative Documents. Specifically, without limitation, Lessor hereby
appoints Agent as its agent hereunder and under the Operative Documents
to accept delivery of all documents to be delivered to Lessor under the
Operative Documents and to take all action on behalf of Lessor required
to be taken by Lessor under the Operative Documents, subject to the
remaining provisions of this Article 8. Agent accepts the agency hereby
created applicable to it and agrees to receive all payments and
proceeds pursuant to the Operative Documents and disburse such payments
or proceeds in accordance with the Operative Documents. Agent shall
have no duties or responsibilities except those expressly set forth in
the Operative Documents. Agent shall not be responsible to any
Participant (or to any other Person) (i) for any recitals, statements,
representations or warranties of any party contained in any of the
Operative Documents or in any certificate or other document referred to
or provided for in, or received by any of them under, the Operative
Documents, other than the representations and warranties made by Agent
in Section 4.4, or (ii) for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Collateral or the
title thereto or of the Loan Agreement or any other document referred
to or provided for therein or (iii) for any failure by any Lessee,
Lessor, any Lender or any other third party (other than Agent) to
perform any of its obligations under any Operative Document. Agent may
employ agents, trustees or attorneys-in-fact, may vest any of them with
any property, title, right or power deemed necessary for the purposes
of such appointment and shall not be responsible for the negligence or
misconduct of any of them selected by it with reasonable care. Neither
Agent nor any of its directors, officers, employees or agents shall be
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liable or responsible for any action taken or omitted to be taken by it
or them hereunder, or in connection herewith, except for its or their
own gross negligence or willful misconduct.
(b) Agent shall not have any duty or obligation to manage,
control, use, operate, store, lease, sell, dispose of or otherwise deal
with any Site, any other Collateral or the Lease, or to otherwise take
or refrain from taking any action under, or in connection with, this
Agreement or any related document to which Agent is a party, except as
expressly provided by the terms hereof, and no implied duties of any
kind shall be read into any Operative Document against Agent. The
permissive right of Agent to take actions enumerated in this Agreement
or any other Operative Document shall never be construed as a duty,
unless Agent is instructed or directed to exercise, perform or enforce
one or more rights by the Required Participants (provided that Agent
has received indemnification reasonably satisfactory to it). Subject to
Section 8.1(c) below, no provision of the Operative Documents shall
require Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its obligations under
the Operative Documents, or in the exercise of any of its rights or
powers thereunder. It is understood and agreed that the duties of Agent
are ministerial in nature.
(c) Except as specifically provided herein, Agent is acting
hereunder solely as agent and, except as specifically provided herein,
is not responsible to any party hereto in its individual capacity,
except with respect to any claim arising from Agent's gross negligence
or willful misconduct or any breach of a representation or covenant
made in its individual capacity.
(d) Agent may accept deposits from, lend money to and
otherwise deal with Lessee or any of its Affiliates with the same
rights as it would have if it were not the named Agent hereunder.
SECTION 8.2. Reliance. Agent may rely upon, and shall not be bound or
obligated to make any investigation into the facts or matters stated in, any
certificate, notice or other communication (including any communication by
telephone, facsimile, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been made, signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
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independent accountants and other experts selected by Agent with due care
(including any expert selected by Agent to aid Agent in any calculations
required in connection with its duties under the Operative Documents).
SECTION 8.3. Action Upon Instructions Generally. Subject to Sections
8.4 and 8.6, upon written instructions of the Required Participants, Agent
shall, on behalf of the Participants, give such notice or direction, exercise
such right, remedy or power hereunder or in respect of any Site, and give such
consent or enter into such amendment to any document to which it is a party as
Agent as may be specified in such instructions. Agent shall deliver to each
Participant a copy of each material notice, report and certificate received by
Agent pursuant to the Operative Documents. Agent shall have no obligation to
investigate or determine whether there has been a Lease Default or Lease Event
of Default. Agent shall not be deemed to have notice or knowledge of any Lease
Default or Lease Event of Default unless a Responsible Officer of Agent is
notified in writing of such Lease Default or Lease Event of Default, provided
that Agent shall be deemed to have been notified in writing of any failure of
Lessee to pay Basic Rent in the amounts and at the times set forth in Article IV
of the Lease. If Agent receives notice of a Lease Default or Lease Event of
Default, Agent shall give prompt notice thereof, at Lessee's expense, to each
Participant. Subject to Sections 8.4, 8.6 and 9.5 hereof, and subject to the
terms and provisions of the Collateral Agency Agreement, Agent shall take action
or refrain from taking action with respect to such Lease Default or Lease Event
of Default as directed by the Required Participants or, in the case of a Lease
Event of Default by virtue of the failure of Lessee to pay any portion of Basic
Rent, as directed by any Participant; provided that, unless and until Agent
receives such directions, Agent may refrain from taking any action, or may act
in its discretion, with respect to such Lease Default or Lease Event of Default.
Prior to the date the Lease Balance shall have become due and payable by
acceleration pursuant to Article 18 of the Lease, the Required Participants may
deliver written instructions to Agent to waive, and Agent shall waive pursuant
thereto, any Event of Default and its consequences; provided that in the absence
of written instructions from all Participants, Agent shall not waive any (i)
Lease Event of Default by virtue of the failure of Lessee to pay any portion of
Basic Rent or (ii) covenant or provision which, under Section 9.5, cannot be
modified or amended without the consent of all Participants. As to any matters
not expressly provided for by this Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Participants
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and such instructions of the Required Participants and any action taken or
failure to act pursuant thereto shall be binding on each Participant.
SECTION 8.4. Indemnification. Each Participant shall reimburse and hold
Agent harmless, ratably in accordance with its Commitment at the time the
indemnification is required to be given, (but only to the extent that any such
indemnified amounts have not in fact been paid to Agent by, or on behalf of,
Lessee in accordance with Section 7.1) from any and all claims, losses, damages,
obligations, penalties, liabilities, demands, suits, judgments, or causes of
action, and all legal proceedings, and any reasonable costs or expenses in
connection therewith, including allocated charges, costs and expenses of
internal counsel of Agent and all other reasonable attorneys' fees and expenses
incurred by Agent, in any way relating to or arising in any manner out of (i)
any Operative Document, the enforcement hereof or thereof or the consummation of
the transactions contemplated thereby, or (ii) instructions from the Required
Participants (including, without limitation, the costs and expenses that Lessee
is obligated to and does not pay hereunder, but excluding normal administrative
costs and expenses incident to the performance by Agent of its agency duties
hereunder other than materially increased administrative costs and expenses
incurred as a result of an Event of Default), provided that no Participant shall
be liable for any of the foregoing to the extent they arise from (a) the gross
negligence or willful misconduct of Agent as determined by a court of competent
jurisdiction, (b) the inaccuracy of any representation or warranty or breach of
any covenant given by Agent in Section 4.4 hereof or in the Loan Agreement, (c)
negligence of Agent in the case of Agent's handling of funds or (d) any taxes,
fees or other charges payable by Agent based on or measured by any fees,
commissions or compensation received by it for acting as Agent in connection
with the transactions contemplated by the Operative Documents.
SECTION 8.5. Independent Credit Investigation. Each Participant by
entering into this Agreement agrees that it has, independently and without
reliance on Agent or any other Participant and based on such documents and
information as it has deemed appropriate, made its own credit analysis of Lessee
and the Guarantors and its own decision to enter into this Agreement and each of
the other Operative Documents to which it is a party and that it will,
independently and without reliance upon Agent or any other Participant 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 action under this
Agreement and any related documents to which it is a party. Agent shall not be
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required to keep itself informed as to the performance or observance by Lessee
of any other document referred to (directly or indirectly) or provided for
herein or to inspect the properties or books of Lessee. Except for notices or
statements which Agent is expressly required to give under this Agreement and
for notices, reports and other documents and information expressly required to
be furnished to Agent alone hereunder or under any other Operative Document,
Agent shall not have any duty or responsibility to provide any Participant with
copies of notices or with any credit or other information concerning the
affairs, financial condition or business of Lessee (or any of its Affiliates)
that may come into the possession of Agent or any of its Affiliates.
SECTION 8.6. Refusal to Act. Except for notices and actions expressly
required of Agent hereunder, Agent shall in all cases be fully justified in
failing or refusing to act unless (a) it is indemnified to its reasonable
satisfaction by Lessor against any and all liability and reasonable expense
which may be incurred by it by reason of taking or continuing to take any such
action (provided that such indemnity shall not be required to extend to
liability or expense arising from any matter described in clauses (a) through
(d) of Section 8.4, it being understood that no action taken by Agent in
accordance with the instructions of the Required Participants shall be deemed to
constitute any such matter) and (b) it is reasonably satisfied that such action
is not contrary to any Operative Document or to any applicable law.
SECTION 8.7. Resignation or Removal of Agent; Appointment of Successor.
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving 30 days' prior written notice
thereof to Lessor, Lenders and Lessee or may be removed at any time for cause by
30 days' prior written notice from the Required Participants to Agent, the other
Participants and Lessee. Upon any such resignation or removal, the Required
Participants at the time of the resignation or removal shall have the right to
appoint a successor Agent. If, within thirty (30) calendar days after the
retiring Agent's giving of notice of resignation or receipt of a written notice
of removal, a successor Agent is not so appointed and does not accept such
appointment, then the retiring or removed Agent may (but shall not be required
to) appoint a successor Agent and transfer to such successor Agent all rights
and obligations of the retiring Agent. Such successor Agent shall be a Lender if
any Lender shall at the time be willing to become the successor Agent, and if no
Lender is so willing, then the successor Agent shall be a financial institution.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
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such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent. Upon the
effective date of resignation or removal, the retiring or removed Agent shall be
discharged from duties and obligations as Agent thereafter arising hereunder and
under any related document, but the provisions of this Agreement and the other
Operative Documents shall inure to its benefit as to any actions taken or
omitted by it while it was Agent under this Agreement and the other Operative
Documents. If the Required Participants or the retiring Agent does not appoint a
successor in accordance with the foregoing provisions of this Section 8.7, any
Participant shall be entitled to apply to a court of competent jurisdiction for
such appointment, and such court may thereupon appoint a successor to act until
such time, if any, as a successor shall have been appointed as above provided.
SECTION 8.8. Separate Agent. Agent may, for the purpose of meeting any
legal requirements of any jurisdiction in which any Site or Collateral may be
located, appoint one or more individuals or corporations either to act as
co-agent jointly with Agent or to act as separate agent of all or any part of
the Collateral, and vest in such individuals or corporations, in such capacity,
such title to such Collateral or any part thereof, and such rights or duties as
Agent may consider necessary or desirable. Agent shall not be required to
qualify to do business in any jurisdiction where it is not now so qualified.
Agent shall execute, acknowledge and deliver all such instruments as may be
required by any such co-agent or separate agent more fully confirming such
title, rights or duties to such co-agent or separate agent. Upon the acceptance
in writing of such appointment by any such co-agent or separate agent, it, she
or he shall be vested with such interest in the Collateral or any part thereof,
and with such rights and duties, not inconsistent with the provisions of the
Operative Documents, as shall be specified in the instrument of appointment,
jointly with Agent (except insofar as local law makes it necessary for any such
co-agent or separate agent to act alone), subject to all terms of the Operative
Documents. Any co-agent or separate agent, to the fullest extent permitted by
legal requirements of the relevant jurisdiction, at any time, by an instrument
in writing, shall constitute Agent its attorney-in-fact and agent, with full
power and authority to do all acts and things and to exercise all discretion on
its behalf and in its name. If any co-agent or separate agent shall die, become
incapable of acting, resign or be removed, the interest in the Collateral or
Sites and all rights and duties of such co-agent or separate agent shall, so far
as permitted by law, vest in and be exercised by Agent, without the appointment
of a successor to such co-agent or separate agent.
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SECTION 8.9. Termination of Agency. The agency created hereby shall
terminate upon the final disposition by Lessor of all Sites and the final
distribution by Agent of all monies or other property or proceeds received
pursuant to the Lease and Loan Agreement in accordance with their respective
terms, provided that at such time Lessee shall have complied fully with all the
terms hereof.
SECTION 8.10. Compensation of Agency. Lessee shall pay Agent (i) the
Structuring/Underwriting Fee pursuant to Section 2.6 hereof and (ii) Agent's
reasonable fees, costs and expenses for the performance of Agent's obligations
hereunder.
SECTION 8.11. Limitations. It is expressly understood and agreed by and
among the parties hereto that, except as otherwise provided herein or in the
other Operative Documents: (a) this Participation Agreement and the other
Operative Documents to which Agent is a party are executed by Agent, not in its
individual capacity (except with respect to the representations and covenants of
Agent in Section 4.4), but solely as Agent under the Operative Documents in the
exercise of the power and authority conferred and vested in it as such Agent;
(b) each and all of the undertakings and agreements herein made on the part of
Agent are each and every one of them made and intended not as personal
undertakings and agreements by Agent, or for the purpose or with the intention
of binding Agent personally, but are made and intended for the purpose of
binding only the interests of Lessor and the Lenders in the Sites and Collateral
unless expressly provided otherwise; (c) actions to be taken by Agent pursuant
to its obligations under the Operative Documents may, in certain circumstances,
be taken by Agent only upon specific authority of the Participants or Required
Participants; (d) nothing contained in the Operative Documents shall be
construed as creating any liability on Agent, individually or personally, or any
incorporator or any past, present or future subscriber to the capital stock of,
or stockholder, officer or director, employee or agent of, Agent to perform any
covenants either express or implied contained herein, all such liability, if
any, being expressly waived by the other parties hereto and by any Person
claiming by, through or under them; and (e) so far as Agent, individually or
personally, is concerned, the other parties hereto and any Person claiming by,
through or under them shall look solely to the Collateral and Lessee for the
performance of any obligation under any of the instruments referred to herein;
provided, however, that nothing in this Section 8.11 shall be construed to limit
in scope or substance the general corporate liability of Agent in respect of its
gross negligence or willful misconduct or those representations, warranties and
covenants of Agent in its individual capacity set forth herein or in any of the
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other agreements contemplated hereby.
SECTION 8.12. Agent May Be a Participant. Lessee and each Participant
(a) acknowledge and agree that Agent may be a Participant and Agent, (as well as
an agent and a Lender under the Credit Agreement and the Collateral Agent under
the Collateral Agency Agreement), and in such other capacities, shall have no
obligation to Lessee or the other Participants greater than it would have were
Agent solely a Participant and not Agent hereunder, or not the agent or a Lender
under the Credit Agreement or Collateral Agent under the Collateral Agency
Agreement and (b) waive any conflict or potential conflict by virtue of Agent
also being a Participant from time to time.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery and the termination or expiration of
this Agreement and any of the Operative Documents, including the termination of
the Lease with respect to any Site, the transfer of the interest in the Sites to
or by Lessor as provided herein or in any other Operative Documents (and shall
not be merged into the Deeds or any other conveyance or transfer document), any
disposition of any interest of Lessor in the Sites, the purchase and sale of the
Notes, payment therefor and any disposition thereof and shall be and continue in
effect notwithstanding any investigation made by any party hereto or to any of
the other Operative Documents and the fact that any such party may waive
compliance with any of the other terms, provisions or conditions of any of the
Operative Documents.
SECTION 9.2. No Broker, etc. Except for Agent (the fees and expenses of
which shall be payable by Lessee in accordance with the provisions of this
Participation Agreement), each of the parties hereto represents to the others
that it has not retained or employed any broker, finder or financial advisor to
act on its behalf in connection with this Agreement, nor has it authorized any
broker, finder or financial adviser retained or employed by any other Person so
to act, nor has it incurred any fees or commissions to which Lessor or any other
Participant might be subjected by virtue of its entering into the transactions
contemplated by this Agreement. Any party who is in breach of this
representation shall indemnify and hold the other parties harmless from and
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against any liability arising out of such breach of this representation.
SECTION 9.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be made in writing and shall be deemed to have been given (i) in
the case of notice by letter, the earlier of when delivered to the addressee by
hand or courier if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter or on the third Business Day
after depositing the same in the mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as provided on Schedule II hereto,
and (ii) in the case of notice by facsimile or bank wire, when receipt is
confirmed if delivered on a Business Day and, if not delivered on a Business
Day, the first Business Day thereafter, addressed as provided on Schedule II
hereto, or to such other address as any of the parties hereto may designate by
written notice. Copies of all notices given by facsimile or bank wire shall be
contemporaneously sent by overnight courier.
SECTION 9.4. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 9.5. Amendments. Except as otherwise specifically provided in
any Operative Document, neither this Agreement nor any of the other Operative
Documents nor any of the terms hereof or thereof may be terminated, amended,
supplemented, waived or modified orally, but only by an instrument in writing
signed by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification shall be sought; and no such termination,
amendment, supplement, waiver or modification shall be effective unless a signed
copy thereof shall have been delivered to Lessor, Lessee and Agent. Lessor,
Agent and Lessee may amend, supplement, waive or modify this Agreement or any
other Operative Document (i) to correct any mistake without the consent of the
Required Participants, or (ii) for any other purpose with the written consent of
the Required Participants; provided, that without the prior written consent of
each Lender, Agent and Lessor shall not:
(a) modify any of the provisions of this Section 9.5, change
the definition of "Required Participants" or "Required Lenders" or modify or
waive any provision of any Operative Document requiring action by any of the
foregoing, or release any collateral (except as otherwise specifically provided
in any Operative Document);
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(b) modify, amend, waive or supplement any of the provisions
of Articles XI, XIII, XVI and XVII of the Lease;
(c) reduce, modify, amend or waive any indemnities in favor of
any Lender;
(d) reduce the amount or change the time of payment of Rent or
the Lease Balance;
(e) consent to any assignment of the Lease releasing Lessee
from its obligations to pay Rent or the Lease Balance or changing the absolute
and unconditional character of such obligations; or
(f) permit the creation of any Lien on the Sites or any part
thereof except as contemplated by the Operative Documents, or deprive any Lender
of the benefit of the security interest and lien secured by the Sites.
SECTION 9.6. Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Agreement are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
SECTION 9.7. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Agreement is intended for the benefit of any
Person except the parties hereto, their successors and permitted assigns.
SECTION 9.8. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN, AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES OF SUCH STATE.
SECTION 9.9. Payment of Transaction Costs and Other Costs.
(a) Transaction Costs. If the transactions contemplated by
this Agreement are consummated, as and when any portion of Transaction Costs
becomes due and payable, Lessor, upon Lessee's request, shall promptly (and in
any event, prior to the next Advance Date) make payment of such portion of the
Transaction Costs to the Person or Persons entitled to payment upon presentation
to Lessor of bills or invoices for such payment; provided, however, that Lessor
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shall not be required to pay any Transaction Costs in excess of $2,000,000.00 in
the aggregate. Lessee shall elect which Transaction Costs Lessor shall so pay,
provided that such election must include the Structuring/Underwriting Fee and
Agent's attorneys fees, and Lessor shall obtain the funds necessary for such
payment in accordance with Section 2.5. Any additional Transaction Costs shall
be paid by Lessee. If such transactions are not consummated, Lessee shall pay
all of the Transaction Costs.
(b) Continuing Expenses. The continuing expenses and
disbursements (including reasonable counsel fees and expenses) of Lessor and
Agent shall be paid by Lessee as Supplemental Rent; and provided, further that
if Lessor shall not have paid $2,000,000 of Transaction Costs in the aggregate,
Lessor shall continue to pay Transaction Costs (the specific Transaction Costs
being so paid by Lessor being in Lessor's discretion) in accordance with Section
2.5 until it shall have paid $2,000,000 of Transaction Costs in the aggregate.
(c) Amendments, Supplements and Appraisal. Without limitation
of the foregoing, Lessee agrees to pay to the Lessor, Agent and the Lenders all
reasonable costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with: (i) the considering, evaluating,
investigating, negotiating and entering into or giving or withholding of any
amendments or supplements or waivers or consents with respect to any Operative
Document; (ii) any Event of Loss or termination of the Lease or any other
Operative Document; (iii) the negotiation and documentation of any restructuring
or "workout," whether or not consummated, of any Operative Document; (iv) the
enforcement of the rights or remedies under the Operative Documents; (v) any
transfer by Agent or a Lender of any interest in the Operative Documents during
the continuance of a Lease Event of Default; (vi) any Advance Date or (vii) any
Site Acquisition Date; provided, however, that in the case of clauses (i), (ii),
(vi), and (vii) Lessee shall not be responsible for any legal fees and expenses
of more than two special counsel for all of Agent and the Lenders (including,
without limitation, special Credit Agreement counsel) and any special local
counsel required by Agent.
SECTION 9.10. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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SECTION 9.11. Limited Liability of Lessor. The parties hereto agree
that Lessor shall have no personal liability whatsoever to Lessee, the Lenders,
Agent or any of their respective successors and assigns for any Claim based on
or in respect of this Agreement or any of the other Operative Documents or
arising in any way from the transactions contemplated hereby or thereby;
provided, however, that Lessor shall be personally liable: (a) for its own
willful misconduct or gross negligence, (b) for liabilities that may result from
the incorrectness of any representation or warranty expressly made by it in
Section 4.3 or from the failure of Lessor to perform the covenants and
agreements set forth in Section 6.2(a) hereof, or (c) for any Tax based on or
measured by any fees, commission or compensation received by it for actions
contemplated by the Operative Documents. It is understood and agreed that,
except as provided in the preceding proviso: (i) Lessor shall have no personal
liability under any of the Operative Documents as a result of acting pursuant to
and consistent with any of the Operative Documents; (ii) all obligations of
Lessor to Lessee, the Lenders, Agent or any of their respective successors and
assigns are solely nonrecourse obligations (with liability payable solely out of
the Sites and the other Collateral) except to the extent that it has received
payment from others; (iii) all such personal liability of Lessor is expressly
waived and released as a condition of, and as consideration for, the execution
and delivery of the Operative Documents by Lessor; and (iv) this Participation
Agreement (except as provided in Section 4.3) is executed and delivered by
Lessor solely in the exercise of the powers expressly conferred upon it as
Lessor under the Operative Documents.
SECTION 9.12. Liabilities of the Lenders. No Lender shall have any
obligation to any other Lender or to Lessee, Lessor or Agent with respect to the
transactions contemplated by the Operative Documents except those obligations of
such Lender expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Lender shall
be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
SECTION 9.13. Liabilities of Agent. Agent shall have no duty, liability
or obligation to any party to this Agreement with respect to the transactions
contemplated hereby except those duties, liabilities, or obligations expressly
set forth in this Agreement or the Loan Agreement, and any such duty, liability
or obligation of Agent shall be as expressly limited by this Agreement or the
Loan Agreement, as the case may be.
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SECTION 9.14. Reproduction of Documents. This Agreement, all documents
constituting Schedules or Exhibits hereto, and all documents relating hereto
received by a party hereto, including, without limitation: (a) consents, waivers
and modifications that may hereafter be executed; (b) documents received by the
Lenders, Agent or Lessor in connection with the receipt and/or acquisition of
the Sites; and (c) financial statements, certificates, and other information
previously or hereafter furnished to Agent, Lessor or any Lender may be
reproduced by the party receiving the same by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. Each of
the parties hereto agrees and stipulates that, to the extent permitted by law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such party in the
regular course of business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 9.15. Consideration for Consents to Waivers and Amendments.
Lessee hereby agrees that it will not, and that it will not permit any of its
Affiliates to, offer or give any consideration or benefit of any kind whatsoever
to any Lender in connection with, in exchange for, or as an inducement to, such
Lender's consent to any waiver in respect of, any modification or amendment of,
any supplement to, or any other consent or approval under, any Operative
Document unless such consideration or benefit is offered ratably to all Lenders.
SECTION 9.16. Payment Directions. It is understood and agreed that
during the Lease Term, for administrative convenience and notwithstanding the
terms and provisions of the Lease or any Loan Document, Lessee will pay all
amounts due Lessor under the Lease and this Agreement, on behalf of Lessor, to
or at the direction of Agent (which direction may change from time to time, so
long as such direction does not require Lessee to make any payment due on any
date to more than one Person) for application in accordance with the terms of
Article III of the Loan Agreement.
SECTION 9.17. Action of and Notices to Lessor under Loan Agreement.
Notwithstanding anything to the contrary in the Loan Agreement, the Lenders,
Lessor and Lessee hereby agree that any notice or demand to be delivered to
Lessor pursuant to the Loan Agreement and any action to be taken by Lessor
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under the Loan Agreement shall, so long as no Lease Event of Default is
continuing, be delivered directly to or taken by Lessee, with a copy to or
notice to Lessor.
SECTION 9.18. Submission to Jurisdiction; Waivers. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY: (a) AGREES THAT ANY ACTION, SUIT OR PROCEEDING
BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT
OCCURRING IN CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA,
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED
BY LAW AGREES THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN
PERSONAL JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO
BRING RELATED LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER
FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM);
(b) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(c) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(d) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
SECTION 9.19. Final Agreement. THIS AGREEMENT, TOGETHER WITH THE LEASE,
LOAN DOCUMENTS, THE OTHER OPERATIVE DOCUMENTS AND OTHER DOCUMENTS EXECUTED IN
CONNECTION HEREWITH OR THEREWITH REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN
THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND
CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.
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[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
By:________________________________
Name Printed: George V. Hager, Jr.
Title: Senior Vice President
MELLON FINANCIAL SERVICES
CORPORATION #4, as Lessor
By:________________________________
Name Printed: Robert C. Carpenter
Title: Assistant Vice President
MELLON BANK, N.A., not in its
individual capacity except as
expressly stated herein, but solely
as Agent
By:________________________________
Name Printed: Carol Paige
Title: Vice President
MELLON BANK, N.A., as Lender
By:________________________________
Name Printed: Carol Paige
Title: Vice President
CITIBANK, N.A., as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
NATIONSBANK, N.A., as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
FLEET NATIONAL BANK, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
CORESTATES BANK, N.A., as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
PNC BANK, NATIONAL ASSOCIATION, as
Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
CREDIT LYONNAIS NEW YORK BRANCH, as
Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
Participation Agreement
CREDIT SUISSE, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
By:________________________________
Name Printed:______________________
Title:_____________________________
AMSOUTH BANK OF ALABAMA, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
BANQUE PARIBAS, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
By:________________________________
Name Printed:______________________
Title:_____________________________
<PAGE>
CREDITANSTALT CORPORATE FINANCE,
INC., as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
By:________________________________
Name Printed:______________________
Title:_____________________________
SIGNET BANK, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
Participation Agreement
THE SUMITOMO BANK, LIMITED, as
Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
By:________________________________
Name Printed:______________________
Title:_____________________________
Participation Agreement
THE FIRST NATIONAL BANK OF
MARYLAND, as Lender
By:________________________________
Name Printed:______________________
Title:_____________________________
<PAGE>
SCHEDULE I
Lessor and Lender Commitments
================================================================================
Acquisition and Transaction
Construction Costs Total
Participant Commitment Commitment Commitment
- --------------------------------------------------------------------------------
Lessor
- --------------------------------------------------------------------------------
Mellon Financial $ 4,440,000.00 $ 60,000.00 $ 4,500,000.00
- --------------------------------------------------------------------------------
Lessor Subtotal $ 4,440,000.00 $ 60,000.00 $ 4,500,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lenders
- --------------------------------------------------------------------------------
Mellon Bank, N.A. $12,809,225.61 $173,097.64 $12,982,323.25
- --------------------------------------------------------------------------------
Citibank, N.A. $12,809,225.60 $173,097.64 $12,982,323.24
- --------------------------------------------------------------------------------
First Union National Bank $10,634,074.08 $143,703.70 $10,777,777.78
of North Carolina
- --------------------------------------------------------------------------------
NationsBank, N.A. $10,634,074.08 $143,703.70 $10,777,777.78
- --------------------------------------------------------------------------------
Fleet National Bank $ 9,345,095.40 $126,285.07 $ 9,471,380.47
- --------------------------------------------------------------------------------
Bank of America National $ 9,345,095.40 $126,285.07 $ 9,471,380.47
Trust and Savings
Association
- --------------------------------------------------------------------------------
CoreStates Bank, N.A. $ 9,345,095.40 $126,285.07 $ 9,471,380.47
I-1
<PAGE>
- --------------------------------------------------------------------------------
Credit Lyonnais New York $ 9,345,095.40 $ 126,285.07 $ 9,471,380.47
Branch
- --------------------------------------------------------------------------------
PNC Bank, National $ 9,345,095.40 $ 126,285.07 $ 9,471,380.47
Association
- --------------------------------------------------------------------------------
AmSouth Bank of Alabama $ 8,056,116.72 $ 108,866.44 $ 8,164,983.16
- --------------------------------------------------------------------------------
Banque Paribas $ 8,056,116.72 $ 108,866.44 $ 8,164,983.16
- --------------------------------------------------------------------------------
Credit Suisse $ 8,056,116.72 $ 108,866.44 $ 8,164,983.16
- --------------------------------------------------------------------------------
The First National Bank of $ 6,444,893.37 $ 87,093.16 $ 6,531,986.53
Maryland
- --------------------------------------------------------------------------------
Creditanstalt Corporate $ 6,444,893.37 $ 87,093.16 $ 6,531,986.53
Finance, Inc.
- --------------------------------------------------------------------------------
Signet Bank $ 6,444,893.37 $ 87,093.16 $ 6,531,986.53
- --------------------------------------------------------------------------------
The Sumitomo Bank, Limited $ 6,444,893.37 $ 87,093.16 $ 6,531,986.53
- --------------------------------------------------------------------------------
Lenders' Subtotal $143,560,000.00 $1,940,000.00 $145,500,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $148,000,000.00 $2,000,000.00 $150,000,000.00
- --------------------------------------------------------------------------------
================================================================================
I-2
<PAGE>
SCHEDULE I
Lessor and Lender Commitments
Bank Initial Commitment Percentage
Mellon Bank, N.A. 8.9226%
Citibank, N.A. 8.9226%
First Union National Bank
of North Carolina 7.4074%
Nationsbank, N.A. 7.4074%
Fleet National Bank 6.5095%
Bank of America National
Trust and Savings Association 6.5095%
CoreStates Bank, N.A. 6.5095%
Credit Lyonnais New York
Branch 6.5095%
PNC Bank, National Association 6.5095%
Amsouth Bank of Alabama 5.6117%
Banque Paribas 5.6117%
Credit Suisse 5.6117%
The First National Bank
of Maryland 4.4893%
Creditanstalt Corporate
Finance, Inc. 4.4893%
Signet Bank 4.4893%
The Sumitomo Bank, Limited 4.4893%
I-3
<PAGE>
SCHEDULE II
Notice Information and Funding Offices
Lessee: Genesis Eldercare Properties, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Telephone: (610) 444-6350
Facsimile: (610) 444-7483
Lessor: Mellon Financial Services
Corporation #4
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
Telephone: (412) 234-2110
Facsimile: (412) 234-3948
Lender and Agent: Mellon Bank, N.A.
(address for notices) Plymouth Meeting Executive Campus
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: (610) 941-8409
Facsimile: (610) 941-4136
Lender and Agent: Mellon Bank, N.A.
(funding office) Loan Administration
701 Market Street
Room 199-5220
Philadelphia, PA 19106
Attention: Sally Gaymon
Telephone: (215) 553-2450
Facsimile: (215) 553-1016
Other Lenders See attachment hereto
(address for notices
and funding office)
II-1
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Fleet National Bank
Lender's address for notices:
Fleet National Bank
75 State Street
Mail Stop: MA BO F04A
Boston, Massachusetts 02109-1810
Attention: Ginger C. Stolzenthaler
Vice President, Healthcare
and Institutions Group
Telephone: 617-346-1647
Facsimile: 617-346-1634
Lender's funding office:
Fleet National Bank
75 State Street
Mail Stop: MA BO F04A
Boston, Massachusetts 02109-1810
Attention: Ginger C. Stolzenthaler
Vice President, Healthcare
and Institutions Group
Telephone: 617-346-1647
Facsimile: 617-346-1634
II-2
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
The Sumitomo Bank, Limited
Lender's address for notices:
The Sumitomo Bank, Limited
One Liberty Place
1650 Market Street, Suite 2860
Philadelphia, Pennsylvania 19103
Attention: J. Wade Bell
Vice President
Telephone: 215-636-4440
Facsimile: 215-636-4446
Lender's funding office:
The Sumitomo Bank, Limited
One Liberty Place
1650 Market Street, Suite 2860
Philadelphia, Pennsylvania 19103
Attention: J. Wade Bell
Vice President
Telephone: 215-636-4440
Facsimile: 215-636-4446
II-3
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Credit Suisse
Lender's address for notices:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attention: Katy Lee
Telephone: 212-238-5427
Facsimile: 212-238-5441
Lender's funding office:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attention: Katy Lee
Telephone: 212-238-5427
Facsimile: 212-238-5441
II-4
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Credit Lyonnais New York Branch
Lender's address for notices:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Evan Wasser, Vice President
Telephone: 212-261-7680
Facsimile: 212-261-3440
Lender's funding office:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Kenia Perez
Telephone: 212-261-7313
Facsimile: 212-261-3440
II-5
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Bank of America National Trust and Savings Association
Lender's address for notices:
Bank of America National Trust
and Savings Association
555 South Flower Street
11th Floor, Department 5618
Los Angeles, California 90071
Attention: Wyatt Ritchie
Telephone: 213-228-9734
Facsimile: 213-228-2756
Lender's funding office:
Bank of America National Trust
and Savings Association
333 South Beaudry Avenue
Los Angeles, California 90017
Attention: Janice Ozaki
Telephone: 213-345-6532
Facsimile: 213-345-6550
II-6
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Citibank, N.A.
Lender's address for notices:
Citibank, N.A.
399 Park Avenue
8th Floor
New York, New York 10043
Attention: Margaret Brown
Telephone: 212-559-0501
Facsimile: 212-793-3053
Lender's funding office:
Citibank, N.A.
One Court Square
7th Floor
Long Island City, New York 11120
Attention: Tom Lynch
Telephone: 718-248-9972
Facsimile: 718-248-4844
II-7
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Creditanstalt Corporate Finance, Inc.
Lender's address for notices:
Creditanstalt Corporate Finance, Inc.
2 Greenwich Plaza
Greenwich, Connecticut 06830
Attention Stacy Harmon
Gregory F. Mathis
Telephone: 203-861-6581
Facsimile: 203-861-6594
Lender's funding office:
Creditanstalt Corporate Finance, Inc.
2 Greenwich Plaza
Greenwich, Connecticut 06830
Attention: Corporate Finance
Telephone: 203-861-6421
Facsimile: 203-861-6594
II-8
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
PNC Bank, National Association
Lender's address for notices:
PNC Bank, National Association
1600 Market Square
22nd Floor
Philadelphia, Pennsylvania 19103
Attention: Mark K. Lavelle
Vice President
Telephone: 215-585-6506
Facsimile: 215-585-6987
Lender's funding office:
PNC Bank, National Association
1600 Market Street
22nd Floor
Philadelphia, Pennsylvania 19103
Attention: Lottie Kirkland
Telephone: 215-585-5101
Facsimile: 215-585-6987
II-9
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
First Union National Bank of North Carolina
Lender's address for notices:
First Union National Bank
of North Carolina
One First Union Center, TW5
Charlotte, North Carolina 28288-0735
Attention: Sue Patterson
Telephone: 704-374-7121
Facsimile: 704-383-9144
Lender's funding office:
First Union National Bank
of North Carolina
One First Union Center, TW5
Charlotte, North Carolina 28288-0735
Attention: Sue Patterson
Telephone: 704-374-7121
Facsimile: 704-383-9144
II-10
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
NationsBank, N.A.
Lender's address for notices:
NationsBank, N.A.
101 North Tryon
Charlotte, North Carolina 28255
Attention: Jacquetta Banks
Telephone: 704-388-1111
Facsimile: 704-386-8694
Lender's funding office:
NationsBank, N.A.
101 North Tryon
Charlotte, North Carolina 28255
Attention: Jacquette Banks
Telephone: 704-388-1111
Facsimile: 704-386-8694
II-11
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Banque Paribas
Lender's address for notices:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention David R. Laffey
Telephone: 212-841-2116
Facsimile: 212-841-2292
Lender's funding office:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Robyn Gewanter
Telephone: 212-841-2950
Facsimile: 212-841-2217
II-12
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
First National Bank of Maryland
Lender's address for notices:
First National Bank of Maryland
25 South Charles Street
18th Floor
Baltimore, Maryland 21201
Attention: Robert H. Hauver
Telephone: 410-244-4246
Facsimile: 410-244-4388
Lender's funding office:
First National Bank of Maryland
25 South Charles Street
18th Floor
Baltimore, Maryland 21201
Attention: Ed Peters
Telephone: 410-244-4062
Facsimile: 410-244-4388
II-13
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
AmSouth Bank of Alabama
Lender's address for notices:
AmSouth Bank of Alabama
1900 5th Avenue North AST-5th Floor
Birmingham, Alabama
Attention: Laine Little
Telephone: 205-801-0133
Facsimile: 205-326-4790
Lender's funding office:
AmSouth Bank of Alabama
1900 5th Avenue North AST-5th Floor
Birmingham, Alabama
Attention: Eleanor Hart
Telephone: 205-801-0135
Facsimile: 205-326-5260
II-14
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
CoreStates Bank, N.A.
Lender's address for notices:
Lawrence Dessen, Vice President
CoreStates Bank NA
FC 1-8-3-22
P.O. Box 7618
Philadelphia, Pennsylvania 19101-7618
Attention: Lawrence Dessen
Telephone: (215) 786-2166
Facsimile: (215) 973-2738
Lender's funding office:
Lori Badolato
FC 1-3-17-70
CoreStates Bank NA
P.O. Box 8500 S 7605
Philadelphia, Pennsylvania
Attention: Lori Badolato
Telephone: (215) 786-7458
Facsimile: (215) 973-2045
II-15
<PAGE>
ATTACHMENT TO SCHEDULE II
Notice Information and Funding Offices of Lenders
Signet Bank
Lender's address for notices:
Signet Bank
7799 Leesburg Pike
Suite 400
Falls Church, Virginia 22043
Attent Wanda Dodson
Telephone: 703/714-5025
Facsimile: 703/714-5060
Lender's funding office:
Signet Bank
7799 Leesburg Pike
Suite 400
Falls Church, Virginia 22043
Attention: Wanda Dodson
Telephone: 703/714-5025
Facsimile: 703/714-5060
II-16
<PAGE>
SCHEDULE III-A
NHCA Sites
Quarterly
Financing Principal
Sites Seller Amount 1 Amortization
Atlantis Rehabilitation NHCA $ 8,030428.36 $0
and Health Care Center
Old Congress Road,
Lantana, Florida
Bowman's Health Care Center NHCA $ 6,486,115.21 $0
South Ridgewood
Ormand Beach, Florida
Eagle Crest Nursing Center NHCA $14,413,589.36 $0
Parental Home Road
Jacksonville, Florida
Oakwood Rehabilitation NHCA $ 7,103,840.47 $0
and Health Care Center
South East Bay Street
Eustis, Florida
Tierra Pines Health NHCA $ 2,264,992.61 $0
Care Center
- --------
1 This amount includes the allocable share of the maximum Transaction Costs
of $2,000,000 which may be funded by Lessor pursuant to Section 2.5 of the
Participation Agreement.
III-A-1
<PAGE>
Ulmerton Road
Largo, Florida
Woodlands Nursing Center NHCA $ 2,779,763.66 $0
North 46th Street
Tampa, Florida
Williamsburg Health Care NHCA $12,972,230.43 $0
and Rehabilitation Center
Mount Vernon Avenue
Williamsburg, Virginia
Windham NHCA $ 1,544,313.15 $0
Main Street, Route 240
Crozet, Virginia
Woodmont Health Care Center NHCA $14,104,726.75 $0
Dairy Lane
Fredricksburg, Virginia
Total $69,700,000
(Sites, if any, marked with an asterisk (*) indicate that Lessor is not
acquiring fee title to the applicable Land Interest, but rather is becoming the
ground lessee thereof.)
III-A-2
<PAGE>
SCHEDULE III-B
Identified Developed Sites
NONE
III-B-1
SCHEDULE III-C
Identified Undeveloped Sites
NONE
III-C-1
<PAGE>
SCHEDULE IV
Stock Sellers
Mark E. Hamister
George E. Hamister
Julia L. Hamister
The George E. Hamister Trust
The Oliver C. Hamister Trust
National Health Care Affiliates, Inc.
Oak Hill Health Care Center, Inc.
Derby Nursing Center Corporation
Delaware Avenue Partnership
EIDOS, Inc.
VersaLink, Inc.
51037850.5 122796 835C 96282934
IV-1
<PAGE>
SCHEDULE 3.2(v)
Operative Documents to be Confirmed
Mortgages (Florida and Virginia)
Assignment of Lease
<PAGE>
SCHEDULE 4.1A
Government Actions
No Government Actions are required other than the obtaining of such licenses,
approvals, authorizations, consents, permits (including, without limitation,
environmental permits, licenses, approvals, authorizations and consents),
easements and rights-of-way, including proof and dedication required under
applicable law for the use and occupance of the Sites and for the operation
thereof.
<PAGE>
SCHEDULE 4.1B
Filings and Recordings
Recordation of the deeds evidencing the acquisition of a particular site, and
recordation of the Lease Supplement relating to the Site with the appropriate
county office.
In addition, for each State in which a Site is located, all filings and
recordings specified in the local counsel questionnaire delivered by local
counsel for such State pursuant to Appendix 2 or Section 3.2(b) shall be deemed
included on this Schedule 4.1B.
<PAGE>
SCHEDULE 4.1C
Computation under Section 5.9
of 1995 Subordinated Note Indenture
<PAGE>
SCHEDULE 4.1D
ERISA Plans
Meridian Healthcare, Inc. Union Retirement Savings Plan,
established December 1, 1989
Genesis Health Ventures, Inc. Retirement Plan, established January 1, 1989
Genesis Health and Welfare Plan
<PAGE>
Definitions Appendix
APPENDIX 1
to
Participation Agreement
In the Participation Agreement and each other Operative Document,
unless the context otherwise requires:
(a) any term defined below by reference to another instrument or
document shall continue to have the meaning ascribed thereto whether or not such
other instrument or document remains in effect;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) a reference to a part, clause, section, article, exhibit or
schedule is a reference to a part, clause, section and article of, and exhibit
and schedule to, such Operative Document;
(e) a reference to any statute, regulation, proclamation, ordinance or
law includes all statutes, regulations, proclamations, ordinances or laws
amending, supplementing, supplanting, varying, consolidating or replacing them,
and a reference to a statute includes all regulations, proclamations and
ordinances issued or otherwise applicable under that statute;
(f) a reference to a document includes any amendment or
supplement to, or replacement or novation of, that document;
(g) a reference to a party to a document includes that
party's successors and permitted assigns; and
(h) references to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement
followed by or referable to an enumeration of specific matters to matters
similar to those specifically mentioned.
Further, each of the parties to the Operative Documents and their
counsel have reviewed and revised the Operative Documents, or requested
revisions thereto, and the usual rule of construction that any ambiguities are
to be resolved against the drafting party shall be inapplicable in construing
and interpreting the Operative Documents.
A1-1
<PAGE>
"Accrued Variable Rent" means, as of any date of determination, (A)
with respect to the Lease, the sum of the aggregate amount of interest that has
accrued on the outstanding Notes to the date of determination, and (B) with
respect to any Lease Supplement, the product of the Allocated Share in respect
of such Lease Supplement multiplied by the amount determined pursuant to the
preceding clause (A).
"Additional Costs" mean (i) the amounts payable pursuant to Sections
2.11 and 2.12 of the Loan Agreement, (ii) the amounts payable pursuant to
Section 5.16 of the Participation Agreement and (iii) the other amounts due and
payable by the Borrower under any Loan Document other than principal and
interest on the Notes.
"Adjusted Contract Rate" has the meaning set forth in Section
2.12 of the Loan Agreement.
"Advance" means, as the context may require, each advance of a Loan by
a Lender and each advance of a portion of the Equity Amount by Lessor to finance
the acquisition of a Site, the construction of a Facility (including any
Capitalized Yield) or the payment of Transaction Costs.
"Advance Date(s)" means each of the actual dates, on or prior to the
date on which the Commitments shall terminate as set forth in Section 2.5 of the
Participation Agreement, on which the transactions contemplated in Article II of
the Participation Agreement are completed.
"Advance Request" has the meaning set forth in Section 2.5 of
the Participation Agreement.
"Affiliate" of a Person shall mean (a) any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
person, (b) any director or officer (or, in the case of a Person which is not a
corporation, any individual having analogous powers) of such person or of a
Person who is an Affiliate of such person within the meaning of the preceding
clause (a), and (c) for each individual who is an Affiliate of the such person
within the meaning of the foregoing clauses (a) or (b), any other individual
related to such Affiliate by consanguinity or adoption within the third degree.
For purposes of the preceding sentence, "control" of a Person means (a) the
possession, directly or indirectly, of the power to direct or cause the
direction of the
A1-2
<PAGE>
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise and (b) in any case shall include direct or
indirect ownership (beneficially or of record) of, or direct or indirect power
to vote, 5% or more of the outstanding shares of any class of capital stock of
such Person (or in the case of a Person that is not a corporation, 5% or more of
any class of equity interest).
"Agent" means Mellon Bank, N.A., a national banking association, in its
capacity as administrative agent for the Participants under the Loan Agreement
and the Participation Agreement.
"Allocated Amount" means, with respect to a Site, the product of (a)
the Lease Balance multiplied by (b) a fraction, the numerator of which is
Lessor's Cost of such Site and the denominator of which is the aggregate
Lessor's Cost of all Sites.
"Allocated Share", with respect to any Lease Supplement, means a
fraction (expressed as a percentage) the numerator of which is Lessor's Cost of
a Site or Group subject to the Lease Supplement in question and the denominator
of which is the Lease Balance.
"Alterations" has the meaning set forth in Section 9.2(a) of the Lease.
"Applicable Laws and Regulations" mean all existing and future
applicable laws, rules, regulations (including Environmental Laws), statutes,
treaties, codes, ordinances, permits, certificates, orders and licenses of and
interpretations by, any Authority, Insurance Requirements and applicable
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction (including those pertaining to health, safety
or the environment and those pertaining to the construction use or occupancy of
any Site) and any restrictive covenant or deed restriction or easement of record
affecting a Site.
"Applicable Margin" means:
(a) for any Interest Period occurring entirely prior to the earlier
of (i) October 1, 1996 and (ii) the date that the Operative
Documents are amended to increase the amount of the Commitments
set forth in Schedule I to the Participation Agreement, zero
basis points for interest determined by reference to the Prime
Rate and 100 basis points for interest determined by reference to
the LIBO Rate; and
A1-3
<PAGE>
(b) for any Interest Period occurring in whole or in part after the
earlier of the dates specified in clauses (i) and (ii) of the
immediately preceding clause (a), the Applicable Margin set forth
in the Credit Agreement, with (x) the Applicable Margin
thereunder applicable to the Prime Rate Option thereunder being
the Applicable Margin hereunder for interest determined by
reference to the Prime Rate under the Operative Documents and (y)
the Applicable Margin thereunder applicable to the Euro-Rate
Option being the Applicable Margin hereunder for interest
determined by reference to the LIBO Rate under the Operative
Documents; provided, that the Applicable Margin for the Renewal
Term shall be determined by the mutual agreement of Agent and
Lessee; and provided, further, that during any Holdover Period,
the Applicable Margin shall be increased by 50 basis points.
"Applicable Percentage" for each Lease Supplement means, as of the end
of the Basic Term and the Renewal Term, the percentage set forth opposite each
such date on Schedule II to such Lease Supplement, and shall be determined on or
about the date of acquisition by Lessor of the related Site (or in the case of a
Non- Acquired Land Interest, the date of the Ground Lease thereof in favor of
Lessor) and set forth in the applicable Lease Supplement or as soon thereafter
as Lessor obtains sufficient information to make a determination for financial
accounting purposes; provided that in no event shall such percentage be less
than 80%.
"Applicable Percentage Amount" means, (a) with respect to any Lease
Supplement, the product obtained by multiplying Lessor's Cost of the Site
covered by such Lease Supplement by the Applicable Percentage of such Lease
Supplement and (b) with respect to the Lease, the sum of all amounts determined
pursuant to the foregoing clause (a) for each Lease Supplement then in effect.
"Appraisal" means any appraisal of any one or more Sites prepared by
the Appraiser and delivered to Agent, on behalf of Lessor and the Lenders.
"Appraised Value" has the meaning set forth in Section 23(b)
of the Ground Lease.
A1-4
<PAGE>
"Appraiser" means Valuation Counselors or such other appraisal firm as
Agent may select from time to time.
"Appurtenant Rights" mean (i) all agreements, easements, rights of way
or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to any Land Interest or the Facilities, including the use of any streets, ways,
alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to
any Land Interest and (ii) all permits, licenses and rights, whether or not of
record, appurtenant to any Land Interest.
"Architect" means a registered architect or certified professional
engineer for Construction Agent or Lessee (which, unless otherwise expressly
provided, may be an employee of Lessee).
"Assignment of Construction Documents" means the Assignment of
Construction Documents, dated as of October 7, 1996, between Lessor and
Construction Agent, substantially in the form of Exhibit B to the Construction
Agency Agreement, as the same may be amended, modified, restated or supplemented
from time to time in accordance with the terms of the Participation Agreement.
"Assignment of Construction Agency Agreement" means the Collateral
Assignment of Construction Agency Agreement and Construction Documents, dated as
of October 7, 1996, from Lessor to Agent as agent for the Lenders, as the same
may be amended, modified, restated or supplemented from time to time in
accordance with the terms of the Participation Agreement.
"Assignment of Lease" means the Assignment of Lease and Agreement and
Lease Supplements and Memoranda of Lease and Agreement in the form of Exhibit H
to the Participation Agreement from Lessor in favor of Agent for the benefit of
the Lenders, as the same may be amended, modified, restated or supplemented from
time to time in accordance with the terms of the Participation Agreement,
together with (i) the Consent and Agreement of Lessee attached thereto, and (ii)
the amendment thereof in the form of Exhibit H-1 to the Participation Agreement.
"Assignment of Licenses" means the Amended and Restated Collateral
Assignment of Licenses, Permits and Approvals from Lessee, NHCA and the Property
Sellers to Agent, in the form of Exhibit J to the Participation Agreement, as
the same may be amended, modified, restated or supplemented from time to time in
accordance with the terms of the Participation Agreement.
A1-5
<PAGE>
"Assumed Interest Rate" means, as of the date of any Advance by a
Participant, the LIBO Rate that would have been applicable for purposes of
calculating interest and Yield in the event that the Advance Date to which such
Advance relates had occurred on such date.
"Authority" means any entity involved in any way in the administration
of Federal or state healthcare-related programs, including the U.S. Department
of Health & Human Services, the Health Care Finance Administration, Medicare
carriers or intermediaries or Medicaid agencies, bureaus or departments and any
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Authorized Officer" means any officer in the Leasing Department of
Mellon who shall be duly authorized to execute the Operative Documents.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978.
"Basic Rent" means an amount payable on each Payment Date during the
Basic Term, the Renewal Term, if applicable, and the Holdover Period, if
applicable, equal to the sum of (i) the aggregate amount of interest payable on
such Payment Date on the Notes, plus (ii) the aggregate amount of the Yield
payable on such Payment Date on the Equity Amount (calculated in accordance with
the definition of "Yield" and in a manner consistent with the calculation of the
amounts under clause (i) on such Payment Date) plus (iii) starting with the
Payment Date October 24, 1996, principal amortization equal to the sum of (x)
level principal amortization amounts, if any, for each Site as shown on Schedule
III to the Participation Agreement or in the applicable Lease Supplement, plus
(y) level principal amortization equal to the lesser of (1) $100,000 per
quarterly Payment Date and (2) the remaining unamortized portion of Transaction
Costs funded by Lessor pursuant to Section 2.5 of the Participation Agreement;
provided, however, that upon the occurrence and during the continuance of a Loan
Event of Default under Sections 6.1(a)(ii), 6.1(a)(iii) and 6.1(a)(iv) of the
Loan Agreement while no Lease Event of Default shall have occurred and be
continuing, Basic Rent shall be determined on the basis of calculations made as
if the Loan Event of Default shall not have occurred and the Loans shall not
have been accelerated, whether or not in fact the Loans shall have been
accelerated or any other remedies shall have been taken under the Loan Agreement
or with respect to the Collateral.
A1-6
<PAGE>
"Basic Term", with respect to the Developed Sites and the Undeveloped
Sites (but only in respect of the Land Interest portion of such Undeveloped
Sites), means (a) the period commencing upon the Site Acquisition Date and
ending on July 24, 2001 or (b) such shorter period as may result from earlier
termination of the Lease as provided therein. With respect to the Facility to be
constructed on any Undeveloped Site, the Basic Term will commence upon the
expiration of the Construction Period applicable to such Undeveloped Site and
will end in accordance with the preceding sentence.
"Basic Term Expiration Date" has the meaning set forth in
Section 2.3 of the Lease.
"Bill of Sale" means each Bill of Sale from the seller of any Developed
Site to Lessor conveying any portion of the Facility located thereon which under
applicable law does not or may not constitute real estate.
"Board of Directors" means, with respect to a corporation, either the
board of directors or any duly authorized committee of that board of directors
which, pursuant to the by-laws of such corporation, has the same authority as
that board of directors as to the matter at issue.
"Borrower" means Lessor, as the borrower under the Loan
Agreement.
"Business Day" means (a) any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania or other day on which
banking institutions are authorized or obligated to close in the City of
Philadelphia, Pennsylvania, the city of New York, New York or the city in which
the Agent's office is located; and
(b) solely with respect to determinations of Interest Periods and
Payment Dates, dealings in United States Dollars are carried on in the London
interbank market.
"Capitalized Interest" means, for any Undeveloped Site, if provided for
in the Advance Request with respect to the acquisition thereof, interest accrued
pursuant to the Loan Agreement during the Construction Period for such
Undeveloped Site, based upon the portion of the Allocated Amount applicable to
such Site which represents funded Commitments of the Lenders, except to the
extent that such amount is not to be capitalized because sufficient
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unfunded Commitment of the Lenders applicable to such Site is not
available therefor.
"Capitalized Yield" means, for any Undeveloped Site, if provided for in
the Advance Request with respect to the acquisition thereof, Yield accrued
during the Construction Period for such Undeveloped Site, based upon the portion
of the Allocated Amount applicable to such Site which represents funded
Commitment of the Lessor, except to the extent that such amount is not to be
capitalized because sufficient unfunded Commitment of the Lessor applicable to
such Site is not available therefor.
"Cash Flow" has the meaning specified in the Credit Agreement.
"Casualty" means an event of damage or casualty relating to any
Facility which does not constitute an Event of Loss.
"Claims" mean liabilities, obligations, damages, losses, demands,
penalties, fines, claims, actions, suits, judgments, settlements, utility
charges, costs, fees, expenses and disbursements (including legal fees and
expenses and costs of investigation which, in the case of counsel or
investigators retained by an Indemnitee, shall be reasonable) of any kind and
nature whatsoever, that may at any time be imposed on, asserted against or
incurred by an Indemnitee as a result of, or arising out of, or in any way
related to or by reason of any of the Operative Documents, as well as the Credit
Agreement or any "Loan Document" referred to therein and without in any way
limiting the generality of the foregoing, including any violation of any
Environmental Laws or any other law by any Borrower or Subsidiary of Borrower or
any Environmental Affiliate of any of them.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, and regulations thereunder, in each case as
in effect from time to time. References to sections of the Code shall be
construed also to refer to any successor sections.
"Collateral" means the property from time to time subject to or
purported to be subject to the Liens of the subsisting Mortgage, the Assignment
of Lease, the Assignment of Licenses and the Joint Stock Collateral subject to
the Pledge Agreement, as limited by the terms and provisions of the Collateral
Agency Agreement and, collectively, all of the foregoing.
"Collateral Agency Agreement" means the Second Amended and
Restated Collateral Agency Agreement dated as of October 7, 1996, in the form of
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Exhibit I-2 to the Participation Agreement, as the same may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of the Participation Agreement.
"Commitment" means as to Lessor or any Lender, its obligation to make
amounts available to Lessor or Loans to the Borrower, as the case may be, in an
aggregate amount not to exceed at any one time outstanding the amount set forth
opposite Lessor's or such Lender's name on Schedule I to the Participation
Agreement, as such commitment may be adjusted pursuant to Section 2.5(g) and
Section 2.6 of the Participation Agreement.
"Commitment Fee" has the meaning specified in Section 2.6 of
the Participation Agreement.
"Commitment Letter" means that certain letter dated July 16,
1996 from Mellon Bank, N.A. to, and accepted by, Genesis.
"Commitment Percentage" means as to any Participant, at a particular
time, the percentage of the aggregate Commitments in effect at such time
represented by such Participant's Commitment, as such percentage is shown on
Schedule I to the Participation Agreement.
"Commitment Period" has the meaning set forth in Section 2.6
of the Participation Agreement.
"Completion" means, with respect to a Facility, the fulfillment of all
of the conditions set forth in Section 3.4 of the Participation Agreement.
"Completion Date" means, with respect to a Site, the date on which
Completion for the Facility on such Site has occurred.
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, occupancy or title to any Site or
any part thereof in, by or on account of any actual or threatened eminent domain
proceeding or other action by any Authority or other Person under the power of
eminent domain or otherwise or any transfer in lieu of or in anticipation
thereof, which in any case does not constitute an Event of Taking. A
Condemnation shall be deemed to have "occurred" on the earliest of the dates
that use, occupancy or title is taken.
"Confirmations" has the meaning set forth in the recitals to the
the Participation Agreement.
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"Consolidated Funded Indebtedness" at any time for a specified group of
Persons shall mean all Indebtedness (including the current portion thereof) of
such Persons which would at such time be classified in whole or part under GAAP
as a long-term liability of such Persons and shall also and in any event include
(i) any Indebtedness of any such Person having a final maturity more than one
year from the date of creation of such Indebtedness and (ii) any Indebtedness of
any Person, regardless of its term, which is renewable or extendable by such
Person (pursuant to the terms thereof or pursuant to a revolving credit or
similar agreement or otherwise) to a date more than one year from such date or
more than one year from the date of creation of such Indebtedness, all as
determined on a consolidated basis.
"Consolidated Subsidiary" means, as to any Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in such Person's consolidated financial statements as of
such date.
"Construction Agency Agreement" means the Construction Agency
Agreement, dated as of October 7, 1996, between Lessor and Construction Agent,
as supplemented from time to time by the Construction Agency Agreement
Supplements, as the same may be amended, modified, restated or supplemented from
time to time in accordance with the terms of the Participation Agreement.
"Construction Agency Event of Default" means a "Construction
Agency Event of Default" as defined in Section 5.1 of the
Construction Agency Agreement.
"Construction Agency Agreement Supplement" means a supplement to the
Construction Agency Agreement executed and delivered by the Construction Agent
and Lessor with respect to an Undeveloped Site, as the same may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of the Participation Agreement.
"Construction Agent" means Lessee, as construction agent under the
Construction Agency Agreement.
"Construction Commencement Date" has the meaning set forth in Section
2.3 of the Construction Agency Agreement.
"Construction Period" for any Undeveloped Site means the period for
construction of the Facility thereon as described in Section 3.3 of the
Construction Agency Agreement.
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"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person directly or indirectly guarantees, becomes surety for,
endorses, assumes, agrees to indemnify another Person (the "Deemed Obligor")
against, or otherwise remains liable (contingently or otherwise) for the
Indebtedness, obligation or liability (the "Assured Obligation") of the Deemed
Obligor. Contingent Liability shall be deemed to exist if a Person agrees,
becomes or remains liable (contingently or otherwise), directly or indirectly
(a) to purchase or assume, or to supply funds for the payment, purchase or
satisfaction of, an Assured Obligation, (b) to make any loan, advance, capital
contribution or other investment in, or to purchase or lease any property or
services from, a Deemed Obligor (i) to maintain the solvency of the Deemed
Obligor, (ii) to enable the Deemed Obligor to meet any other financial
condition, (iii) to enable the Deemed Obligor to satisfy any payment of
dividends or other distributions upon the shares of any other Person, or (iv) to
assure the holder of such Assured Obligation against loss, (c) to purchase or
lease property or services from the Deemed Obligor regardless of the
non-delivery of or failure to furnish of such property or services, or (d) in
respect of any other transaction the effect of which is to assure the payment or
performance (or payment of damages or other remedy in the event of nonpayment or
nonperformance) of any Assured Obligation.
"Controlled Group Member" means each trade or business (whether or not
incorporated) which, at any time, together with Lessee, Genesis, National
Health, any Property Seller or any Subsidiary of any thereof is treated as a
single employer under Sections 4001(a)(14) or 4001(b)(1) of ERISA or Sections
414(b), (c), (m) or (o) of the Code.
"Corresponding Source of Funds" means, in the case of any portion of a
LIBO Rate Loan or Equity Amount (to the extent that the Yield is determined by
reference to the LIBO Rate), the proceeds of hypothetical receipts by a LIBOR
Office or by a Lender or Lessor through a LIBOR Office of one or more Dollar
deposits in the interbank eurodollar market at the beginning of the Interest
Period corresponding to such portion of the LIBO Rate Loan having maturities
approximately equal to such portion of the LIBO Rate Loan or Equity Amount and
in an aggregate amount approximately equal to such portion (in the case of
Lessor) or such Lender's pro rata share of such portion (in the case of a
Lender).
"Credit Agreement" means that certain Second Amended and Restated
Credit Agreement dated as of October 7, 1996 by and among Genesis Health
Ventures, Inc. and certain of its subsidiaries, as borrowers, the institutions
identified therein as lenders, Mellon Bank, N.A., as issuer of letters of
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credit, Mellon Bank, N.A., as administrative agent and co-syndication agent and
Citibank, N.A. as co-syndication agent, as it may be amended, modified,
increased (including any increase in amounts or the commitment thereunder),
supplemented, refunded or replaced from time to time, and if so amended,
modified, increased, refunded or replaced, the amended, modified, increased,
supplemented, refunded or replaced credit agreement. For purposes of the
Operative Documents, if the Credit Agreement shall terminate without a
replacement agreement having become effective, references to the financial
covenants set forth in the Credit Agreement shall mean the financial covenants
as set forth in the Credit Agreement immediately prior to its termination,
exclusive of any modification to the terms of such agreement or arrangement that
were made in contemplation of the termination thereof.
"Debt/Equity Fraction" means at any time a fraction the numerator of
which is the aggregate outstanding principal balance of the Notes and the
denominator of which is the sum of (i) the aggregate outstanding principal
balance of the Notes plus (ii) the outstanding Equity Amount.
"Deed" means each Deed from the seller of any Land Interest to Lessor,
conveying the Land Interest and the Facility, if any, or other improvements, if
any, located on the related Site in a form acceptable to the Lenders.
"Defaulted Amount" has the meaning set forth in Section 2.5(g)
of the Participation Agreement.
"Defaulting Participant" has the meaning set forth in Section
2.5(g) of the Participation Agreement.
"Designated Owner" has the meaning set forth in
Section 12.1(b) of the Lease.
"Developed Site" has the meaning set forth in the Recitals to
the Participation Agreement.
"Document Closing Date" has the meaning set forth in Section
2.1 of the Participation Agreement.
"Dollar" and the symbol "$" shall mean lawful money of the United
States of America.
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"Early Termination Date" means a Payment Date on which Lessee purchases
all (but not less than all) of the Sites from Lessor pursuant to Section 6.5 of
the Lease.
"End of Term Report" has the meaning set forth in Section
6.4(c) of the Lease.
"Environmental Audit" means a Phase One environmental site assessment
(the scope and performance of which meets or exceeds ASTM Standard Practice
E1527-93 Standard Practice for Environmental Site Assessments: Phase One
Environmental Site Assessment Process) of each Site to be acquired by Lessor on
a Site Acquisition Date or of a Site to be sold pursuant to the Sale Option
under the Lease and any additional environmental assessments (including, without
limitation, a Phase Two environmental site assessment) requested by the Agent.
"Environmental Concern Materials" means (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in CERCLA or any similar state
law), (b) any toxic chemical or other substance form or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel,
motor oil, waste and used oil, heating oil and other petroleum products or
compounds, polychlorinated biphenyls, radon and urea formaldehyde.
"Environmental Engineer" means Roy F. Weston or such other
environmental consulting firm as Construction Agent may from time to time
select, subject to the approval of Agent.
"Environmental Indemnity" means the Environmental Indemnity Agreement
dated as of July 24, 1996 by Lessee, as the same may be amended, modified,
restated or supplemented from time to time in accordance with the terms of the
Participation Agreement.
"Environmental Laws" means any law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (c)
regulation of the manufacture, use or introduction into commerce of
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Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal. Environmental Laws shall include, without limitation, the Resource
Conservation and Recovery Act of 1976, (RCRA) 42 U.S.C. ss.ss. 6901-6987, as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss.
9601-9657, (CERCLA), the Hazardous Materials Transportation Act of 1975, 49
U.S.C. ss.ss. 1801-1812, the Toxic Substances Control Act, 15 U.S.C. ss.ss.
2601-2671, the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss. 136 et seq. and all
similar federal, state and local environmental laws, ordinances, rules, orders,
statutes, decrees, judgments, injunctions, codes and regulations.
"Environmental Permits" means all permits, licenses, authorizations,
registrations, certificates and approvals of Authorities required by
Environmental Laws.
"Equity Amount" means, with respect to Lessor as of any date of
determination, the aggregate outstanding amount invested by Lessor pursuant to
the Participation Agreement for the purchase of the Sites, the construction of
Facilities (including any Capitalized Yield) or the payment of Transaction
Costs, excluding any portion thereof funded by the Lenders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"Event of Loss" means (x) the actual or constructive total loss of the
Facility on a Site or damage to the Facility on a Site to an extent rendering
repair impractical or uneconomical, in any case as reasonably determined in good
faith by the Board of Directors of Lessee, such determination to be made
promptly after the occurrence of such event and to be evidenced by an Officer's
Certificate of Lessee delivered to Lessor, each Lender and Agent, (y) damage to
the Facility on a Site which results in an insurance settlement on the basis of
a total loss or a constructive total loss (including title insurance proceeds)
in respect of a total loss of the Facility on a Site, or (z) an Event of Taking.
"Event of Taking" means (A) taking of title to a Site or the Land
Interest or (B) any condemnation (other than a requisition of temporarary use)
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or requisition of use for a period scheduled to last beyond the end of the Lease
Term, in either case resulting in (i) the loss of use or possession of
substantially all of a Site or (ii) the loss of use or possession of a material
portion of a Site, in either of clause (i) or clause (ii), as reasonably
determined in good faith by a Senior Officer of Lessee, such determination to be
made promptly after the occurrence of such event and to be evidenced by an
Officer's Certificate of such Senior Officer delivered to Lessor and Agent.
"Excluded Amounts" mean:
(a) all indemnity payments and expenses to which Lessor (or
the respective successors, assigns, agents, officers, directors or employees of
Lessor) is entitled pursuant to the Operative Documents;
(b) any amounts payable under any Operative Documents to
reimburse Lessor (including the reasonable expenses of Lessor incurred in
connection with any such payment) for performing any of the obligations of
Lessee under and as permitted by any Operative Document;
(c) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies payable to Lessor
(or the respective successors, assigns, agents, officers, directors or employees
of Lessor);
(d) any insurance proceeds under policies maintained by
Lessor and not required to be maintained by Lessee under the Lease;
(e) any amount payable to Lessor pursuant to Section 9.9
of the Participation Agreement;
(f) prior to completion of any foreclosure of the
Mortgage or deed in lieu thereof, any expense reimbursements to
Lessor or Agent; and
(g) any payments of interest on payments referred to in
clauses (a) through (f) above.
"Facilities" mean all buildings, structures and fixtures located on the
Land Interest, but excluding the Land Interest.
"Facility" has the meaning set forth in the Recitals to the
Participation Agreement.
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"Facility Fee" with respect to each Participant means an amount equal
to the product of each Participant's Commitment and ten (10) basis points.
"Fair Market Sales Value" with respect to any Site or any portion
thereof means, as of the date of the determination, the fair market sales value
as determined by an independent appraiser chosen by Agent (at the direction of
the Required Participants) that would be obtained in an arm's-length transaction
between an informed and willing buyer (other than a buyer currently in
possession) and an informed and willing seller, under no compulsion to buy or
sell, and neither of which is related to Lessee, for the purchase of such Site.
Such fair market sales value shall be calculated as the value for the use of the
Site, assuming, in the determination of such fair market sales value, that the
Site is in the condition and repair required to be maintained by the terms of
the Lease (unless such fair market sales value is being determined for purposes
of Section 9.2(b) of the Lease, in which case this assumption shall not be
made).
"Final Maturity Date" means July 24, 2001, subject to extension through
the end of the Renewal Term if the Renewal Term is entered into pursuant to
Section 2.10 of the Participation Agreement and Section 2.4 of the Lease.
"Final Rent Payment Date" has the meaning set forth in Section
18.1(iii)(B)(1) of the Lease.
"Financial Covenants" means any covenant set forth in the Credit
Agreement from time to time which applies a test for determining net worth, or
which sets forth financial ratios, net income, debt or value levels or
limitations, and as of the Document Closing Date, includes Sections 7.01 through
7.18 of the Credit Agreement.
"Financing" has the meaning set forth in the Recitals to the
Participation Agreement.
"Force Majeure" means acts of God, fire, windstorm, flood, explosion,
collapse of structures, riot, war, labor disputes, delays or restrictions by
governmental bodies (other than delays or restrictions resulting from Lessee's
actions or failures to take reasonably foreseeable actions), inability to obtain
or use necessary materials or reasonable substitutes, or any other cause beyond
the reasonable control of Lessee, other than lack of funds; provided, that in no
event shall an event of Force Majeure be deemed to exist for more than ninety
(90) days.
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"Funding Breakage Date" has the meaning set forth in Section 2.12 of
the Loan Agreement.
"Funding Breakage Indemnity" has the meaning set forth in Section 2.12
of the Loan Agreement.
"Future Value Amount" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"GAAP" means generally accepted accounting principles in the United
States, applied on a basis consistent with the principles used in preparing the
financial statements of Genesis and its Consolidated Subsidiaries as of June 30,
1996 and for the fiscal year ended most recently prior thereto.
"Genesis" means Genesis Health Ventures, Inc., a Pennsylvania
corporation.
"Governmental Action" means all applicable permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, decrees, licenses, exemptions, publications, filings, notices to and
declarations of or with, or required by, any Authority, or required by any
Applicable Laws and Regulations, and shall include, without limitation, all
citings, Environmental Permits and operating permits and licenses that are
required for the use, occupancy, zoning and operation of the Facilities.
"Ground Lease" means, with respect to any Non-Acquired Land Interest, a
ground lease agreement leasing such Non-Acquired Land Interest, executed by
Lessee, as lessor under such ground lease, and Lessor, as lessee under such
ground lease, and dated as of the applicable Site Acquisition Date,
substantially in the form of Exhibit M to the Participation Agreement, with such
modifications as may be necessary or desirable in the opinion of Lessor or
Lessor's counsel to comply with all Applicable Laws and Regulations and,
consistent with the provisions thereof, to set forth the provisions customarily
used with respect to the applicable jurisdiction, as the same may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of the Participation Agreement.
"Group" means a group of Sites designated as a group by Lessee for
accounting purposes pursuant to Section 2.5(a)(ii) of the Participation
Agreement. As defined herein, the NHCA Sites are a Group.
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"Guaranties" means the Guaranties as confirmed by the Confirmations, as
the same may be amended, modified, restated or supplemented from time to time in
accordance with the terms of the Participation Agreement.
"Guarantors" mean, as of the Document Closing Date, Genesis and all
Affiliates of Genesis who are parties to the Credit Agreement as of the Document
Closing Date, and thereafter from time to time, Genesis and all Affiliates of
Genesis who at such time are or become parties to the Credit Agreement.
"Hazardous Material" means any substance, waste or material which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous by listing characteristic or definition under
any Environmental Law, including petroleum, crude oil or any fraction thereof,
petroleum derivatives, by-products and other hydrocarbons and is or becomes
regulated by any Authority, including any agency, department, commission, board
or instrumentality of the United States, the States in which any Site is located
or any political subdivision thereof and also including asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls ("PCBs") and radon gas.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"Holdover Period" shall mean any period after the Lease Termination
Date until the earliest of (i) the sale of the Sites pursuant to Section 6.9 of
the Lease, (ii) the reduction of the Lease Balance to zero and the payment by
Lessee of all Basic Rent, Supplemental Rent and all other amounts then due and
payable under the Operative Documents, and (iii) written notice by the Agent, as
agent for the Participants, terminating the Holdover Period pursuant to Section
6.9 of the Lease.
"Highest Lawful Rate" has the meaning set forth in Section
2.11 of the Participation Agreement.
"Indebtedness" has the meaning specified in the Credit
Agreement.
"Indemnitee" means each Lessor, Lender, Agent (in its
individual capacity and as agent) and Lessor and the respective
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Affiliates, successors, permitted assigns, permitted transferees, invitees,
contractors, servants, employees, officers, directors, shareholders, partners,
participants, representatives, attorneys and agents of each of the foregoing
Persons; provided, however, that in no event shall Lessee be an Indemnitee.
"Indenture" shall mean the 1995 Indenture or the 1996 Indenture
(whichever shall be in effect from time to time), or any restatement or
replacement thereof from time to time.
"Independent Accounting Firm" has the meaning specified in
Section 5.11 of the Participation Agreement.
"Insolvency Event" means (a) a proceeding shall have been instituted
with respect to any Person (i) seeking to have an order for relief entered in
respect of such Person, or seeking a declaration or entailing a finding that
such Person is insolvent or a similar declaration or finding, or seeking
dissolution, winding-up, charter revocation or forfeiture, liquidation,
reorganization, arrangement, adjustment, composition or other similar relief
with respect to such Person, its assets or its debts under any law, relating to
bankruptcy, insolvency, relief of debtors or protection of creditors,
termination of legal entities or any other similar law now or hereafter in
effect, or (ii) seeking appointment of a receiver, trustee, liquidator,
assignee, sequestrator or other custodian for such Person or for all or any
substantial part of its property and such proceeding shall result in the entry,
making or grant of any such order for relief declaration, finding, relief or
appointment, or such proceeding shall remain undismissed and unstayed for a
period of 30 consecutive days; or
(b) Any Person shall become insolvent; shall fail to pay, become unable
to pay, or state that it is or will be unable to pay, its debts as they become
due; shall voluntarily suspend transaction of its business; shall make a general
assignment for the benefit of creditors; shall institute (or fail to controvert
in a timely and appropriate manner) a proceeding described in (a)(i) of this
Definition, or (whether or not any such proceeding has been instituted) shall
consent to or acquiesce in any such order for relief, declaration, finding or
relief described therein; shall institute (or fail to controvert in a timely and
appropriate manner) a proceeding described in (a)(ii) of this Definition, or
(whether or not any such proceeding has been instituted) shall consent to or
acquiesce in any such appointment or to the taking of possession by any such
custodian of all or any substantial part of its property; shall dissolve,
wind-up, revoke or forfeit its charter (or other constituent documents) or
liquidate itself or any substantial part of its property; or shall take any
in furtherance of any of the foregoing.
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"Inspecting Parties" have the meaning specified in Section 15.1 of the
Lease.
"Insurance Requirements" means all terms and conditions of any
insurance policy either required by the Lease to be maintained by Lessee and all
requirements of the issuer of any such policy.
"Interest Period" means with respect to any Advance the successive
periods commencing on (and including) a Payment Date and ending on (but
excluding) (i) the next succeeding Payment Date (if Lessee elects an Interest
Period of three months or the Prime Rate is applicable), or (ii) for any Payment
Date after October 24, 1996, the second succeeding Payment Date (if Lessee
elects a LIBO Period of six months and the LIBO Rate is applicable), with the
Interest Period being determined by reference to clause (i) if Lessee fails to
elect a LIBO Period of six months not later than three Business Days prior to
the commencement of the applicable Interest Period; provided, however, that no
Interest Period during the Basic Term may extend beyond the last Payment Date
during the Basic Term (unless the Renewal Term shall be applicable) and no
Interest Period during the Renewal Term may extend beyond the last Payment Date
of the Renewal Term; and provided, further that for the initial Advance on the
Document Closing Date, which occurs on a date other than a Payment Date, the
first Interest Period for such portion of the Lease Balance shall be the period
commencing on (and including) the date of such Advance and ending on (but
excluding) the next succeeding Payment Date and interest on the Notes shall be
6.65625% per annum (with the Yield for such initial period being determined in
accordance with the definition thereof based on such interest rate); and
provided, finally, that for any Advance, other than the initial Advance on the
Document Closing Date, which occurs on a date other than a Payment Date, the
first Interest Period for such portion of the Lease Balance shall be the period
commencing on (and including) the date of such Advance and ending on (but
excluding) the next succeeding Payment Date and interest on the Notes and Yield
for such Advance for such initial period shall be determined by reference to the
Prime Rate.
"Joint Stock Collateral" means Collateral as defined in the
Pledge Agreement.
"Land Interest" has the meaning set forth in the Recitals to
the Participation Agreement.
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"Lease" means the Amended and Restated Lease and Agreement dated as of
October 7, 1996 between Lessor and Lessee, in the form of Exhibit A to the
Participation Agreement, together with all Lease Supplements thereto from time
to time, as such Amended and Restate Lease and Agreement and such Lease
Supplements may be amended, modified, restated or supplemented from time to time
in accordance with the terms of the Participation Agreement.
"Lease Balance" means, as of any date of determination, the sum of the
aggregate outstanding principal amount of the Notes plus the Equity Amount, less
any amounts applied pursuant to the Operative Documents in reduction thereof.
"Lease Default" means any event, condition or failure which, with
notice or lapse of time or both, would become a Lease Event of Default.
"Lease Event of Default" means any event condition or failure
designated as a "Lease Event of Default" in Article XVII of the Lease.
"Lease Payment/Bankruptcy Default" means the occurrence of an event
specified in Section 17(a), (b), (f) or (g) of the Lease, without regard to any
grace or cure periods set forth therein.
"Lease Supplement" means each Lease Supplement and Memorandum of Lease
and Agreement, substantially in the form of Exhibit A to the Lease, with such
changes as shall be reasonably required by Agent (after consultation with
applicable local counsel) executed and delivered by Lessee to Lessor on each
Site, as the same may be amended, modified, restated or supplemented from time
to time in accordance with the terms of the Participation Agreement.
"Lease Term" has the meaning set forth in Section 2.3 of the Lease.
"Lease Termination Date" means (i) the expiration of the Lease Term, or
(ii) if earlier, the termination of Lessee's right to possession pursuant to
Section 18.1 of the Lease, or (iii) with respect to all of the Sites, a
termination of the Lease pursuant to Section 6.5 of the Lease.
"Leasehold Estate" means Lessee's interest in the Sites (including the
Facilities located thereon) subject to the Lease.
"Lenders" mean the holders of the Notes.
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<PAGE>
"Lessee" means Genesis Eldercare Properties, Inc. a Pennsylvania
corporation and wholly-owned, single purpose subsidiary of Genesis.
"Lessor" means Mellon Financial Services Corporation #4, and its
successors and permitted assigns.
"Lessor Liens" mean Liens on or against any Site or the Lease, or any
payment of Rent (a) which result from any act of, or any Claim against, Lessor
or any Lender in either case unrelated to the transactions contemplated by the
Operative Documents or (b) which result from any tax owed by Lessor or any
Lender, except any Tax for which Lessee is obligated to indemnify.
"Lessor's Cost" means (a) for all Sites, the aggregate amount paid or
advanced by Lessor on each Advance Date with respect to all Land Interest and
Facilities plus all Capitalized Interest and Capitalized Yield, and (b) for any
Site, the aggregate amount paid or advanced by Lessor on each Advance Date with
respect to the Land Interest for such site and the Facility located or being
constructed thereon plus all Capitalized Interest and Capitalized Yield fairly
allocable to such Site.
"LIBO Period" means for any Interest Period either three months or six
months, as specified by Lessee by irrevocable written notice to Agent received
by Agent not later than three (3) Business Days prior to the commencement of
such Interest Period, and in the absence of such specification by Lessee, three
months; provided, that if Lessee duly and timely selects a six month LIBO Period
for any Interest Period, such LIBO Period shall extend through the end of the
next succeeding quarterly Interest Period as well; and provided, further, that
no LIBO Period during the Basic Term may extend beyond the last Payment Date
during the Basic Term (unless the Renewal Term shall be applicable) and no LIBO
Period during the Renewal Term may extend beyond the last Payment Date of the
Renewal Term; and provided finally, that the LIBO Period for any Interest Period
ending on or prior to October 24, 1996 shall be a one-month period; subject to
the second proviso of the definition of "Interest Period" for Advances described
in such proviso.
"LIBO Rate" shall have the meaning set forth in the Credit
Agreement for "Euro Rate."
"LIBO Rate Loans" mean Loans bearing interest by reference to a LIBO
Rate.
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"LIBO Rate Reserve Percentage" shall have the meaning set forth in the
Credit Agreement for "Euro-Rate Reserve Percentage," with the reference to the
Agent therein being a reference to the Agent hereunder.
"LIBOR Office" shall have the meaning set forth in the Credit Agreement
for "National Euro-Rate Funding Office".
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loans" has the meaning set forth in Section 2.1 of the Loan
Agreement.
"Loan Agreement" means the Amended and Restated Loan Agreement, dated
as of October 7, 1996, among Lessor, Agent and the Lenders, in the form of
Exhibit C to the Participation Agreement, as the same may be amended, modified,
restated or supplemented from time to time in accordance with the terms of the
Participation Agreement.
"Loan Default" means any event, condition or failure which, with
notice, passage of time or a determination by the Required Participants or
Required Lenders, as applicable, or any combination of the foregoing, would
become a Loan Event of Default.
"Loan Documents" mean the Loan Agreement, the Notes, the Mortgages and
all documents and instruments executed and delivered in connection with each of
the foregoing.
"Loan Event of Default" means any event, condition or failure
designated as a "Loan Event of Default" in Section 6.1 of the Loan Agreement.
"Loan Participant" has the meaning specified in Section 6.4(a)
of the Participation Agreement.
"Loan Policy" has the meaning set forth in Appendix 2 and Section
3.2(d) of the Participation Agreement.
"Major Construction Document" has the meaning specified in Section 2.6
of the Construction Agency Agreement.
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<PAGE>
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise) or prospects of Genesis
or Lessee taken as a whole or Genesis and its Subsidiaries taken as a whole or
(b) an adverse effect on the legality, validity, binding effect, enforceability
or admissibility into evidence of any Operative Document, or the ability of
Agent or any Participant to enforce any rights or remedies under or in
connection with the Operative Documents.
"Maximum Construction Period" means, with respect to an Undeveloped
Site, the period commencing on the Document Closing Date and ending on the
earliest of (i) October 7, 1998, (ii) the Completion Date of the Facility on
such Undeveloped Site, and (iii) an early termination of the Construction Period
as to such Undeveloped Site pursuant to Section 5.1 of the Construction Agency
Agreement.
"Mellon" means Mellon Bank, N.A., a national banking association, and
any successor.
"Monthly Anniversary Date" means for each calendar month, the 24th day
of such month, provided, however, that in the event that the 24th day of such
month shall occur on a date which is not a Business Day, such Monthly
Anniversary Date shall be the next following Business Day (unless such next
following Business Day is the first Business Day of another calendar month, in
which case such Monthly Anniversary Date shall be the immediately preceding
Business Day).
"Mortgage" means each of the following, as the same may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of the Participation Agreement: (i) Mortgage, Assignment of Rents and
Leases, Pledge Agreement and Fixture Filing Statement from Lessor and Lessee to
Agent, substantially in the form of Exhibit D-1 to the Participation Agreement
and (ii) Deed of Trust, Assignment of Rents, Pledge Agreement and Fixture Filing
Statement from Lessor and Lessee in favor of Agent, substantially in the form of
Exhibit D-2 to the Participation Agreement. The decision to use the "Mortgage"
form or the "Deed of Trust" form shall be made by Agent with respect to each
Site, and each such form shall be modified as necessary or desirable in Agent's
opinion to comply with all Applicable Laws and Regulations and to set forth the
provisions and remedies customarily used by secured lenders with respect to the
applicable jurisdiction in which such instrument is to be recorded.
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<PAGE>
"Mortgaged Property" has the meaning for Mortgaged Property, Collateral
or similar term set forth in the Mortgage.
"Multiemployer Plan" has the meaning specified in the Credit
Agreement.
"1993 Indenture" has the same meaning as "1993 Subordinated Debenture
Indenture" set forth in the Credit Agreement.
"1995 Indenture" has the same meaning as "1995 Subordinated Note
Indenture" set forth in the Credit Agreement.
"1996 Indenture" has the same meaning as "1996 Subordinated Note
Indenture" set forth in the Credit Agreement.
"Net Cash Proceeds" shall have the meaning specified in the Credit
Agreement.
"Net Condemnation Proceeds" mean all payments received from any
Authority relating to an Event of Taking after deducting the costs incurred by
Lessee, Lessor, Agent or any Lender in respect of the receipt thereof.
"NHCA" means National Health Care Affiliates, Inc., a Florida
corporation.
"NHCA Environmental Indemnity" means the NHCA Environmental Indemnity
Agreement dated as of July 24, 1996 by NHCA and the Property Sellers, as the
same may be amended, modified, restated or supplemented from time to time in
accordance with the terms of the Participation Agreement.
"NHCA Sites" has the meaning specified in Section 3.2 of the
Participation Agreement.
"Non-Acquired Land Interest" means the Land Interests relating to a
Facility if fee title to such Land Interest is not acquired by Lessor pursuant
to the Operative Documents.
"Non-Defaulting Participant" has the meaning set forth in Section
2.5(g) of the Participation Agreement.
"Non-Renewing Participant" has the meaning set forth in Section 2.10 of
the Participation Agreement.
"Nonseverable" shall describe an Alteration or part of an Alteration
which cannot be readily removed from a Site without
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<PAGE>
causing material damage to or materially impairing the value or utility of such
Site.
"Notes" mean the notes issued by the Borrower under the Loan Agreement
and denominated as such, substantially in the form of Exhibit A to the Loan
Agreement, and any and all Notes issued in replacement or exchange therefor in
accordance with the provisions thereof.
"Obligations" has the meaning set forth in Section 11 of the Lease
Supplements
"OCC" means the Office of the Comptroller of the Currency or any
successor thereto.
"Officer's Certificate" of a Person means a certificate signed by the
Chairman of the Board of Directors or the President or any Executive Vice
President or any Senior Vice President or any other Vice President of such
Person signing with the Treasurer or any Assistant Treasurer or the Controller
or any Assistant Controller, Cashier, Assistant Cashier or the Secretary or any
Assistant Secretary of such Person, or by any Vice President who is also
Controller, Treasurer or Cashier signing alone.
"Operative Documents" means the following documents:
(1) the Participation Agreement,
(2) the Lease,
(3) the Lease Supplements,
(4) the Construction Agency Agreement,
(5) the Construction Agency Agreement Supplements,
(6) the Assignment of Construction Documents,
(7) the Assignment of Construction Agency Agreement,
(8) the Purchase Agreement Assignments,
(9) the Ground Leases,
(10) the Guaranties,
(11) the Loan Agreement,
(12) the Notes,
(13) the Mortgages,
(14) the Environmental Indemnity,
(15) the NHCA Environmental Indemnity,
(16) the Pledge Agreement,
(17) the Collateral Agency Agreement,
(18) the Assignment of Licenses,
(19) the Assignment of Lease,
(20) the Deeds, and
(21) the Bills of Sale.
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<PAGE>
"Original Guaranties" has the meaning set forth in the recitals to the
Participation Agreement.
"Original Lease" has the meaning set forth in Article I of the Lease.
"Overall Transaction" means all the transactions and activities
referred to in or contemplated by the Operative Documents.
"Overdue Rate" means the lesser of (a) the highest interest rate
permitted by Applicable Laws and Regulations and (b) an interest rate per annum
equal to, (i) in the case of the LIBO Rate Loans, (A) until the end of the
applicable Interest Period at a rate per annum 2.00% above the rate otherwise
applicable to such part, and (B) thereafter in accordance with the following
clause (iii); (ii) in the case of the Equity Amount, until the end of the
applicable Interest Period at a rate per annum 2.00% above the Yield; and (iii)
in the case of any other amount due from Lessee hereunder or under any of the
Operative Documents, 2.00% above the then-current Prime Rate.
"Participants" mean Lessor and the Lenders, collectively.
"Participation Agreement" means the Amended and Restated Participation
Agreement, dated as of October 7, 1996, among Lessee, Lessor, the Lenders and
Agent, as the same may be amended, modified, restated or supplemented from time
to time in accordance with the terms of the Participation Agreement.
"Payment Dates" mean the 24th day of any January, April, July and
October in each year, commencing October 24, 1996, and shall include, in any
event, the expiration date of the Basic Term (unless the Renewal Term shall be
applicable), the expiration date of the Renewal Term, if applicable, and the
Lease Termination Date; provided, however, that in the event that any Payment
Date shall occur on a date which is not a Business Day, such Payment Date shall
be the next following Business Day (unless such next following Business Day is
the first Business Day of another calendar month, in which case such Payment
Date shall be the immediately preceding Business Day).
"PBGC" means the Pension Benefit Guaranty Corporation established under
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to the functions of said corporation.
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<PAGE>
"Pension-Related Event" shall mean any of the following events or
conditions:
(a) Any action is taken by any Person (i) to terminate, or would result
in the termination of, a Plan, either pursuant to its terms or by operation of
law (including, without limitation, any amendment of a Plan which would result
in a termination under Section 4041(e) of ERISA), or (ii) to have a trustee
appointed for a Plan pursuant to Section 4042 of ERISA;
(b) PBGC notifies any Person of its determination that an event
described in Section 4042 of ERISA has occurred with respect to a Plan, that a
Plan should be terminated, or that a trustee should be appointed for a Plan;
(c) Any Reportable Event occurs with respect to a Plan;
(d) Any action occurs or is taken which could result in Lessee, Genesis
or any Subsidiary thereof or any Controlled Group Member becoming subject to
liability for a complete or partial withdrawal by any Person from a
Multiemployer Plan (including, without limitation, seller liability incurred
under Section 4204(a)(2) of ERISA), or Lessee, Genesis or any Subsidiary thereof
or any other Controlled Group Member receives from any Person a notice or demand
for payment on account of any such alleged or asserted liability; or
(e) (i) There occurs any failure to meet the minimum funding standard
under Section 302 of ERISA or Section 412 of the Code with respect to a Plan, or
any tax return is filed showing any tax payable under Section 4971(a) of the
Code with respect to any such failure, or Lessee, Genesis or any Subsidiary
thereof or any other Controlled Group Member receives a notice of deficiency
from the Internal Revenue Service with respect to any alleged or asserted such
failure, or (ii) any request is made by any Person for a variance from the
minimum funding standard, or an extension of the period for amortizing unfunded
liabilities, with respect to a Plan.
"Permits" has the meaning set forth in Section 4.1(l) of the
Participation Agreement.
"Permitted Contest" means actions taken by a Person to contest in good
faith, by appropriate proceedings initiated timely and diligently prosecuted,
the legality, validity or applicability to any Site or any interest therein of
any Person of: (a) any law, regulation, rule, judgment, order, or other legal
provision or judicial or administrative requirements; (b) any term or condition
A1-28
<PAGE>
of, or any revocation or amendment of, or other proceeding relating to, any
authorization or other consent, approval or other action by any Authority; or
(c) any Lien or Tax; provided that the initiation and prosecution of such
contest would not: (i) result in, or materially increase the risk of, the
imposition of any criminal liability on any Indemnitee; (ii) materially and
adversely affect the security interests created by the Operative Documents or
the right, title or interest of Agent or Lessor in or to any of the Sites or the
right of Lessor, Agent or any Lender to receive payment of the principal of or
interest on any Note, Equity Amount of or Yield on the Equity Amount, Rent or
the Lease Balance or any interest therein; or (iii) materially and adversely
affect the fair market value, utility or remaining useful life of any Site or
any interest therein or the continued economic operation thereof; and provided
further that in any event adequate reserves in accordance with GAAP are
maintained against any adverse determination of such contest (with the
determination of the adequacy of reserves taking into account the availability
of insurance from reputable insurers).
"Permitted Exceptions" mean the exceptions set forth in the Title
Policies.
"Permitted Investments" means (i) full faith and credit obligations of
the United States of America, or fully guaranteed as to interest and principal
by the full faith and credit of the United States of America, maturing in not
more than one year from the date such investment is made; (ii) certificates of
deposit having a final maturity of not more than one year after the date of
issuance thereof of a of any commercial bank incorporated under the laws of the
United States of America or any state thereof or the District of Columbia, which
bank is a member of the Federal Reserve System and has a combined capital and
surplus of not less than $500,000,000 and with a senior unsecured debt credit
rating of at least "A" by Moody's Investors Service, Inc. and "A" by Standard &
Poor's Ratings Group; (iii) commercial paper of companies, banks, trust
companies or national banking associations (in each case excluding Lessee and
its Affiliates) incorporated or doing business under the laws of the United
States or one of the States thereof, in each case having a remaining term until
maturity of not more than 180 days from the date such investment is made and
rated at least P-1 by Moody's Investors Service, Inc. or at least A-1 by
Standard & Poor's Ratings Group; and (iv) repurchase agreements maturing within
one year with any financial institution having combined capital and surplus of
not less than $500,000,000 with any of the obligations described in clauses (i)
through (iii) as collateral so long as title to the underlying obligations pass
to Lessor and such underlying securities shall be segregated in a custodial or
trust account for the benefit of Lessor.
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<PAGE>
"Permitted Liens" shall have the meaning set forth in the Credit
Agreement, but shall include (i) Lessor Liens and (ii) Permitted Exceptions.
"Person" means an individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or Authority.
"Plan" means any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) covered by Title IV of
ERISA by reason of Section 4021 of ERISA, of which Lessee, Genesis or any
Subsidiary thereof or any other Controlled Group Member is or has been within
the preceding five years a "contributing sponsor" within the meaning of Section
4001(a)(13) of ERISA, or which is or has been within the preceding five years
maintained for employees of Lessee, Genesis or any Subsidiary thereof or any
other Controlled Group Member.
"Plans and Specifications" means, with respect to a Site, the plans and
specifications for the Facility to be constructed on such Site, as amended or
supplemented from time to time.
"Pledge Agreement" means the Second Amended and Restated Collateral
Agency Agreement dated as of October 7, 1996, in the form of Exhibit I-1 to the
Participation Agreement, as the same may be amended, modified, restated or
supplemented from time to time in accordance with the terms of the Participation
Agreement.
"Postretirement Benefits" has the same meaning specified in the Credit
Agreement.
"Present Value Amount" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"Prime Rate" means the interest rate per annum announced from time to
time by Mellon as its prime rate. The prime rate may be greater or less than
other interest rates charged by Mellon to other borrowers and is not solely
based or dependent upon the interest rate which Mellon may charge any particular
borrower or class of borrower. If the aforesaid rate changes from time to time
after the Document Closing Date, the Prime Rate shall be automatically increased
or decreased, as the case may be, without notice to Lessee, Lessor or any
Lender, as of the effective time of each change.
A1-30
<PAGE>
"Proceeds" has the meaning specified in Section 6.4 of the Lease.
"Prohibited Transaction" means a transaction that is prohibited under
Code Section 4975 or ERISA Section 406 and not exempt under Code Section 4975 or
ERISA Section 408.
"Punchlist Amount" has the meaning specified in Section 3.5(a) of the
Participation Agreement.
"Purchase Agreement" means, for any Site, a purchase agreement between
the seller of such Site and Lessee, in form and substance acceptable to Agent
and counsel to the Participants.
"Purchase Agreement Assignment" means, for any Site, the assignment of
the Purchase Agreement from Lessee to Lessor, substantially in the form of
Exhibit L to the Participation Agreement or in form otherwise reasonably
acceptable to Lessor and Agent, as the same may be amended, modified, restated
or supplemented from time to time in accordance with the terms of the
Participation Agreement.
"Purchase Option" has the meaning specified in Section 6.2 of the
Lease.
"Purchase Option Exercise Amount" means, as of any date of
determination, the sum of (a) the Lease Balance as of the date of purchase, plus
(b) all accrued but unpaid Rent, plus (c) all other sums then due and payable
under the Operative Documents by Lessee and any of its Affiliates.
"Redeployment Rate" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"Redeployment Period" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"Regulated Activity" means the use, Release, generation, treatment,
storage, recycling, transportation or disposal of Hazardous Material to the
extent such activities are regulated by any Authority.
"Regulations" mean the income tax regulations promulgated from time to
time under and pursuant to the Code.
"Release" means the release, deposit, disposal or leak of any Hazardous
Material into or upon or under any land or water or air, or otherwise into the
A1-31
<PAGE>
environment, including by means of burial, disposal, discharge, emission,
injection, spillage, leakage, seepage, leaching, dumping, pumping, pouring,
escaping, emptying, placement and the like.
"Renewal Request" has the meaning set forth in Section 2.10 of the
Participation Agreement.
"Renewal Term" has the meaning set forth in Section 2.4 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Installment Period" means (i) with respect to any Lease
Supplement, the period commencing on (and including) the date of such Lease
Supplement and ending on (but excluding) the next succeeding Payment Date, and
thereafter, successive periods commencing on (and including) a Payment Date and
ending on (but excluding) the next succeeding Payment Date, and (ii) with
respect to the Lease, the period commencing on (and including) the date of the
initial Lease Supplement and ending on (but excluding) the next succeeding
Payment Date, and thereafter, successive periods commencing on (and including) a
Payment Date and ending on (but excluding) the next succeeding Payment Date.
"Replacement Participant" has the meaning specified in Section 2.10 of
the Participation Agreement.
"Reportable Event" has the same meaning specified in the Credit
Agreement.
"Required Lenders" mean, as of the date of the determination, Lenders
having aggregate investments in the Overall Transaction (as measured by the
outstanding principal amount of the Loans then outstanding) equal to 51% or more
of all such investments (including, under all circumstances, Agent).
"Required Participants" mean, as of the date of the determination,
Participants having aggregate investments in the Overall Transaction (as
measured by the outstanding principal amount of the Loans then outstanding and
the outstanding Equity Amount) equal to 51% or more of all such investments
(including, under all circumstances, Agent).
"Responsible Officer" of a Person means the President, the Chief
Executive Officer, any Vice President, the Controller, the Treasurer or the
Chief Financial Officer of such Person.
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<PAGE>
"Restricted Subsidiaries" has the same meaning specified in the Credit
Agreement.
"Sale Option" has the meaning specified in Section 6.3 of the Lease.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
"Sellers" mean the sellers of the Sites to Lessor, identified on
Schedule III to the Participation Agreement.
"Senior Officer" means the Chairman or Vice Chairman of the Board of
Directors, the Chairman or Vice Chairman of the Executive Committee of the Board
of Directors, the President, any Senior Vice President, the Chief Executive
Officer, the Chief Financial Officer or the Treasurer of Lessee.
"Shortfall Amount" has the meaning set forth in Section 6.4(c) of the
Lease.
"Site" has the meaning set forth in the Recitals to the Participation
Agreement, and shall include, without limitation, all of the right, title and
interest of the seller of the Site (or upon the acquisition of title to the Site
by Lessor, all right, title and interest of Lessor) in and to the following:
(A) the real property described in Schedule III attached to
the Participation Agreement (the "Land"); all buildings, structures and
other improvements now or in the future located on the Land (the
"Improvements"; the Improvements and the Land are sometimes
collectively referred to herein as the "Property");
(B) all the estate, right, title, claim or demand whatsoever
of such Person, in possession or expectancy, in and to the Property or
any part thereof;
(C) all right, title and interest of such Person in and to all
of the fixtures, furnishings and fittings of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case,
A1-33
<PAGE>
attachments, components, parts and accessories) currently owned or
subsequently acquired by the Mortgagor and now or subsequently attached
to, or contained in or used or usable in any way in connection with any
operation or letting of the Property (all of the foregoing in this
paragraph (C) being referred to as the "Fixtures");
(D) all right, title and interest of such Person in and to all
of the fixtures, chattels, business machines, machinery, apparatus,
equipment, furnishings, fittings and articles of personal property of
every kind and nature whatsoever, and all appurtenances and additions
thereto and substitutions or replacements thereof (together with, in
each case, attachments, components, parts and accessories) currently
owned or subsequently acquired by Mortgagor and now or subsequently
attached to, or contained in or used or usable in any way in connection
with any operation or letting of the Property, including but without
limiting the generality of the foregoing, all screens, awnings, shades,
blinds, curtains, draperies, artwork, carpets, rugs, storm doors and
windows, furniture and furnishings, heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilating, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, refrigerators, elevators, loading and unloading
equipment and systems, stoves, ranges, laundry equipment, cleaning
systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae),
televisions, computers (excluding software), sprinkler systems and
other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (D) being referred
to as the "Equipment");
(E) all right, title and interest of such Person in and to all
substitutes and replacements of, and all additions and improvements to,
the Improvements and the Fixtures and Equipment, subsequently acquired
by such Person or constructed, assembled or placed by such Person on
the Land, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all
building materials whether stored at the Property or offsite, and, in
each such case, without any further mortgage, conveyance, assignment or
other act by such Person;
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(F) all right, title and interest of such Person in, to and
under all books and records relating to or used in connection with the
operation of the Property or the Fixtures or any part thereof; and all
general intangibles related to the operation of the Improvements now
existing or hereafter arising;
(G) all right, title and interest of such Person in and to all
insurance policies (including title insurance policies) required to be
maintained by Lessee pursuant to Article XI of the Lease, including the
right to collect and receive such proceeds; and all awards and other
compensation, including the interest payable thereon and the right to
collect and receive the same, made to the present or any subsequent
owner of the Property for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Property or any easement or other
right therein; and
(H) all right, title and interest of such Person in and to (to
the extent assignable) (i) all consents, licenses, building permits,
certificates of occupancy and other governmental approvals relating to
construction, completion, occupancy, use or operation of the Property
or any part thereof and (ii) all plans and specifications relating to
the Property.
"Site Acquisition Date" has the meaning specified in Section 3.2 of the
Participation Agreement.
"Standard Notice" means a notice of the Lessee for the conversion to or
renewal of any portion of the Loans or the Equity Amount to LIBO Rate Loans or
to Equity Amount which bears Yield based upon the LIBO Rate or for the making of
any Advance which shall bear interest or Yield based upon the LIBO Rate or for
the selection of an Interest Period for LIBO Rate Loans or for Equity Amount
which bears Yield based upon the LIBO Rate.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
dated as of May 3, 1996 among Stock Sellers and Genesis, as amended.
"Stock Sellers" means those Persons described on Schedule IV attached
hereto.
"Structuring/Underwriting Fee" has the meaning specified in Section 2.6
of the Participation Agreement.
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<PAGE>
"Sublease" has the meaning specified in Section 12.1 of the Lease.
"Subsidiary" has the meaning specified in the Credit Agreement.
"Subtenant" has the meaning set forth in Section 12.1(a) of the Lease.
"Supplemental Lease Balance" means the product of the Allocated Share
of the Lease Supplement in question and the Lease Balance.
"Supplemental Rent" means any and all amounts, liabilities and
obligations other than Basic Rent which Lessee assumes or agrees or is otherwise
obligated or designated to pay under the Lease or any other Operative Document
(whether or not designated as Supplemental Rent) to Lessor, Agent, the Lenders
or any other Person, including amounts under Section 9.1 of the Lease,
Additional Costs and indemnities and damages for breach of any covenants,
representations, warranties or agreements.
"Surviving Company" has the meaning set forth in Section 5.2 of the
Participation Agreement.
"Taxes" and "Tax" mean any and all fees (including documentation,
recording, license and registration fees), taxes (including income (whether net,
gross or adjusted gross), financial institutions, franchise, gross receipts,
sales, rental, use, turnover, value-added, property, excise and stamp taxes),
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any penalties, fines or interest thereon or additions
thereto.
"Title Insurance Company" means Chicago Title Insurance Company and its
successors and assigns, or such other title insurance company as shall be
acceptable to Agent.
"Title Policies" have the meaning specified in Section 3.2(d) of the
Participation Agreement.
"Total Costs" means the sum of the Lessor's Costs plus Transaction
Costs funded by Lessor; provided, however, that Transaction Costs shall not
exceed $2,000,000 in the aggregate.
"Total Funded Debt/Cash Flow Ratio" has the meaning specified in the
Credit Agreement.
A1-36
<PAGE>
"Transaction Costs" shall mean all transaction costs and expenses
incurred by Mellon as Agent for the Lessor and the Lenders, Lessee and Lessor in
connection with the preparation, negotiation, execution, delivery, performance
and administration of the Operative Documents and Agent's syndication of the
Notes pursuant to Section 6.7, in each case including without limitation (a) the
reasonable legal fees and expenses of special counsel to Mellon, as Agent for
Lessor and the Lenders (including, without limitation, reasonable fees and
expenses of counsel to Mellon, as Agent, in connection with the transfer by
Lessor of its interest in the Sites or the transfer by any of the Lenders of any
Notes from time to time), special Credit Agreement counsel to Mellon and special
counsel to Lessee, (b) reasonable legal fees and expenses of local counsel to
the Lessee, (c) the reasonable expenses of Lessor (including, without
limitation, residual value insurance premiums if any), (d) all appraisal fees
and expenses, including the cost of an appraisal obtained by Lessor with respect
to the Facilities upon a Lease Default or Lease Event of Default, (e) all costs
and expenses of the preparation of the Environmental Audits, (f) the
Structuring/Underwriting Fee, and (g) all recording, filing fees and expenses,
including fees and expenses of the Title Insurance Company. Certain Transaction
Costs (not to exceed $2,000,000 in the aggregate) incurred in connection with
the closing of this lease arrangement will be paid by Lessor pursuant to Section
9.9 of the Participation Agreement.
"Treasury Rate" has the meaning specified in the Credit Agreement.
"Turnover Date" has the meaning set forth in Section 12.1(b) of the
Lease.
"UCC" means the Uniform Commercial Code of New York or any other
applicable jurisdiction.
"Undeveloped Site" has the meaning set forth in the Recitals to the
Participation Agreement.
"Unrestricted Entities" has the same meaning specified in the Credit
Agreement.
"Yield" means during the Basic Term, (a) the applicable interest rate
payable from time to time pursuant to the Loan Agreement plus 300 basis points;
provided, that the Yield Rate for the Equity Amount for the Renewal Term, if
any, shall be determined by the mutual agreement of Lessor and Lessee; and
provided, further, that during any Holdover Period, the Applicable Margin
A1-37
<PAGE>
(and thus, the Yield) shall be increased by 50 basis points. During any period
that the applicable interest rate payable with respect to the portion of any
Advance allocable to the Notes pursuant to the Loan Agreement is determined by
reference to a LIBO Rate, Yield on the portion of such Advance constituting a
portion of the Equity Amount shall be calculated on the basis of actual number
of days elapsed in a 360-day year. During any period that the applicable
interest rate payable with respect to the portion of any Advance allocable to
the Notes pursuant to the Loan Agreement is determined by reference to the Prime
Rate, Yield on the portion of such Advance constituting a portion of the Equity
Amount shall be calculated on the basis of actual number of days elapsed in a
365 or 366-day year, as applicable.
A1-38
<PAGE>
APPENDIX 2
to
Participation Agreement
CONDITIONS PRECEDENT TO DOCUMENT CLOSING DATE
(a) Authorization, Execution and Delivery of Documents; No
Default. The Operative Documents shall have been duly authorized, executed and
delivered by each of the other parties thereto, shall (to the extent the form
and substance thereof shall not be prescribed hereby) be in form and substance
satisfactory to the Agent and an executed counterpart of each thereof shall have
been delivered to the Agent. Each Lender shall have received an original, duly
executed Note registered in such Lender's name. Each of the Participation
Agreement, the Lease, the Guaranty, the Loan Agreement, the Notes, the
Assignment of Lease and the other Operative Documents shall be in full force and
effect as to all other parties and no Lease Default or Lease Event of Default
shall have occurred or be continuing.
(b) Litigation. No action or proceeding shall have been
instituted or threatened nor shall any governmental action be instituted or
threatened before any Authority, nor shall any order, judgment or decree have
been issued or proposed to be issued by any Authority, to set aside, restrain,
enjoin or prevent the performance of this Agreement or any transaction
contemplated hereby or by any other Operative Document or which is reasonably
likely, in the sole opinion of the Agent, to have a Material Adverse Effect.
(c) Legality, etc. In the opinion of such Lender or its
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Laws and Regulations and no change shall have occurred or
been proposed in Applicable Laws and Regulations that would make it uneconomic
or illegal for any party to any Operative Document to participate in any of the
transactions contemplated by the Operative Documents or otherwise would prohibit
the consummation of any transaction contemplated by the Operative Documents or
expand the duties, obligations and risks of such Lender.
(d) Governmental Approvals. All necessary (or, in the
reasonable opinion of Lessor, Agent or either of their respective counsel,
advisable) Governmental Actions, in each case required by any Applicable Laws
A2-1
<PAGE>
and Regulations, shall have been obtained or made and be in full force and
effect.
(e) Requirements of Law. In the reasonable opinion of Lessor,
Agent and their respective counsel, the transactions contemplated by the
Operative Documents do not and will not violate in any Applicable Laws and
Regulations and do not and will not subject Lessor, Agent or any Lender to any
adverse regulatory prohibitions or constraints.
(f) Opinions; Local Counsel Questionnaires. The following
opinions, each dated the Document Closing Date (or, in the case of clauses (iii)
and (iv) below, in the discretion of Agent, on the applicable Site Acquisition
Date), substantially in the form set forth in the Exhibit noted below, and
containing such other matters as the parties to whom they are addressed shall
reasonably request, shall have been addressed to each of Lessor, Agent and the
Lenders, and delivered to Lessor and Agent:
(i) the opinion of Ira Gubernick, Esq., in-house counsel
for Lessee (Exhibit E-1).
(ii) the opinion of Blank Rome Comisky & McCauley, special
counsel for Lessee (Exhibit E-2);
(iii) the opinion of Holland & Knight ("Special Florida
Counsel"), special Florida counsel for Genesis (Exhibit E-3);
(iv) the opinion of Ober, Kaler, Grimes & Shriver
("Special Virginia Counsel"), special Virginia counsel for Genesis
(Exhibit E-3); and
(v) the opinion of Blank, Rome, Comisky & McCauley,
special counsel for Genesis (Exhibit E-4).
In addition, not less than five (5) days prior to the Document Closing Date,
local counsel questionnaires (responding to the matters set forth in Exhibit E-5
and such other matters as Agent shall request) for Florida and Virginia,
prepared by Special Florida Counsel and Special Virginia Counsel, respectively,
and addressed to Lessor, Agent and the Lenders, shall have been delivered to
Agent and shall be in form and substance acceptable to Agent.
A2-2
<PAGE>
(g) Corporate Status and Proceedings. On or prior to the
Document Closing Date, each of the Lenders, Lessor and Agent shall have
received:
(i) certificates of existence and good standing with respect
to Lessee from (A) the Secretaries of State of the State of its
incorporation and (B) the Secretary of State of the State of its
principal place of business, each dated no earlier than the 10th day
prior to the Document Closing Date;
(ii) copies of Lessee's certificate of incorporation,
certified by the Secretary of State of the State of its incorporation
no earlier than the 10th day prior to the Document Closing Date; and
(ii) with respect to Lessee, an Officer's Certificate
substantially in the form of Exhibit F, dated the Document Closing
Date, with respect to such Person's governing documents, resolutions
and incumbent officers, representations and warranties and absence of
defaults.
(h) Lessor Officer's Certificate. Each Lender and Agent shall
have received (x) a certificate of the Secretary or Assistant Secretary of
Lessor attaching and certifying as to (i) the corporate authority for the
execution, delivery and performance by Lessor of each Operative Document to
which it is or will be a party, (ii) its organizational documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to execute
and deliver such documents on behalf of Lessor and (y) a good standing
certificate from the appropriate Authority as to Lessor's good standing.
All documents and instruments required to be delivered on the Document Closing
Date shall be delivered at the offices of Mayer, Brown & Platt in New York, New
York, or at such other location as may be determined by the Lessor, Agent and
Lessee.
(i) Filings and Recordings. All filings or recordings
enumerated and described in Schedule 4.1B hereof, as well as all other
filings and recordings necessary or advisable, including precautionary
financing statements, in the opinion of Agent or counsel to Agent, to
perfect the rights, titles and interests of Lessor, the Lenders, the
Guarantors and Agent intended to be created by the Operative Documents
shall have been made, or shall have been arranged to be made promptly
thereafter, in the appropriate places or offices, including any
recordings and filings necessary to create, perfect, preserve and
protect (i) Lessor's interest in the Land Interests and the Facilities
and
A2-3
<PAGE>
(ii) a first mortgage lien on all Land Interests and
Facilities included in the Collateral, subject in both cases, to
Permitted Exceptions and the rights of Lessee under the Lease. All
recording and filing fees and taxes with respect to any recordings or
filings made pursuant to this Agreement shall have been paid in full,
and satisfactory evidence thereof shall have been delivered to Agent,
or arrangements for such payment shall have been made to the
satisfaction of Agent.
(j) Survey. Lessee shall have delivered, or shall have caused
to be delivered, to Agent, with sufficient counterpart originals for Agent to
distribute to Lessor and each Lender, and counsel to the Lenders an ALTA survey
of each Site to be acquired on or prior to the Document Closing Date in a form
satisfactory to the Title Insurance Company and showing no state of facts
unsatisfactory to Agent and counsel to the Lenders, which survey shall be
certified to Lessor and Agent.
(k) Title Insurance. Lessor shall have received from the Title
Insurance Company its ALTA 1992 owner's policy of title insurance, acceptable in
form and substance to Agent and counsel to the Lenders (the "Lessor's Policy")
(or a final hand-marked original thereof signed by the Title Insurance Company)
containing all of the provisions to be included in such policy by the Title
Insurance Company, in which case Lessor shall receive a clean, final original of
such policy within thirty (30) days), insuring that Lessor has good and
marketable title to each Site being purchased by Lessor on or prior to the
Document Closing Date, subject to the Lease and such other exceptions to title
as are reasonably acceptable to Agent and counsel for the Lenders, together with
complete, legible copies of all encumbrances, maps and surveys of record. Agent,
for the benefit of the Lenders shall have received from the Title Insurance
Company its ALTA 1992 form of loan policy of title insurance (the "Loan Policy";
together with the Lessor's Policy, the "Title Policies"), reasonably acceptable
in form and substance to Agent and counsel for the Lenders, insuring the
creation under the Mortgage in favor of Agent and the Lease in favor of Lessor
of a valid first priority mortgage lien against the Land Interest, subject to
such exceptions to title as are reasonably acceptable to Agent and counsel for
the Lenders, together with to the extent available complete, legible copies of
all encumbrances, maps and surveys of record. Each of the Title Policies shall
be dated as of the applicable Site Acquisition Date, shall be in an amount equal
to the Fair Market Sales Value of such Site as of such date and, to the extent
permitted under Applicable Laws and Regulations and to the extent applicable to
each type of policy, and to the extent available within the applicable
A2-4
<PAGE>
jurisdiction at reasonable prices, shall (x) contain affirmative endorsements as
to mechanics' liens, usury, doing business, zoning (with express parking
coverage), easements and rights-of-way, comprehensive coverage, encroachments,
rights of access and survey matters, (y) delete the creditors' rights exclusion
and the general exceptions to coverage, and (z) contain such other endorsements
as reasonably requested by Agent.
(l) Environmental Audit. Prior to the Document Closing Date,
Agent shall have received an Environmental Audit for each Site to be acquired on
or prior to the Document Closing Date, which shall be in form and substance
acceptable to Agent in its sole and absolute discretion.
(m) Zoning. In the event that, with respect to a Site to be
acquired on or prior to the Document Closing Date, an ALTA 3.1 Zoning
Endorsement (with express parking coverage) was not obtained in connection with
the Title Policies for such Site, Agent on behalf of the Lenders shall receive a
copy of the applicable zoning ordinance, special use permit or other
Governmental Action covering such Site, and such evidence as Agent may require
(including without limitation the written certification of Lessee's certified
professional engineer or registered architect or any other person satisfactory
to Agent) that the zoning of such Site is satisfactory and compatible with the
Facility located thereon.
(n) Deed and Bill of Sale; Ground Lease. As to any Site to be
acquired on or prior to the Document Closing Date, Agent shall have received (i)
a Deed conveying to Lessor such Site, if any, or other improvements, if any,
located on such Site, and (ii) a Bill of Sale conveying any portion of any such
Facility or improvements which do not or may not constitute real estate under
Applicable Law (provided that no Bill of Sale shall be required if the form of
Deed used purports to convey title to the items which would otherwise be
conveyed in the Bill of Sale and if such Deed is in fact sufficient under
applicable law to convey title to such items); provided, however, that for any
Non-Acquired Land Interest, the Deed described in clause (i) shall convey only
the related Facility and, in addition, Agent shall have received a Ground Lease
of the Non-Acquired Land Interest from Lessee or one of its affiliates
(whichever shall acquire such Land Interest), as ground lessor, to Lessor, as
ground lessee.
(o) Lease Supplement. Agent shall have received original
counterparts of the Lease Supplement executed by Lessee and Lessor with respect
to each Site or Group to be acquired on or prior to the Document Closing Date;
A2-5
<PAGE>
provided that only Agent shall receive and retain the one original thereof
marked as the sole original counterpart for UCC purposes.
(p) Mortgage. Agent shall have received a Mortgage duly
executed by Lessor with respect to each Site to be acquired on or prior to the
Document Closing Date.
(q)Assignment of Lease; Consent of Lessee. Agent shall have
received an Assignment of Lease duly executed by Lessor, with the consent
thereto duly executed by Lessee, with respect to the Lease.
(r) Filings and Recordations. Agent shall have received
evidence reasonably satisfactory to it that each of the Deeds, the Florida Lease
Supplement, the Mortgages and the Assignment of Lease delivered shall have been
or are being recorded with the appropriate Authorities in the order in which
such documents are listed in this clause, and the UCC Financing Statements with
respect to the Facilities acquired shall have been or are being filed with the
appropriate Authorities.
(s) Insurance. Insurance complying with the provisions of
Article XI of the Lease shall be in full force and effect as evidenced by
certificates of insurance, broker's reports or insurance binders delivered to
Lessor in form and substance reasonably satisfactory to Agent.
(t) Appraisal. Not less than ten (10) Business Days prior to
the Document Closing Date, Agent shall have received and will deliver to Lessor
and each Lender an appraisal (the "Appraisal") which will establish (by the use
of appraisal methods satisfactory to the Lenders) that, as of the date such Site
becomes subject to the Lease, such Site will have a Fair Market Sales Value of
not less than the amount allocated to such Site on Schedule III. The Appraisal
will also establish the Fair Market Sales Value of such Site as of the end of
the Base Term and the Renewal Term. The Appraisal will be prepared in accordance
with the Financial Institutions Reform Recovery and Enforcement Act of 1989 and
will be performed by an independent appraisal company chosen by Agent.
(u) FIRPTA Affidavit. Lessee shall have caused the seller of
the Land Interest to be acquired on the Document Closing Date to deliver to
Agent either (i) a FIRPTA Affidavit in customary form or (ii) if such seller is
a "foreign person" as defined in Section 1445 of the Code, evidence that a
portion of the sales price to be paid to such seller has been withheld, if so
A2-6
<PAGE>
required, in accordance with the provisions of the Code and the Regulations.
(v) No Event of Loss. No Event of Loss shall have occurred in
respect of any Site to be acquired on or prior to the Document Closing Date. No
action shall be pending or threatened by an Authority to initiate a Condemnation
or an Event of Taking in respect of any Site to be acquired on or prior to such
date.
(w) Appraised Value Limitation; 25% Test. The appraised value
of the Land Interest of any Site or Group to be acquired on or prior to the
Document Closing Date shall not exceed twenty-five percent (25%) of the
forecasted Fair Market Sales Value of such Site or Group (on an "as-built"
basis).
(x) Good Standing. Lessee shall have delivered to Agent a
certificate issued by the office of the secretary of state of the jurisdiction
in which any Land Interest to be acquired or is located indicating that Lessee
is a foreign corporation in good standing under the laws of such jurisdiction.
(y) Stock Purchase Agreement; Assignment. Lessee shall have
caused Genesis to execute and deliver to Agent a certified copy of the Stock
Purchase Agreement, together with the Assignment of Rights under Stock Purchase
Agreement.
(z) Credit Agreement. Lessee shall have caused Genesis to
execute and deliver to Agent a certified copy of the Credit Agreement.
(aa) Number of Counterparts. Whenever Agent is to have
received any document, agreement or opinion pursuant to the Participation
Agreement, such condition shall require that Agent has received sufficient
counterpart originals for Agent to distribute to Lessor and each Lender unless
otherwise specifically approved by Agent.
A2-7
<PAGE>
Investor's Letter
EXHIBIT G TO PARTICIPATION AGREEMENT
FORM OF INVESTOR'S LETTER
[Date]
Mellon Financial Services
Corporation #4
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
Mellon Bank, N.A.
Plymouth Meeting Executive Campus
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Genesis Eldercare Properties, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Ladies and Gentlemen:
Capitalized terms used in this letter and not otherwise defined herein,
unless the context otherwise requires, shall have the meanings assigned thereto
in Appendix 1 to that certain Amended and Restated Participation Agreement (the
"Participation Agreement"), dated as of October 7, 1996, among Genesis Eldercare
Properties, Inc., as Lessee; Mellon Financial Services Corporation #4, as
Lessor; the Persons named on Schedule I thereto (together with their respective
permitted successors, assigns and transferees), as Lenders; and Mellon Bank,
N.A., a national banking association, not in its individual capacity except as
expressly stated therein, but solely as Agent for Lessor and Lenders.
The undersigned has agreed to purchase: [check applicable box]
G-1
<PAGE>
|_| (1) the Note numbered Note No. __, dated as of ________,
199_ and in an original principal amount of
__________________ Dollars ($__________) from
-------------,
|_| (2) a portion, in the amount of $___________, of the Note
numbered Note No. __, dated as of ________, 199_ and in
an original principal amount of __________________
Dollars ($__________) from _____________ (the "Current
Holder"), or
|_| (3) loan participation, in the amount of $___________, of
the Note numbered Note No. __, dated as of ________,
199_ and in an original principal amount of
__________________ Dollars ($__________) from
-------------,
and desires that Lessee and Agent consent to the purchase by the undersigned of
the afore-described interest and:
in the case of clause (1) above, Lessor, as borrower, shall
execute and deliver to the undersigned a new Note in the
current principal amount of Note No. __ in the name of the
undersigned, or
in the case of clause (2) above, Lessor, as borrower, shall execute and
deliver (i) to the undersigned a new Note in the principal amount of
$____________ in the name of the undersigned, and (ii) to the Current
Holder a new Note in the principal amount of the excess of the current
principal amount of Note No. __ over the amount specified in the
immediately preceding clause(i).
The undersigned hereby represents and warrants as of the date hereof to
the addressees hereof as follows:
(a) The transfer of the Note, or the portion thereof or loan
participation therein being purchased by the undersigned (the Note or such
portion or loan participation, as applicable, is called the "Note Interest"), to
the undersigned is not to or in connection with any arrangement or understanding
in any way involving any employee benefit plan (or its related trust), as
defined in Section 3(3) of ERISA, or with the assets of any such plan (or its
related trust), as defined in Section 4975(e)(1) of the Code (other than a
governmental plan, as defined in Section 3(32) of ERISA);
G-2
<PAGE>
(b) The Note Interest is being acquired by the undersigned for
investment and not with a view to the resale or distribution of such interest or
any part thereof, but without prejudice, however, to the right of the
undersigned at all times to sell or otherwise dispose of all or any part of such
interest under a registration available under the Securities Act of 1933, as
amended, or under an exemption from such registration available under such Act,
it being understood that the disposition by the undersigned of the Note Interest
to be purchased by the undersigned shall, at all times, remain entirely within
its control;
(c) Neither the undersigned nor any Person authorized to act on its
behalf has directly or indirectly offered to sell the Note Interest or the
related Note or any security similar thereto, to, or otherwise approved or
negotiated with respect thereto with, anyone other than the Lenders, and neither
it nor any Person authorized to act on its behalf will so offer or sell in
violation of Section 5 of the Securities Act of 1933, as amended, or securities
or blue sky law of any applicable jurisdiction;
(d) The representations and warranties set forth in Section 4.2 of the
Participation Agreement are accurate with respect to the undersigned (other than
as such representations and warranties relate to the execution and delivery of
Operative Documents);
(e) The undersigned agrees to be bound by the provisions of Section 6.3
of the Participation Agreement in connection with its acquisition of the Note
Interest and any subsequent transfer thereof; and
(f) In the case of a purchase as described in clause (1) or clause (2)
above, such purchase is being made pursuant to the Assignment and Assumption in
the form of Exhibit G-1 attached hereto (which is in the form of Exhibit O to
the Participation Agreement). In the case of a purchase of a loan participation
as described in clause (3) above, such purchase is being made pursuant to the
Loan Participation Agreement in the form attached hereto [attach form of Loan
Participation Agreement].
The undersigned acknowledges that by execution of this letter it shall
be bound by all obligations (whether or not accrued) under and, in the case of a
transfer of the Note or a portion thereof as described in clause (1) or (2)
above, shall
G-3
<PAGE>
have become a party to, all Operative Documents to which its transferor was a
party.
The undersigned understands that neither the Note or the Note Interest
has been or will be registered or qualified under the Securities Act of 1933, as
amended, or any securities or "blue sky" laws of any jurisdiction and that
neither Agent nor Lessee nor any Participant has an obligation to effect such
registration or otherwise assist in the disposition of the Note or Note
Interest.
Very truly yours,
---------------------------
By:________________________
Name Printed:______________
Title:_____________________
Consent to the acquisition of the aforementioned Note Interest by:
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
By:_______________________________
Name:_____________________________
Title:____________________________
MELLON BANK, N.A., not in its individual
capacity, but solely as Agent
By:_______________________________
Name:_____________________________
Title:____________________________
G-4
<PAGE>
EXHIBIT G-1 TO
INVESTOR'S LETTER
G-5
<PAGE>
Assignment of Lease and Agreement and
Lease Supplements and
Memoranda of Lease and Agreement
EXHIBIT H TO PARTICIPATION AGREEMENT
FORM OF ASSIGNMENT OF LEASE AND AGREEMENT AND
LEASE SUPPLEMENTS AND MEMORANDA OF LEASE AND AGREEMENT
This instrument was prepared by
and upon recordation should be
returned to:
Robert E. Gordon, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
ASSIGNMENT OF LEASE AND AGREEMENT AND
LEASE SUPPLEMENTS AND MEMORANDA OF LEASE
AND AGREEMENT
Dated as of __________, 1996
between
MELLON FINANCIAL SERVICES
CORPORATION #4,
as Lessor
and
MELLON BANK, N.A.,
as Agent and Assignee
<PAGE>
TABLE OF CONTENTS
Section 1. COLLATERAL ASSIGNMENT OF LEASE..........................H-1
Section 2. ASSIGNMENT AS COLLATERAL SECURITY.......................H-3
Section 3. PAYMENTS UNDER THE LEASE................................H-4
Section 4. POWER OF ATTORNEY IN RESPECT OF THE LEASE...............H-4
Section 5. ASSIGNEE DESIGNATED RECIPIENT...........................H-5
Section 6. ALLOCATION PURSUANT TO .................................H-5
Section 7. IRREVOCABILITY; SUPPLEMENTAL INSTRUMENTS................H-5
Section 8. AMENDMENTS OR TERMINATION OF THE LEASE..................H-5
Section 9. LESSEE'S CONSENT AND AGREEMENT..........................H-5
Section 10. REMEDIES CUMULATIVE.....................................H-6
Section 11. MISCELLANEOUS...........................................H-6
ATTACHMENTS TO ASSIGNMENT OF LEASE:
Exhibit A - Legal Description
Consent and Agreement of Lessee
-i-
<PAGE>
THIS ASSIGNMENT OF LEASE AND AGREEMENT AND LEASE SUPPLEMENT AND
MEMORANDUM OF LEASE AND AGREEMENT dated as of July 24, 1996 (herein, as the same
may be amended or supplemented from time to time, called this "Assignment
Agreement"), is between MELLON FINANCIAL SERVICES CORPORATION #4, a Pennsylvania
corporation, as Lessor ("Lessor") and MELLON BANK, N.A., as Agent and assignee
(the "Assignee").
Capitalized terms not otherwise defined in this Assignment Agreement
shall have the respective meanings assigned thereto in the Appendix 1 to that
certain Participation Agreement, dated as of July 24, 1996 (the "Participation
Agreement"), by and among Genesis Eldercare Properties, Inc. ("Lessee"), a
Pennsylvania corporation, Lessor, Assignee and the Lenders set forth therein
(the "Lenders").
RECITALS:
WHEREAS, the Sites legally described on Exhibit A attached hereto, have
been leased by Lessor to Lessee pursuant to a Lease and Agreement, dated as of
July 24, 1996, together with, for each Site, a Lease Supplement and Memorandum
of Lease and Agreement (herein, said Lease and Agreement, together with all
Lease Supplements and Memoranda of Lease and Agreement, as the same may be
amended or supplemented from time to time as permitted thereby and by the
Operative Documents, are collectively called the "Lease");
WHEREAS, Lessor has entered into the Participation Agreement with
Assignee, Lessee and the Lenders party thereto providing, among other things,
for the commitment of the Lenders to assist in financing Lessor's acquisition of
the Sites by making Loans to be evidenced by the respective Notes. Such Loans as
evidenced by the Notes (i) mature on July 24, 2001 and (ii) bear interest on the
unpaid principal amount thereof from time to time outstanding at the interest
rate per annum determined as provided in and payable as specified in the Loan
Agreement; and
WHEREAS, Lessor is entering into this Assignment Agreement in order to
induce the Lenders to make Loans to Lessor and as additional security for the
purchase of the Notes.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Lessor hereby agrees for the benefit of Assignee as follows:
Section 1. COLLATERAL ASSIGNMENT OF LEASE. Lessor, in consideration of
the premises and for other good and valuable consideration, the receipt whereof
H-1
<PAGE>
is hereby acknowledged, and as security for the payment of the principal of, and
all interest and all other sums payable on, the Notes and all other sums payable
by Lessor to Assignee under the Loan Agreement or under any of the other
Operative Documents and the performance and observance by Lessor for the benefit
of Assignee or the Lenders of the provisions of each thereof, whether contained
therein or incorporated therein by reference, has assigned, transferred,
conveyed and set over, and by these presents does assign, transfer, convey and
set over, to Assignee, for the benefit of Assignee and the Lenders, all of
Lessor's interest in, to and under the Lease and all of Lessor's estate, right,
title, interest, claim and demand as Lessor under the Lease, and all existing or
future amendments, supplements or modifications of the Lease;
TOGETHER WITH all rights, powers, privileges, options and other
benefits of Lessor under the Lease, including, without limitation (a) the right
to receive and collect all Rent, income, revenues, issues, profits, Loss
Proceeds, bankruptcy claims, liquidated damages, purchase price proceeds
(pursuant to Article VI of the Lease, or otherwise), the Applicable Percentage
Amount, and other payments, tenders and security payable to or receivable by
Lessor under the Lease, to be applied in accordance with Section 3.3 of the Loan
Agreement; (b) the right, subject to the provisions of Section 9.5 of the
Participation Agreement and not to the exclusion of Lessor, to give and withhold
all waivers, consents, modifications, amendments and agreements under or with
respect to the Lease; (c) the right, not to the exclusion of Lessor, to give and
receive copies of all notices and other instruments or communications under or
pursuant to the Lease; (d) the right to take such action upon the occurrence and
during the continuance of a Lease Event of Default as shall be permitted by the
Lease or by Applicable Laws and Regulations; and (e) the right to do any and all
other things whatsoever which Lessor or any lessor under the Lease, as the case
may be, is or may be entitled to do thereunder;
TOGETHER WITH the right and power to execute and deliver as agent and
attorney-in-fact of Lessor under the Lease an appropriate deed, bill of sale or
other instruments of transfer necessary or appropriate for the conveyance and
transfer to Lessee of Lessor's interest in the Sites pursuant to Article VI of
the Lease, and all interests of Lessor therein and to perform in the name and
for and on behalf of Lessor, as such agent and attorney-in-fact, any and all
other necessary or appropriate acts with respect to any such purchase,
conveyance and transfer;
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TOGETHER WITH the right, not to the exclusion of Lessor, to inspect the
Sites and all records relating thereto and to enforce performance or observance
by the Lessee of any of such rights by the exercise of the right to proceed by
appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants and terms or to recover
damages for the breach thereof;
EXCLUDING FROM all of the foregoing the Excluded Amounts.
TO HAVE AND TO HOLD the same unto Assignee and its successors and
assigns forever.
Section 2. ASSIGNMENT AS COLLATERAL SECURITY. The assignment made
hereby is executed as collateral security, and the execution and delivery hereof
shall not in any way impair or diminish any obligations of Lessor as lessor
under the Lease or of Lessor, Assignee, the Guarantor or any Lender under any of
the other Operative Documents, nor impair, affect or modify any of the terms and
conditions of the Notes or the Loan Agreement or any of the other Operative
Documents securing the Notes, nor shall any of the obligations of Lessor or of
any other Person under any of the Operative Documents (other than the express
obligations of Assignee) be imposed upon Assignee, including, but not limited
to, collecting Rent or enforcing performance by Lessee or the Guarantor.
Without limiting the generality of the foregoing, Assignee shall not be
obligated to perform or discharge, nor does Assignee hereby undertake to perform
or discharge, any obligation, duty or liability of Lessor under the Lease, or of
Lessor under any of the other Operative Documents, or under or by reason of this
Assignment Agreement and the Lessor does hereby waive any and all liability,
loss or damage which may or might be asserted against Assignee by reason of any
alleged obligations or undertakings on its or their part to perform or discharge
any of the terms, covenants or agreements contained in the Lease to be performed
or discharged by Lessor thereunder, provided, however, if Assignee does
undertake any such action pursuant to the terms, conditions and restrictions
contained in this Assignment Agreement and the other Operative Documents, Lessor
shall retain any rights it may have with respect thereto under the Operative
Documents or by law or in equity, and Assignee shall be liable for its gross
negligence or willful misconduct. It is further understood and agreed that this
Assignment Agreement shall not operate to (i) place responsibility for the
control, care, management or repair of the Sites upon Assignee, nor for the
carrying out of any of the terms and conditions of the Lease or of any of the
other Operative Documents (except to the extent expressly provided therein),
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in any such case binding upon or applicable to Lessor, or (ii) make
Assignee responsible or liable for any waste with respect to the Sites by Lessee
or any Person other than by Assignee, or for any dangerous or defective
condition of the Sites, or for any negligence of the management, upkeep, or
repair or control of the Sites resulting in loss or injury or death to Lessee,
any sublessee, sublessor, licensee, employee or stranger other than by Assignee.
Section 3. PAYMENTS UNDER THE LEASE. Lessor hereby directs Lessee to
pay to Assignee, as and when due pursuant to the Lease, the Applicable
Percentage Amount, all Basic Rent, all Supplemental Rent and all payments
pursuant to Articles IV and VI of the Lease, purchase proceeds or avails,
income, Loss Proceeds, and other sums paid or payable to Lessor pursuant to the
Lease (but excluding any indemnity payments or reimbursements to Lessor from
Lessee pursuant to the Lease or otherwise).
Assignee may, at its option, although it shall not be obligated to do
so, and without waiving or releasing any obligation or Loan Event of Default, at
any time perform any Lease covenant required to be performed by Lessor for and
on behalf of Lessor and may recover any money advanced for any such purpose from
Lessor on demand, with interest at the Overdue Rate from the date of
advancement; and (b) Assignee is authorized to endorse, in the name of Lessor,
any item, howsoever received by it, representing any payment on or other
proceeds (including Loss Proceeds) of the Lease (including, without limitation,
all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and VI of
the Lease, purchase proceeds or avails, income, Loss Proceeds and other sums
paid or payable to Lessor pursuant to the Lease) and to endorse and deliver, in
the name of Lessor, any instrument or other item of the Rent held by Assignee
hereunder, in connection with the sale or collection of the Rent.
Section 4. POWER OF ATTORNEY IN RESPECT OF THE LEASE. Lessor does
hereby irrevocably constitute and appoint Assignee its true and lawful attorney
with an interest and full power of substitution, for it and in its name, place
and stead to do any or all of the following (a) ask, demand, collect, receive,
receipt for, sue for, compound and give acquittance for the Recourse Deficiency
Amount, all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and
VI of the Lease, purchase proceeds or avails, income, Loss Proceeds and other
sums paid or payable to Lessor pursuant to the Lease and other sums which are
assigned under Section 1 hereof, and (b) without limiting the provisions of the
foregoing clause (a) hereof, during the continuance of any Lease Event of
Default under the Lease, sue for, compound and give acquittance for, or settle,
adjust or compromise any claim for any and all such Rent, purchase proceeds or
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<PAGE>
or avails, income, Loss Proceeds and other sums which are assigned under Section
1 hereof as fully as Lessor could itself do, and in its discretion to file any
claim or take any other action or proceedings, either in its own name or in the
name of Lessor or otherwise, which Assignee may deem necessary or appropriate to
protect and preserve the right, title and interest of Assignee in and to such
Rent and other sums and security intended to be afforded hereby.
Section 5. ASSIGNEE DESIGNATED RECIPIENT. Lessor hereby directs Lessee
to deliver or remit directly to Assignee at its address set forth in the
Participation Agreement the Applicable Percentage Amount, all Basic Rent, all
Supplemental Rent, payments pursuant to Articles IV and VI of the Lease,
purchase proceeds or avails, income, Loss Proceeds and other sums paid or
payable to Lessor pursuant to the Lease by wire transfer of Federal or other
funds current and immediately available to Assignee on the due date thereof.
Section 6. ALLOCATION PURSUANT TO LOAN AGREEMENT. Notwithstanding
anything contained herein to the contrary, the Applicable Percentage Amount, any
and all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and VI
of the Lease, purchase proceeds or avails, income, Loss Proceeds and other sums
paid to or received or collected by or on behalf of Assignee shall be paid,
allocated and distributed pursuant to the terms of, and in the order of priority
provided for in, Section 3.3 of the Loan Agreement.
Section 7. IRREVOCABILITY; SUPPLEMENTAL INSTRUMENTS. Lessor agrees that
the collateral assignment made hereby and the designation and direction to
Lessee hereinabove set forth are irrevocable, and that Lessor will not, while
said collateral assignment is in effect or thereafter until Lessee has received
from Assignee written notice of the termination of said collateral assignment,
make any other assignment, designation or direction inconsistent therewith, and
that any assignment, designation or direction inconsistent therewith shall be
void. Lessor will from time to time, upon request of Assignee, execute all
instruments of further assurance and all such supplemental instruments as
Assignee may reasonably specify.
Section 8. AMENDMENTS OR TERMINATION OF THE LEASE. Except as otherwise
permitted under Section 9.5 of the Participation Agreement, Lessor agrees that
it will not enter into any agreement amending, supplementing, hypothecating,
waiving, discharging or terminating the Lease.
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Section 9. LESSEE'S CONSENT AND AGREEMENT. The consent and
agreement by Lessee to the provisions of this Assignment Agreement is attached
hereto.
Section 10. REMEDIES CUMULATIVE. Each right, power and remedy of
Assignee provided for in this instrument or now or hereafter existing at law or
in equity or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
Assignment Agreement or in any other Operative Document or now or hereafter
existing at law or in equity or by statute or otherwise and the exercise or
beginning of the exercise by Assignee of any one or more of such rights, powers
or remedies shall not preclude the further exercise thereof or the simultaneous
or later exercise by Assignee of any or all such other rights, powers or
remedies. No failure or delay on the part of Assignee to exercise any such
right, power or remedy (including, without limitation, the granting by Assignee
of consent to any action by Lessor) shall operate as a waiver thereof. Lessor
stipulates that the remedies at law in respect of any default or threatened
default by Lessor in the performance of or compliance with any of the terms of
this Assignment Agreement are not and will not be adequate, and that any of such
terms may be specifically enforced by a decree for specific performance or by an
injunction against the violation of any terms or otherwise.
Section 11. MISCELLANEOUS.
(a) All notices, requests, offers, consents and other
instruments given pursuant to this Assignment Agreement shall be delivered in
accordance with Section 9.3 of the Participation Agreement.
(b) This Assignment Agreement shall be binding upon, inure to
the benefit of and be enforceable by, the respective successors and assigns of
the parties hereto. The headings to the various paragraphs of this Assignment
Agreement have been inserted for convenience reference only and shall not
modify, define, limit or expand the express provisions of this Assignment
Agreement. Neither this Assignment Agreement nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but only by an
instrument signed by the parties hereto. If any provision of this Assignment
Agreement or any application thereof shall be invalid or unenforceable, the
remainder of this Assignment Agreement and any other application of such
provision shall not be affected thereby.
(c) This Assignment Agreement may be executed in counterparts,
each of which shall be deemed an original, and such counterparts shall
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<PAGE>
constitute but one and the same Assignment Agreement. It shall not be necessary
in making proof of this Assignment Agreement to produce or account for more than
one such counterpart signed by the party against which enforcement of this
Assignment Agreement is sought.
(d) THIS ASSIGNMENT AGREEMENT HAS BEEN DELIVERED IN, AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH COMMONWEALTH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, EXCEPT THAT, TO THE EXTENT REQUIRED BY
APPLICABLE LAW, FORECLOSURE HEREUNDER WITH RESPECT TO ANY SITE SHALL BE GOVERNED
BY THE LAWS OF THE STATE IN WHICH SUCH SITE IS LOCATED.
(e) Upon payment in full of all indebtedness secured by this
Assignment Agreement and the Loan Agreement and performance of all other
obligations secured hereby and thereby, Assignee shall, at Lessee's expense, do,
execute, acknowledge and deliver each and every deed, conveyance, transfer and
release necessary or proper to evidence the release of this Assignment Agreement
whereupon this Assignment Agreement and the Lien created hereby shall terminate
and be of no further force or effect.
(f) Notwithstanding anything to the contrary set forth herein,
in the event of any conflict between any provision of this Assignment Agreement
and the Loan Agreement, the terms and provisions of the Loan Agreement shall
control.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment
Agreement to be duly executed and delivered as of the date and year first above
written.
MELLON FINANCIAL SERVICES
CORPORATION #4, a
Pennsylvania corporation, as Lessor
By:___________________________
Name:_________________________
Its:__________________________
Address: One Mellon Bank Center
Room 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
Telephone: (412) 234-2110
Facsimile: (412) 234-3948
ACCEPTED:
MELLON BANK, N.A., as Agent and
Assignee
By:___________________________
Name:_________________________
Its:__________________________
Address: Plymouth Meeting Executive Campus
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: (610) 941-8409
Facsimile: (610) 941-4136
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<PAGE>
STATE OF _______________
COUNTY OF ______________
The foregoing instrument was acknowledged before me this ___ day of
__________________, 1996, by ____________________________, the
_______________________ of MELLON FINANCIAL SERVICES CORPORATION #4, a
Pennsylvania corporation.
----------------------
Signature of Notary
(Notary Seal must be affixed)
- -----------------------------
Name of Notary Printed
My Commission Expires: ______
Commission Number: __________
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<PAGE>
STATE OF ___________
COUNTY OF __________
The foregoing instrument was acknowledged before me this ___ day of
__________________, 1996, by ____________________________, the , of MELLON BANK,
N.A., a national banking association.
----------------------
Signature of Notary
(Notary Seal must be affixed)
- -----------------------------
Name of Notary Printed
My Commission Expires: ______
Commission Number: __________
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<PAGE>
Exhibit A
Legal Description of the Land
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<PAGE>
CONSENT AND AGREEMENT
OF LESSEE
THIS CONSENT AND AGREEMENT dated as of July 24, 1996, by GENESIS
ELDERCARE PROPERTIES, INC., A Pennsylvania corporation (the "Lessee") for the
benefit of MELLON BANK, N.A., as Agent ("Assignee"), to the assignments made
under the Assignment of Lease and Rents, dated as of the date hereof (the
"Assignment Agreement"), between MELLON FINANCIAL SERVICES CORPORATION #4, a
Pennsylvania corporation as assignor ("Lessor") and Assignee. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Assignment
Agreement.
1. Lessee hereby consents to the terms and provisions of the Assignment
Agreement and agrees it will deliver or remit, as and when payable pursuant to
the Operative Documents directly to Assignee, the Applicable Percentage Amount,
all Basic Rent, all Supplemental Rent, and all payments pursuant to Articles IV
and VI of the Lease, purchase proceeds or avails, income, Loss Proceeds and
other sums paid or payable to Lessor pursuant to the Lease (but excluding any
indemnity payments or reimbursements to Lessor from Lessee pursuant to the
Lease, any other Operative Document or otherwise), in each case, without any
offset, deduction, defense, abatement, suspension, deferment, diminution or
reduction for any reason so that said funds shall at all times be available for
payment of interest and principal due on the Notes, except in each case as
expressly provided in the Lease.
2. Notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Lessor under the Lease, (ii) any action with respect to the
Lease which may be taken by any trustee or receiver of Lessor, or by any court
in such proceeding, and (iii) the exercise by the Lender of any rights and
remedies under the Assignment Agreement, Lessee agrees that it will remain
obligated under the Lease in accordance with their respective terms and that it
will not take any action to terminate (other than pursuant to its rights under
the Lease and the Participation Agreement to do so), rescind or avoid the Lease.
3. To the extent that Lessee may acquire any indebtedness of Lessor or
any other party to the Participation Agreement, or any claim against Lessor or
any other party to the Participation Agreement, by way of subrogation or
otherwise, all such indebtedness and claims are hereby subordinated and made
fully subject in right of payment thereof to the prior payment in full of the
Notes.
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4. In addition to (and not in limitation of) all of Lessee's
reimbursement and indemnity obligations set forth in the Operative Documents,
Lessee agrees to pay promptly all reasonable and documented costs and expenses
incurred by Lessor, pursuant to the Assignment Agreement, for the release of the
Assignment Agreement.
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<PAGE>
IN WITNESS WHEREOF, Lessee has caused this Consent and Agreement to be
duly executed and delivered as of the date and year first above written.
GENESIS ELDERCARE PROPERTIES,
INC., a Pennsylvania
corporation, as Lessee
By:__________________________
Name:______________________
Title:_______________________
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<PAGE>
STATE OF _________
COUNTY OF ________
The foregoing instrument was acknowledged before me this ___ day of
__________________, 1996, by ____________________________, the
_______________________ of GENESIS ELDERCARE PROPERTIES, INC., a Pennsylvania
corporation, on behalf of the ____________________________
------------------------------
Signature of Notary
(Notary Seal must be affixed) _____________________________
Name of Notary Printed
My Commission Expires: ______
Commission Number: __________
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<PAGE>
EXHIBIT K TO PARTICIPATION AGREEMENT
Form of Architect's Certificate
(Section 3.4(a))
[In form reasonably acceptable to Agent]
K-1
<PAGE>
EXHIBIT L TO PARTICIPATION AGREEMENT
Form of Purchase Agreement Assignment
[In form reasonably acceptable to Lessor and Agent]
L-1
<PAGE>
Ground Lease
EXHIBIT M TO PARTICIPATION AGREEMENT
Form of Ground Lease
[To be provided pursuant to Section 3.2(v).]
M-1
<PAGE>
Advance Request
EXHIBIT N TO PARTICIPATION AGREEMENT
Form of Advance Request
ADVANCE REQUEST
TO: Mellon Bank, N.A., not individually, but solely as
agent (the "Agent") under the Amended and Restated
Participation Agreement, dated as of October 7, 1996
(the "Participation Agreement"), among Genesis
Eldercare Properties, Inc., as Lessee, Mellon
Financial Services Corporation #4, as Lessor, the
Lenders named therein and the Agent (all capitalized
terms used herein and not otherwise defined shall
have the meanings assigned to them in the
Participation Agreement, unless the context otherwise
requires).
FROM: Genesis Eldercare Properties, Inc.
DATE: _____________________________
REGARDING: Advance Request
Genesis Eldercare Properties, Inc. hereby represents, warrants
and certifies as follows:
1. This Advance Request is delivered pursuant to Section 2.5 of the
Participation Agreement.
2. Lessee hereby requests an Advance pursuant to the Participation
Agreement in the amount of $__________. The amount of the Advance Request
satisfies the requirements of the second sentence of Section 3.1(a).
3. The proposed Advance Date is ____________________.
4. [Include information required by clauses (ii), (iii), (iv), (v) and
(vi), as applicable.] The information required pursuant to Section 2.5(a) of the
Participation Agreement attached hereto on Annex A is true, correct and
complete.
5. The Lessee requests that the disbursement of funds be sent by wire
transfer in accordance with the payment instructions attached hereto as Annex B.
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6. That (A) each and every representation and warranty of Lessee
contained in the Operative Documents is true and correct in all material
respects on and as of such Advance Date as though made on and as of such Advance
Date, except to the extent such representations or warranties relate solely to
an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date;
(B) no material Lease Default and no Lease Event of Default has occurred and is
continuing; (C) each Operative Document to which Lessee is a party is in full
force and effect with respect to it; and (D) Lessee has duly performed and
complied with all covenants, agreements and conditions contained herein or in
any other Operative Document required to be performed or complied with by it on
or prior to such Advance Date.
7. That, after giving effect to the Advance, (A) the Lease (including
all amendments and supplements thereto including, without limitation, any
amendments which may increase the amount of the lease financing facility) is a
"Credit Facility" within the meaning of the 1995 Indenture, constitutes "Senior
Indebtedness" within the meaning of the 1993 Indenture and, from and after the
execution and delivery of the 1996 Indenture and the issuance of the notes
thereunder, is or will constitute "Senior Indebtedness" within the meaning
thereof, and (B) there will be default under the Indenture, including (without
limitation) no violation of the of the financial tests set forth in Section 5.9
of the 1995 Indenture or any similar provisions in the Indenture [; and that
attached hereto as Annex C is a calculation demonstrating the non-violation of
such financial tests].2
GENESIS ELDERCARE PROPERTIES, INC.
By:___________________________
Name Printed:_________________
Title:________________________
- --------
2 Include the calculation for each Advance Request other than an Advance
Request solely for Construction Costs under Section 3.3.
ADVANCE REQUEST
Attachments:
Annex A - Information regarding Advance Request
Annex B - Wire transfer instructions for the disbursement of funds
Annex C - Computation under Section 5.9 of 1995 Indenture
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<PAGE>
Assignment and Assumption
EXHIBIT O TO PARTICIPATION AGREEMENT
FORM OF
ASSIGNMENT AND ASSUMPTION
Reference is made to the Amended and Restated Participation
Agreement dated as of October 7, 1996 (the "Participation Agreement"), among
Genesis Eldercare Properties, Inc., as Lessee (the "Lessee"); Mellon Financial
Services Corporation #4, as Lessor (the "Lessor"); Mellon Bank, N.A., as Agent
and the Lenders named therein. Terms defined in the Participation Agreement are
used herein as therein defined.
(the "Assignor") and (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under (i) that certain Note
numbered Note No. ___, dated as of _________, ____ and in an original principal
amount of ______________________ Dollars ($___________) (the "Note"), and (ii)
the Participation Agreement as it relates to the Note, all as of the effective
date of this Assignment and Assumption (the "Assignment and Assumption Effective
Date") (as determined below) equal to the percentage interest specified on
Schedule I hereto of all outstanding rights and obligations under the Note and
the Participation Agreement specified on Schedule I hereto. After giving effect
to such sale and assignment, the Assignee's Commitment shall be as set forth on
Schedule I hereto.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Participation Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Participation Agreement or any other
document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Lessee, Lessor or Guarantor or the performance or observance by the Lessee,
Lessor or Guarantor of any of their respective obligations under the
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<PAGE>
Participation Agreement or any of the other Operative Documents.
3. The Assignee confirms and agrees as follows: (i) that it
has received a copy of this Assignment and Assumption Agreement, together with
copies of the Operative Documents and the financial statements referred to in
Section 5.11 of the Participation Agreement 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 Assumption; (ii) that it will,
independently and without reliance upon the Agent, the Assignor or any other
Participant 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 the Participation Agreement; (iii) that it appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Participation Agreement and the other Operative Documents
as are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) that it will perform in accordance with
its terms all of the obligations which by the terms of the Participation
Agreement or the other Operative Documents are required to be performed by it as
a Lender; and (v) that its address for notices and its funding office are as set
forth beneath its name on the signature pages hereof.
4. The Assignment and Assumption Effective Date shall be ,
____. Following the execution of this Assignment and Assumption, Assignor and
Assignee shall deliver it to the Agent, Lessor and Lessor with an Investor's
Letter from the Assignee for acceptance by the Agent, together with a fee in the
amount of $3,000.
5. The effectiveness of this Assignment and Assumption is
subject to the written consent of Agent and Lessee pursuant to the Participation
Agreement. Upon such consent by Agent and Lessee, as of the Assignment and
Assumption Effective Date (i) the Assignee shall be a party to the Participation
Agreement, and shall have the rights and obligations of a Lender under the
Participation Agreement, and (ii) the Assignor shall, to the extent provided in
this Assignment and Assumption, relinquish its rights and be released from its
obligations under the Participation Agreement.
6. Upon such consent by Agent and Lessee, from and after the
Assignment and Assumption Effective Date, the Agent shall make all payments
under the Participation Agreement in respect of the interests assigned hereby
(including, withoutlimitation, all payments of principal, interest and fees with
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<PAGE>
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Participation Agreement for
periods prior to the Assignment and Assumption Effective Date directly between
themselves.
7. THIS ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT
THE CONFLICTS LAW) OF THE STATE OF PENNSYLVANIA.
8. The Assignee agrees not to sell any assignments of, or
grant loan participations in, its interest in the Note or the Participation
Agreement and the other Operative Documents except in accordance with the
Participation Agreement.
[ASSIGNOR]
By: ______________________
Name:
Title:
[ASSIGNEE]
By: ______________________
Name:
Title:
Address for Notices:
Funding Office:
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<PAGE>
SCHEDULE I
TO
ASSIGNMENT AND ASSUMPTION
DATED _____________, ____
Relating to
Note numbered Note No. ___,
dated as of _________, ____ and
in an original principal amount of $___________
A. Original Principal Amount of Note $__________
B. Percentage of Note assigned to Assignee ____%
C. Assignee's Commitment (including funded amounts) $__________
D. Assignor's Retained Commitment (including funded
amounts), after giving effect to Assignment $__________
[(A) = (C) + (D)]
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<PAGE>
MANAGEMENT AND AFFILIATION AGREEMENT
THIS MANAGEMENT AND AFFILIATION AGREEMENT (the "Agreement"), dated as
of August 31, 1996, by and between GENESIS ELDERCARE NETWORK SERVICES, INC., a
Pennsylvania corporation ("Manager"), GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation ("Genesis") and AGE INSTITUTE OF FLORIDA, INC., a
Florida not-for-profit corporation ("Age").
BACKGROUND
A. On the date hereof, Age acquired eleven (11) eldercare centers
located in Pinellas, Polk, Volusia, Bay and Okaloosa Counties in the State of
Florida, and listed on Exhibit "A" attached hereto and hereby made a part hereof
(collectively, the "Facilities"), together with all equipment, fixtures and
other tangible and intangible assets of Edgemont Partners, LP., a Tennessee
limited partnership ("Edgemont") as more particularly described in that certain
Asset Purchase Agreement dated the date hereof by and between Age and Edgemont
(the "Asset Purchase Agreement") (the Facilities and all such equipment,
fixtures and assets, collectively, the "Property").
B. Manager is in the business of operating and managing eldercare
centers and providing operational, accounting and financial services to such
facilities and Manager is willing to provide the management services with
respect to the Facilities on the basis, terms and conditions set forth below.
C. Manager is a subsidiary of Genesis, a recognized leader in providing
healthcare services to the geriatric population. Genesis operates through health
service networks (hereinafter referred to as the "Genesis Health Network")
composed primarily of operating owned, leased and managed long-term care
facilities, providing specialty medical services to long-term care providers and
patients and developing advanced clinical protocols and personnel training
programs. The Genesis Health Network also includes developing, and providing
services through, managed care programs for the geriatric and subacute care
populations. Age desires to affiliate with the Genesis Health Network to, among
other things, receive Genesis' expertise in clinical programming and personnel
training; have its Facilities provide care through Genesis' third party managed
care payor agreements; and access Genesis' expertise in managed care pricing and
patient care.
TERMS
NOW, THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth below, and intending to be legally bound,
Manager and Age agree as follows:
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SECTION 1 Appointment of Manager. Age hereby appoints and employs Manager as
operating manager of the Facilities, and Manager agrees to act as operating
manager of the Facilities, to supervise and direct the day to day business
activities, management and operation, expansion, repair and renovation of the
Facilities and all phases of its operations in the name of and on behalf of Age
and for Age's account during the term of this Agreement.
SECTION 2 Term. The term of this Agreement shall commence on the date hereof
(the "Commencement Date") and shall continue for a period of ten (10) years from
the Commencement Date (such time period is hereinafter referred to as the
"Initial Term"). After the expiration of the Initial Term or any subsequent
term, this Agreement shall automatically renew for a period of five (5) years
unless either party provides the other party with prior written notice of its
intention to terminate this Agreement at the end of its current term which
notice is given at least one hundred and twenty (120) days prior to the
expiration of the Initial Term or any subsequent term.
SECTION 3 Responsibilities of Manager-Management. In connection with the
supervision, direction and management of the Facilities, beginning on the
Commencement Date, Manager or its subcontractor(s) shall (either directly or
through supervision of employees of the Facilities), as agent and on behalf of
Age, perform or cause to be performed, the following services:
3.1 Manage the operation of the Facilities, including, but not
limited to, the provision of long-term nursing care to residents, staffing,
accounting services (but not audit services), billing, collections, rate
setting, and general on-site administration.
3.2 Select, employ, supervise and train an adequate staff, as
required by law and subject to availability, of nurses, nurse aides, office and
other employees, including an administrator (the "Administrator") and a
registered nurse as director of nursing (the "Director of Nursing") (each of
whom may be replaced by Manager from time to time), and promote, direct, assign
and discharge all such employees at Manager's sole discretion; provided, that
the initial employment of the Administrator and Director of Nursing requires the
prior consent of Age, which consent shall not be unreasonably withheld or
delayed. At Age's request, such employees shall be employees of Manager or its
Affiliates and carried on the payroll of the Facilities; provided, that Age may
decide to directly employ the employees at the Facilities. Age agrees to
reimburse Manager for the direct and indirect employment related costs
associated with any such
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employee, including, without limitation, compensation, salary, bonuses,
reasonable business expense reimbursements approved by Manager, employer's FICA
payments, unemployment compensation and other employment taxes, bonuses,
automobile allowances, vacation, personal and sick leave benefits, workers'
compensation, group life, health and accident insurance premiums, disability and
other benefits (collectively, "Employment Costs"). Notwithstanding the
foregoing, during the term of this Agreement, Manager or its Affiliate, in
Manager's sole discretion, may directly employ the Facilities' Administrator and
Director of Nursing. The compensation payable to the Administrator and Director
of Nursing shall be paid by Age and shall be reasonable and in line with
compensation payable by other similar nursing home operators to administrators
and nursing directors of comparable facilities in the Facilities' general market
area.
3.3 With the prior written consent of Age, institute and amend
from time to time, general salary scales, personnel policies and appropriate
employee benefits for all employees of the Facilities.
3.4 Issue bills for services and materials furnished by the
Facilities and collect accounts receivable and monies owed to the Facilities;
design and maintain accounting, billing, patient and collection records; and
prepare and file, or supervise the preparation and filing of, insurance,
Medicare, Medicaid and any and all other necessary or desirable applications,
reports and claims related to revenue production. Age expressly constitutes
Manager, to the extent permitted by applicable law, as its agent to administer,
process and collect, on Age's behalf and in its name, all Medicare and Medicaid
receivables. Manager shall have the right to enforce Age's rights as creditor
under any contract relating to the Facilities or in connection with rendering
any services at the Facilities for the purposes of collecting accounts
receivable and monies owed the Facilities, and Manager shall make reasonable
efforts to collect all such receivables and monies.
3.5 Plan, supervise and conduct a program of regular
maintenance and repair, except that any single physical improvement or series of
related improvements (other than budgeted capital items or maintenance and
repair items) costing more than Twenty-five Thousand Dollars ($25,000) for any
single Facility shall be subject to the prior written approval of Age.
3.6 Purchase food, beverage, medical, cleaning and other
supplies, equipment, furniture and furnishings necessary for the operation and
maintenance of the Facilities and contract for all necessary services for the
account of Age, except that the purchase of any single item or series of related
items of equipment, furniture or furnishings (other than budgeted or emergency
items at
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Manager's discretion) which cost more than Twenty-five Thousand Dollars
($25,000) for any single Facility shall be subject to the prior approval of Age.
3.7 Administer, supervise, coordinate and schedule all patient
and other services of the Facilities, including the provision of food,
barber/beautician and other ancillary services. Subject to the terms of Section
9 hereof, Manager may contract with any of its Affiliates on an arms-length
basis after prior written approval by Age, including, but not limited to, for
the provision of the following categories of service at Age's expense: dietary,
janitorial and housekeeping, contract maintenance, data processing, group
purchasing, pharmacy, medical, enteral feeding and therapy and rehabilitation
services. Manager shall use such consultants or other professionals in
connection with the provision and delivery of such services, as Manager shall
select in its reasonable business judgment.
3.8 Provide for the payment of accounts payable, employee
payroll, taxes, insurance premiums and other obligations of the Facilities.
3.9 With the prior consent of Age, institute standards and
procedures for admitting and discharging residents, for charging residents for
services and for collecting the charges from residents or third parties.
3.10 Furnish to Age for review and approval, policy manuals
discussing aspects of the operation of the Facilities and propose revisions to
such policy manuals from time to time.
3.11 With Age's consent, not to be unreasonably withheld or
delayed, obtain and maintain insurance coverage for the Facilities, including
insurance coverage naming Age, Manager and such other persons as may be
reasonably requested by Age as additional insureds, with respect to services
that could be provided by the Facilities.
3.12 Negotiate and enter into, in the name of and on behalf of
Age, such agreements, contracts and orders as it may deem necessary or advisable
for the furnishing of services, concessions and supplies for the operation and
maintenance of the Facilities in accordance with the Facilities' budgets.
3.13 Handle and settle employee relation matters, union and
non-union, and negotiate on behalf of Age (and in conjunction with Age's
counsel) with any labor union lawfully entitled to represent employees who work
at the Facilities; provided, however, any collective bargaining agreement or
labor contract must be submitted to Age for its prior approval and provided,
further, that
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the institution of any labor litigation and any labor settlement in excess of
the sum of Twenty-five Thousand Dollars ($25,000) for any single Facility must
be approved by Age.
3.14 As appropriate, file or contract for filing, annual and
semi-annual Medicare and Medicaid cost reports, budget cost reports for setting
the Facilities' initial rate and interim rate increase requests.
3.15 Make periodic evaluations of the performances of all
departments of the Facilities and provide written notification to Age in the
event of any material substandard performances. At Age's written request,
Manager shall make available any such evaluations to Age.
3.16 Implement and maintain accounting and internal control
systems using accounts and classifications consistent with those used in similar
nursing home facilities operated by Manager.
3.17 Implement and maintain a program to provide objective
measurements of the quality of healthcare provided at the Facilities, and
Manager may utilize patient questionnaires and interviews, periodic inspection,
and such other techniques as Manager may reasonably deem necessary to maintain
the quality of healthcare at the Facilities.
SECTION 4 Responsibilities of Age. Age makes the following covenants which are
material covenants and upon which Manager relies as an inducement to enter into
this Agreement:
4.1 Age will cooperate with Manager in every respect to allow
Manager to perform its services under this Agreement and will furnish Manager
with all information required by it for the performance of its services under
this Agreement. Age will permit Manager full access to the Facilities and will
allow Manager to examine and copy any data in the possession and control of Age
affecting management and/or operation of the Facilities.
4.2 Age will examine documents and contracts submitted by
Manager and render reasonable decisions pertaining thereto, when required,
promptly, to avoid unreasonable delay in the progress of Manager's work, and, in
any event, if Age shall not respond negatively in writing to the notice within
ten (10) days after the notice is sent, Age shall be deemed to have approved the
matter submitted to Age. In any emergency situation (as determined by Manager),
Manager shall not be required to seek or obtain Age's approval for any actions
which Manager, in its sole judgment, deems necessary or appropriate to respond
to such situations, provided Manager promptly thereafter reports such action to
Age. Age shall
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execute and deliver any and all applications and other documents that may
reasonably be deemed by Manager to be necessary or proper to be executed by Age
in connection with the operation of the Facilities.
4.3 Age agrees that Manager retains all ownership and other
rights in all proprietary systems, policy and other manuals, materials and other
information, in whatever form, developed by Manager or its Affiliates in the
performance of its services under this Agreement. Nothing contained in this
Agreement shall be construed as a license or transfer of such information either
during the term of this Agreement or otherwise. Upon termination of this
Agreement, or earlier upon Manager's request, Age shall immediately return all
such information to Manager.
4.4 As long as Age shall owe funds to Manager, or any
Affiliate of Manager, Age shall not (without the consent of Manager, which may
be withheld in its sole discretion) withdraw, lend, pledge or divert any
revenues of the Facilities, except as may be provided in this Agreement or the
budgets applicable to the Facilities.
4.5 During the term of this Agreement and for a period of two
years following the termination of this Agreement, Age shall not, directly or
indirectly, for Age or on behalf of any other person or business entity,
solicit, recruit, entice or persuade any employee of Manager or its Affiliates
to leave the employ of Manager or its Affiliates or to contract with Age or any
other person; provided, that, the foregoing shall not limit Age from employing
employees of the Facilities in accordance with Section 3.2 hereof.
SECTION 5 Fees
5.1 Management Fee. Beginning on the Commencement Date, in
addition to any other fees due to Manager and reimbursements for operating
expenses at the Facilities (including, without limitation, salaries and benefits
for employees at the Facilities), compensation to the Manager, consists of a
monthly fee (the "Management Fee"), payable in arrears on the last business day
of each month, equal to the product of Net Revenue (as defined in Section
15.16(d) of this Agreement) for the immediately preceding month multiplied by
6%.
5.2 Other Fees and Reimbursements. The fees listed above shall
be in addition to any and all other reimbursements due Manager, including,
without limitation, reimbursements for salaries and benefits for employees, tax
contests, costs for filing and expenses related to preparing or contracting for
filing reports or
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requests to Medicare, its intermediary or Medicaid and costs incurred by the
Manager in representing Age in connection with any and all audits, reviews and
appeals of Medicare and Medicaid Cost Reports; provided, that, costs for
preparation and filing of Medicaid and Medicare cost reports for the Facilities
shall be at no additional cost to Age.
5.3 Overdue Invoices. Age shall pay Manager interest on
amounts due to Manager which are not paid within thirty (30) days of their due
date at a rate of 15% per annum, which rate is subject to adjustment from time
to time, to reflect changes in the prime rate announced from time to time by
Mellon Bank, N.A.
SECTION 6 Budgets and Reports.
6.1 Annual Budget. Within ninety (90) days of the date of the
Commencement Date, and no later than sixty (60) days prior to the end of each
fiscal year of the Facilities, Manager shall submit to Age an annual budget
(each an "Annual Budget") covering the operations of and proposed capital
expenditures to be made with respect to the Facilities for the next fiscal year
(or the remainder of the current fiscal year, in the case of the initial
budget). Age shall approve or disapprove the annual budget submitted by Manager
no later than thirty (30) days prior to the end of each Facilities' fiscal year.
Manager shall not make any expenditure which would have the effect of causing
the Budget with respect to each Facility to be exceeded, without first obtaining
Age's approval thereof.
6.2 Capital Expenditures. The Annual Budget shall include a
capital budget (the "Capital Budget") outlining a program of capital
expenditures as may be required by applicable law, any lender of Age or in
Manager's reasonable business judgment during the next fiscal year (or the
remainder of the current fiscal year, in the case of the initial budget), in
which each proposed capital expenditure will be designated as either mandatory,
highly recommended or desirable. Age may approve or reject, in its discretion,
each proposed capital expenditure, except those indicated as mandatory. Age
shall not unreasonably withhold or delay its consent to highly recommended
capital expenditures. Manager shall be responsible for designating as a
"mandatory capital expenditure" any expenditure which, if not made would, in
Manager's reasonable judgment, (a) cause the Facilities to lose or put at risk
its license, (b) place at risk the life of a patient of the Facilities, (c)
cause the ineligibility of the Facilities under any third party payor program
applicable to the Facilities or (d) cause the issuance of a formal notice that
the operating license for the Facilities or any substantial portion of the
Facilities
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will be revoked or suspended or qualified in any material adverse
respect.
6.3 Operating Budget. The Annual Budget shall include an
operating budget (the "Operating Budget") setting forth an estimate of operating
revenues and expenses for the Facilities for the next fiscal year (or the
remainder of the current fiscal year, in the case of the initial budget),
together with an explanation of anticipated changes in the Facilities. Manager
shall provide to Age upon written request such other reports, including a cost
comparison report, and all appropriate Medicare and Medicaid reports necessary
under these programs, as are normally provided by Manager to owners of other
similar nursing home facilities managed by Manager.
6.4 Reports. As soon as available and in any event within
forty-five (45) days after the end of each month, Manager shall provide to Age a
report reconciling the actual operating expenses incurred during such month to
the operating expenses shown on the Operating Budget for such month. Manager
shall also furnish or arrange for the preparation of such other reports which
shall include: (a) unaudited monthly financial statements of Age for the month
then ended, prepared on a basis consistent with the annual statements; (b) at
Age's expense, audited annual financial statements of Age prepared by a
nationally recognized certified public accounting firm or other independent
certified public accounting firm, prepared in accordance with generally accepted
accounting principles, and including a balance sheet, a statement of income and
expenses for the year then ended; (c) monthly census information of the
Facilities as of the end of such month in sufficient detail to show by
patient-mix (i.e., private, Medicare, Medicaid and V.A.) the average monthly
census of the Facilities; (d) an aged accounts receivable report from the
Facilities in sufficient detail to show amounts due from each class of
patient-mix by the account age classifications of thirty (30) days, sixty (60)
days, ninety (90) days, one hundred twenty (120) days, and over one hundred
twenty (120) days and (e) other reports required under Age's senior loan or bond
documents.
SECTION 7 Bank Accounts and Working Capital.
7.1 Manager, in the Facilities' name and on behalf of Age,
shall transfer immediately upon receipt, but in no event less frequently than
weekly, all Gross Revenues (as defined below) of the Facilities for deposit into
a bank account established exclusively for that purpose by Age ("Gross Revenue
Account").
7.2 Upon receipt from the Gross Revenue Account of moneys in
respect of operating expenses, Manager shall deposit all
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of such moneys in a bank account of the Facilities (the "Operating Account")
established in Age's name, and shall supervise the disbursements from the
Operating Account on behalf of Age of such amounts and at such times as the same
are required in Manager's reasonable business judgment. Manager shall discharge
such supervisory responsibilities in accordance with reasonable and customary
business standards and practices. Manager shall specify, with the approval of
Age, the signatory or signatories of Manager required on all checks or other
documents of withdrawal submitted by Manager on the Operating Account, but a
signatory designated by Age may also be an authorized signatory on the Operating
Account.
All costs and expenses (including Manager's Management Fee as
defined in Section 5.1 of this Agreement) incurred in the operation of the
Facilities shall be paid out of the Operating Account. Such costs and expenses
shall be paid in the following order of priority:
(i) ordinary and necessary expenses and costs of
operation of the Facilities, including, without limitation,
payroll expenses and utility charges and the payment to Age of
"Home Office Fees," as that term is defined in Section 4.18 of
the Acquisition Loan and Security Agreement, dated as of
August 31, 1996, between Age and Genesis (the "Acquisition
Loan Agreement");
(ii) principal and interest due on outstanding
indebtedness, if any, under the Acquisition Loan
Agreement;
(iii) the Management Fee (as defined in Section
5.1);
(iv) principal and interest due on outstanding
indebtedness, if any, under the Working Capital Loan and
Security Agreement, dated as of August 31, 1996, between Age
and Genesis;
(v) payments with respect to capital improvements;
and
(vi) transfers into a debt service reserve fund in an
amount not to exceed Five Million Dollars ($5,000,000.00).
Any funds remaining in the Operating Account after payment of the foregoing
costs and expenses ("Excess Cash") shall be distributed to Age.
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7.3 Taxes. Any federal, state or local taxes, assessments or
other governmental charges imposed on the Facilities and arising from Age's
period of ownership are the obligations of Age, not of Manager, and shall be
paid out of the Operating Account of the Facilities. With Age's prior written
consent, Manager may (and upon receipt of Age's written instructions, Manager
shall) contest the validity or amount of any such tax or imposition on the
Facilities.
SECTION 8 Licenses, Permits, Certifications and Contests.
8.1 Manager, as agent of Age, shall apply for, in the name of
Age, and obtain and maintain, on behalf of Age, all necessary licenses, permits
and approvals to operate the Facilities to substantially comply with all
applicable laws, rule and regulations and to be eligible for participation in
the Medicaid Program and Federal Medicare Program.
8.2 Neither Age nor Manager shall take any action or fail to
take any action which such party knows or has reason to believe will cause any
governmental authority having jurisdiction over the operation of the Facilities
to institute any proceeding for the suspension, rescission or revocation of any
necessary license, permit or approval. Manager shall not take any action or fail
to take action which Manager knows or has reason to believe will adversely
affect Age's right to accept and obtain payments under Medicare, Medicaid or any
other public or private third party medical payment programs.
8.3 Manager shall, with the approval of and at the cost of
Age, have the right, on behalf of Age, to contest by appropriate legal
proceedings, diligently conducted in good faith in the name of Age, the validity
or application of any agreement, law, ordinance, rule, ruling, regulation, order
or requirement of any governmental agency having jurisdiction over the operation
of the Facilities. Age shall fully cooperate with Manager with regard to the
contest and Age shall pay all reasonable attorneys' fees incurred with regard to
the contest from the Operating Account. Counsel for any such contest shall be
selected by Manager and reasonably approved by Age. Manager shall, with the
consent of Age and at Age's cost and expense, process all third party payment
claims and appeals for the services provided at the Facilities, including
without limitation, exhaustion of all applicable administrative proceedings or
procedures, adjustment and denials by governmental agencies or their fiscal
intermediaries and other third party payors.
8.4 Age shall to comply with all federal, state and local
laws, rules and regulations and requirements which are applicable to Age
provided that Age, at its sole expense and
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without cost to Manager, shall have the right to contest by proper legal
proceedings the validity, so far as applicable to it, of any such law, rule,
regulation or requirement, provided that such contest shall not result in a
suspension of operations of any Facilities, and provided, further, Age shall not
be deemed to be in breach of this covenant if Age's failure to comply with any
such law, rule, regulation or requirement is the result of the negligence or
willful misconduct of Manager.
8.5 Manager shall use its best efforts to operate and maintain
the Facilities in compliance with the requirements of any statute, ordinance,
law, rule, regulation or order of any governmental or regulatory body having
jurisdiction over the Facilities.
SECTION 9. TRANSACTIONS WITH SPECIALISTS; AFFILIATES AND SUBCONTRACTORS
9.1 Staff Specialists. In addition to the other managerial
services provided for in this Agreement, Manager may, but shall not be obligated
to, make available to the Facilities for consultation and advice, when
necessary, specialists in accounting, budgeting, management, nursing, personnel,
purchasing, quality assurance, policies and procedures, and third party
reimbursement. Manager shall not charge Age separately for the services of
consultants in the referenced areas who are employees of Manager or of any of
its Affiliates.
9.2 Transactions with Specialists or Affiliates. The parties
contemplate that Manager or its Affiliates may propose to provide certain
contract services to the Facilities, such as data processing, insurance, dietary
and social service consulting, contract maintenance, pharmacy, medical, medical
supply, patient therapy, case management and rehabilitation services. Age agrees
to promptly review and approve all such proposed contracts which are competitive
with the prevailing market rates for such services in the Facilities' market
area and which, with respect to services that could be provided by the
Facilities, are not expected to exceed the costs that the Facilities would incur
if the same services were provided internally and directly by the Facilities.
SECTION 10 REPRESENTATIONS AND WARRANTIES. Age, Manager and Genesis make the
following representations and warranties to the other parties:
10.1 Status. The representing party is a corporation duly
organized and validly existing in good standing under the laws of its state of
incorporation, and has all necessary power to carry on its business as now being
conducted, to operate its properties
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as now being operated, to carry on its contemplated business, to enter into this
Agreement and to observe and perform its terms.
10.2 Authority and Due Execution. The representing party has
full power and authority to execute and to deliver this Agreement and all
related documents and to carry out the transactions contemplated by this
Agreement. The execution of this Agreement by such party will not, with the
passing of time, the giving of notice, or both, result in a default under or a
breach or violation of such party's (i) organizational documents; or (ii) any
law, regulation, court order, injunction or decree of any court, administrative
agency or governmental body; (iii) or any mortgage, note, bond, indenture,
agreement, lease, license, permit or other instrument or obligation to which
such party is now a party or by which such party or any of its assets may be
bound or affected. This Agreement constitutes a valid and binding obligation of
the representing party, enforceable against such party in accordance with its
terms, except to the extent that its enforceability is limited by applicable
bankruptcy, reorganization, insolvency, receivership or other laws of general
application or equitable principles relating to or affecting the enforcement of
creditors' rights.
10.3 Litigation. There is no litigation, claim, investigation,
challenge or other proceeding pending or, to the knowledge of the representing
party, threatened against such party, its properties or business which seeks to
enjoin or prohibit it from entering into this Agreement.
SECTION 11 TERMINATION
11.1 Termination for Cause.
(a) Bankruptcy, etc. If either party is dissolved or
liquidated, or shall apply for or consent to the appointment of a
receiver, trustee or liquidator of it or all or a substantial part of
its assets, file a voluntary petition in bankruptcy, make a general
assignment for the benefit of creditors, file a petition or an answer
seeking reorganization or arrangement with creditors or take advantage
of any insolvency law, or if an order, judgment or decree shall be
entered by a court of competent jurisdiction, on the application of a
creditor, adjudicating the party a bankrupt or insolvent or approving a
petition seeking reorganization of the party or appointing a receiver,
trustee or liquidator for the party or all or a substantial part of its
assets, and such order, judgment or decree shall continue unstayed and
in effect for any period of ninety (90) consecutive days, then in case
of
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any such event, this Agreement shall immediately expire, at the other
party's option.
(b) Default. If Age or Manager shall fail to keep,
observe or perform any material covenant, agreement, term or provision
of this Agreement to be kept, observed or performed by it, or Age shall
unreasonably withhold its approval of the budget submitted by the
Manager, and such default shall continue for a period of thirty (30)
days after written notice by the non-defaulting party to the other
specifying the default in question and requesting that the default be
cured, then in case of any such event and upon the expiration of any
applicable period of grace this Agreement shall expire, at the option
of the non-defaulting party on ten (10) days further written notice to
the other party, except that with respect to non-monetary defaults of
Age or Manager, if the defaulting party has commenced cure within such
thirty (30) day period, and diligently pursues such cure after the
thirty (30) day period, or in good faith contests the alleged
non-monetary default, then the right to give such ten (10) day notice
of termination shall be suspended for the time necessary to effect such
cure, or pending resolution of such contest, as applicable. Such
termination by Manager shall be without prejudice to Manager's right to
receive all of the fees and reimbursements provided in this Agreement,
including reimbursements for the cost of employees of the Facilities.
(c) Other Causes. In addition to its rights set forth
above, Age shall have the right, after thirty (30) days prior written
notice to Manager to terminate this Agreement if because of Manager's
gross negligence or willful misconduct: (i) there has been a formal
notice by the appropriate governmental or regulatory agency (the
"Notice"), that the operating license for the Facilities will be
revoked or suspended, which Notice is not rescinded, vacated or stayed
by action of Manager (or otherwise) within thirty (30) days of its
issuance; (ii) the Facilities shall have received formal notice that it
will lose eligibility for reimbursement under Medicare or Medicaid
which notice is not rescinded, vacated or stayed by action of Manager
(or otherwise) within thirty (30) days of its issuance; (iii) a "bed
hold" has been imposed on the comprehensive care beds of the Facilities
and remains in effect for more than sixty (60) consecutive days by the
appropriate governmental agency; (iv) Manager fails, within the time
permitted by such applicable regulatory body, after receipt of notice
thereof, to correct any material standards and/or conditions of
participation capable of such correction (or obtain waivers for such
standards and/or conditions of participation), or fails to diligently
prepare a Plan of Correction for any remaining material standards
and/or
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conditions of participation for which the applicable Facilities is
cited pursuant to any licensure and/or certification survey or fails to
materially implement the Plan of Correction within the time permitted
for such corrections; and such failure causes one of the events
described in (i) through (iii) above to occur.
11.2 Partial Termination Upon Destruction or Taking. Age and
the Manager each has the option to terminate this Agreement as to a specific
Facility upon thirty (30) days prior written notice to the other upon the
occurrence of either of the following events:
(i) the Facility or any material portion of the
Facility is damaged or destroyed to the extent that in the written
opinion of an independent architect or engineer reasonably acceptable
to both parties (A) it is not practicable or desirable to rebuild,
repair or restore the Facility to its condition immediately preceding
such damage within a period of twelve (12) months; or (B) the conduct
of normal operations of the Facility would be prevented for a period of
twelve (12) months or more; or
(ii) title to or the temporary use of, all or
substantially all of the Facility is taken under the exercise of the
power of eminent domain by a governmental authority which in the
opinion of an independent architect or engineer reasonably acceptable
to both parties, prevents or is likely to prevent the conduct of normal
operations at the Facility for a period of at least twelve (12) months.
If termination of this Agreement with respect to a particular
Facility occurs as a result of any of the events described above in this Section
11.2, then (a) this Agreement shall terminate only as to the Management of that
Facility, but shall continue in full force and effect with respect to all other
Facilities as to which this Agreement has not been terminated, and (b) if Age or
any Affiliate of Age rebuilds, restores or otherwise rearranges the Facility and
recommences operations thereof, Age shall give Manager the first option to
manage such Facility, which option must be accepted by Manager within ninety
(90) days of receipt of such notice from Age, under the same terms, conditions
and fees as provided in this Agreement.
11.3 Effect of Termination. Upon any termination of this
Agreement by Manager for cause or by Age without cause (except, in either case,
any termination under Section 11.2 of this Agreement), all amounts due to
Manager from Age or payable to Manager from Age under the remaining term of this
Agreement or otherwise shall be immediately due and payable.
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SECTION 12 NOTICES. Any notice, communication or demand requiring or permitted
to be given under this Agreement shall be in writing (including facsimile
communications) and shall be sent by first-class mail,or by
nationally-recognized overnight courier, or by facsimile transmission or by
personal delivery. All notices shall be sent to the applicable party at the
following addresses addressed as follows:
12.1 To Age, by addressing the same to:
Age Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, PA 17201
12.2 To Manager, by addressing the same to:
Genesis Eldercare Network Services, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: Chairman and Chief Executive
Officer
Attention: Law Department
Any such properly given notice shall be effective on the earliest to occur of
receipt, telephone confirmation of receipt of facsimile communication, one
business day after delivery to a nationally recognized overnight courier, or
five business days after deposit in the mail, return receipt requested.
SECTION 13 COSTS AND EXPENSES; INDEMNITY; EXCULPATION.
13.1 Age's Responsibility for Expenses. Except as otherwise
expressly provided in this Agreement, all fees, costs, expenses and purchases
arising out of, relating to or incurred in the operation of the Facilities,
including, without limitation, the fees, costs and expenses of consultants and
professionals, shall be the sole responsibility of Age. Manager, by reason of
the execution of this Agreement or the performance of its services under this
Agreement, shall not be liable for or deemed to have assumed any liability for
such fees, costs and expenses, or any other liability or debt of Age whatsoever,
arising out of or relating to the Facilities or incurred at its central
administrative offices in the performance of its obligations hereunder. Manager
shall have no obligations to advance any sums required to maintain necessary
licenses and permits and to otherwise keep the Facilities operating, without
assurances that
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the necessary funds for the discharge of any such liability of any such
obligation will be punctually paid by Age.
13.2 Indemnification by Age. Age shall indemnify and hold
Manager and Genesis harmless from and against any and all claims, losses, costs,
damages, and liabilities, including reasonable attorneys' fees, incurred, caused
or occasioned by, in connection with or arising out of this Agreement or the
acts or omissions of Age, its agents, employees or contractors, including,
without limitation, Age's violation or failure to perform, or misrepresentation
with respect to, any of the terms covenants or conditions of this Agreement,
except if such claim, loss, cost, damage or liability results from the
negligence or willful misconduct of Manager or Genesis.
13.3 Indemnification by Manager and Genesis. Manager and
Genesis shall indemnify and hold Age harmless from and against any and all
claims, losses, costs, damages, and liabilities, including reasonable attorneys'
fees, incurred, caused or occasioned by, in connection with or arising out of
this Agreement or the acts or omissions of Manager, its agents, employees or
contractors, including, without limitation, Manager's violation or failure to
perform, or misrepresentation with respect to, any of the terms covenants or
conditions of this Agreement, except if such claim, loss, cost, damage or
liability results from the negligence or willful misconduct of Age.
13.4 Exculpation. Notwithstanding anything to the contrary
contained in this Agreement, the liability and obligation of Age to perform and
observe and make good its obligations contained in this Agreement and in any
contracts entered into between Manager and its Affiliates on behalf of Age in
connection with the operation of the Facilities (which contracts shall likewise
contain the same exculpation) and to pay the Management Fee in accordance with
the provisions of this Agreement shall not be enforced by any action or
proceeding wherein damages or any money judgment or any deficiency judgment or
any judgment establishing any personal obligation or liability shall be sought,
collected or otherwise obtained against Age or against any past, present or
future partner, member, officer, director or shareholder of Age, and Manager,
for itself and its successors and assigns, hereby irrevocably, knowingly,
voluntarily and intentionally waives any and all right to sue for, seek or
demand any such damages, money judgment, deficiency judgment or personal
judgment against Age or against any past, present or future partner, member,
officer, director or shareholder of Age under or by reason of or in connection
with this Agreement and agrees to look solely to Gross Revenue (as defined in
Section 15.16(c) of this Agreement) and to the Collateral under the Acquisition
Loan Agreement for the enforcement of such liabilities and obligations of Age.
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SECTION 14 AFFILIATION WITH GENESIS HEALTH NETWORK. Age agrees to affiliate with
Genesis and become a member of the Genesis Health Network. Genesis accepts Age's
admission as an affiliate of the Genesis Health Network which affiliation may be
terminated by Genesis or Age at any time, with or without cause. As long as Age
is affiliated with the Genesis Health Network, Genesis agrees to:
14.1 Provide Age with the opportunity to purchase Facilities
goods and services through The Tidewater Shared Services Group, a wholly-owned
subsidiary of Genesis, which is a qualified group purchasing organization.
14.2 As such management information systems are developed,
provide Age with access to computer data bases developed by Genesis providing
on-line access to Genesis Health Network clinical operating systems and quality
assurance programs; provided, that, any such access will be at an additional
cost to Age.
14.3 Admit patients to the Facilities through agreements
negotiated between Genesis and third party payors, from time to time, for the
admission and treatment of their subscribers at long-term care facilities
affiliated with the Genesis Health Network. Such agreements may reflect
alternative compensation\reimbursement methodologies including fee for service,
discounts from fee for service and managed care programs.
14.4 Process referrals from third party payors for admission
into long-term care facilities affiliated with the Genesis Health Network,
including the Facilities. Such referrals shall be made at Genesis' sole
discretion. At Age's request, on a case by case basis, Genesis will advise Age
on pricing and assessing referrals received directly by Age for the provision of
care on a managed care basis.
14.5 For patients at the Facilities referred through the
Genesis Health Network, oversee the coordination of patient care, including,
without limitation, discharge planning and patient reporting; centrally process
all patient billings with appropriate third party payors; and collect and
process all data relating to patient outcomes . Genesis will provide Age with
copies of all discharge reports provided to third party payors for Facilities
patients.
SECTION 15. MISCELLANEOUS.
15.1 Confidentiality. Age acknowledges that Genesis or
its Affiliates retain all ownership and other rights in all
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proprietary systems, manuals, materials, data bases, protocols, contracts,
procedures, seminars and programs, and other information, in whatever form,
developed by Genesis, Manager or its Affiliates independently or in the
performance of its services under this Agreement, including, without limitation,
all clinical protocols and training programs provided to Age pursuant to this
Agreement (collectively, "Genesis Confidential Information"). Nothing contained
in this Agreement shall be construed as a license or transfer of any Genesis
Confidential Information to Age either during the term of this Agreement or
otherwise. Upon termination of this Agreement, all use of such Genesis
Confidential Information by Age shall cease and all such property shall be
immediately returned to Genesis. Without the prior written consent of Genesis,
Age will not in any manner disclose to any third party any of the terms of any
Genesis Confidential Information, or use such information except pursuant to
this Agreement. The confidentiality obligations under this Agreement of Age
shall terminate with respect to any Genesis Confidential Information to the
extent that such information is or becomes part of the public domain through no
fault of the party receiving such information or its affiliates or is
independently developed by the recipient without any reference to any
information obtained from or through the provider. At the request of Genesis,
Age agrees to execute a confidentiality agreement evidencing the obligations
contained in this Section.
15.2 Public Relations. Age agrees that Genesis may publish the
name, address telephone number and other descriptive information about Age
and/or the Facilities, in its promotional and informational materials. Genesis
agrees that as long as Age is affiliated with the Genesis Health Network, Age,
with Genesis' consent not to be unreasonably withheld, may publish that it is a
member of the Genesis Health Network in its promotional materials. Age
acknowledges that Genesis is a public company and Age agrees that Genesis will
have exclusive control in developing public statements or press releases in
connection with any non-routine issues arising from the parties relationship
evidenced by this Agreement which Genesis determines may require disclosure to
the public.
15.3 Government Regulations. In accordance with their
respective obligations under this Agreement, Age and Manager shall operate and
maintain the Facilities in compliance with the requirements of any statute,
ordinance, law, rule, regulation or order of any governmental or regulatory body
having jurisdiction over the Facilities. If for any reason any term or condition
of this Agreement is found to be invalid or contrary to government laws, rules,
regulations or orders, Age, Manager and Genesis agree to immediately and in good
faith modify such term or condition to comply with such government law, rule,
regulation or order.
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15.4 Good Faith Effort by Manager. Manager shall act in good
faith and use its reasonable efforts to perform its obligations under this
Agreement, but shall have no liability to Age for any decisions made with
respect to or any actions taken or in the omission of any actions in connection
with the Facilities' operations, so long as such decisions, actions or omissions
were made or taken in good faith and met the standards of care set forth herein.
Any action taken or omitted by Manager in reliance on written advice from
accountants with respect to financial reporting matters or legal counsel with
respect to legal questions shall be conclusively deemed to have been taken in
good faith. The liability of Manager to Age is limited to actual damages
suffered by Age as a direct and proximate result of Manager's breach under any
provision of this Agreement. Manager makes no warranties, express or implied,
and shall not assume any financial or other responsibilities in connection with
its obligations under this Agreement, except as specifically provided in this
Agreement. Manager shall be responsible for managing the Facilities and all of
their assets and services with the same diligence and skill as is employed by
prudent owners and managers in the management of similar healthcare facilities,
and consistent with the provisions of this Agreement and in substantial
compliance with all obligations imposed on Age which are known or reasonably
should be known by Manager.
15.5 Assignment. Neither Manager or Age shall assign its
rights or obligations under this Agreement without prior written consent of the
other party. Notwithstanding the foregoing, Manager may at any time assign its
rights and obligations under this Agreement to an Affiliate of Manager, provided
that any such assignment shall not release Manager of its obligations under this
Agreement unless Age consents to such a release.
15.6 Retention of Control by Age. Age shall at all times
continue to exercise control over the assets and operations of the Facilities,
and Manager shall perform its responsibilities as described in this Agreement in
accordance with written policies and directives adopted by Age. By entering into
this Agreement, Age does not delegate to Manager any of the powers, duties and
responsibilities vested in Age by law, or by its governance documents. Age may,
according to the terms of this Agreement, (a) direct Manager to implement
existing Facilities policy, (b) adopt as Facilities policy, recommendations or
proposals made by Manager, or (c) adopt as Facilities policy Age's own proposals
notwithstanding any objection by Manager; provided that any such policy shall be
consistent with the terms of this Agreement. Age shall have the right to approve
the Annual Budget.
15.7 Books and Records. Manager shall make available to Age
for inspection and copying by Age upon request, all books and
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records and financial data relating to the Facilities. Manager shall provide Age
with copies of all licensure and/or certification surveys conducted at the
Facilities.
15.8 Force Majeure. Manager shall not be deemed to be in
violation of this Agreement if it is prevented from performing any of its
obligations under this Agreement for any reason beyond its control including,
without limitation, strikes, lockouts, acts of God, unavailability of residents,
personnel, supplies, unforeseen changes in statutes, regulations or rules of
appropriate governmental or other regulatory authorities.
15.9 Binding Agreement. The terms, covenants, conditions,
provisions and agreements contained in this Agreement shall be binding upon and
inure to the benefit of Age and Manager, their successors and assigns.
15.10 Relationship of Parties. Nothing contained in this
Agreement shall constitute or be construed to be or to create a partnership,
joint venture or lease between Age and Manager with respect to the Facilities.
15.11 Entire Agreement; Amendments. This Agreement contains
the entire agreement between the parties hereto with respect to the subject
matter, and no prior oral or written, and no contemporaneous oral,
representations or agreements between the parties with respect to the subject
matter of this Agreement shall be of any force and effect. Any additions,
amendments or modifications to this Agreement shall be of no force and effect
unless in writing and signed by both Age and Manager.
15.12 Governing Law. This Agreement is made under, and shall
be construed and enforced in accordance with, the laws of the State of Florida
applicable to agreements made and to be performed solely therein, without giving
effect to principles of conflicts of law.
15.13 Arbitration of Accounting Matters. If any controversy
should arise between the parties in the performance, interpretation and
application of this Agreement which involves accounting matters, either party
may serve upon the other a written notice stating that such party desires to
have the controversy reviewed by an arbitrator, who shall be a representative of
a firm specializing in accounting in the nursing home area of medical services.
If the parties cannot agree within fifteen (15) days from the service of such
notice, upon the selection of such an arbitrator, the arbitrator shall be
selected or designated by the American Arbitration Association upon the written
request of either party hereto. Arbitration of such controversy, disagreement or
dispute shall be conducted in accordance with the rules then in
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force of the American Arbitration Association and the decision and award of the
arbitrator so selected shall be binding upon Age and Manager.
15.14 Maintenance of Books, Records and Documents.
(a) Until the expiration of four (4) years after the
furnishing of services pursuant to this Agreement, Manager shall, as provided in
Section 952 of the Omnibus Reconciliation Act of 1980, and regulations
promulgated thereunder make available, upon written request, to the Secretary of
the United States Department of Health and Human Services, or upon request, to
the Comptroller General of the United States, or any of their duly authorized
representatives, this Agreement, and all books, documents and records of Manager
that are necessary to verify the nature and extent of the costs of any services
furnished pursuant to this Agreement for which payment may be made under the
Federal Medicare Program.
(b) If Manager carries out any of the duties of this
Agreement through a subcontract or subcontracts with an aggregate value or cost
of Twenty Five Thousand Dollars ($25,000) or more over a twelve (12) month
period with a related organization, such subcontract or subcontracts shall
contain a clause to the effect that until the expiration of four (4) years after
the furnishing of such services pursuant to such subcontract or subcontracts,
the related organization shall, as provided in Section 952, make available, upon
written request, to the above referenced Federal officials, or any of their duly
authorized representatives, the subcontract or subcontracts, and all books,
documents and records of such organization that are necessary to verify the
nature and extent of the costs of any services furnished pursuant to such
subcontract or subcontracts for which payment may be made under the Medicare
program.
15.15 Further Assurances. At any time and from time to time
during the term of this Agreement, at the request of either party (the
"Requesting Party"), the other party (the "Other Party") shall promptly execute
and deliver all such further agreements, certificates, instruments and
documents, including a certificate of the Other Party in a form reasonably
satisfactory to the Requesting Party stating that this Agreement is in effect
with respect to, and is binding against, the Other Party, and the Other Party
shall perform such further actions, as the Requesting Party may reasonably
request in order to fully consummate the transactions contemplated by this
Agreement and carry out the purposes and intent of this Agreement.
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15.16 Certain Definitions.
(a) Affiliate. The term "Affiliate," as used in this
Agreement, means a person that, directly or indirectly, controls or is
controlled by, or is under common control with, the person specified.
(b) Person. The term "person," as used in this
Agreement means any individual, sole proprietorship, joint venture, corporation,
partnership, governmental body, regulatory agency or other entity of any nature.
(c) Gross Revenue. The term "Gross Revenue," as used
in this Agreement, means all operating revenues and non-operating revenues,
receipts, rentals and income and other moneys of, or received by or on behalf
of, the Facilities from all sources, and all rights to receive the same, whether
in the form of accounts receivable, contract rights, chattel paper, instruments,
general intangibles or other rights and all proceeds thereof, including net
insurance proceeds and net condemnation awards paid in respect of the Facilities
and not applied in restoration thereof, whether now existing or hereafter coming
into existence and whether now owned or hereafter acquired, and the proceeds
thereof, including revenues derived from ownership, operation or leasing of the
Facilities, including fees paid or payable by residents of the Facilities.
(d) Net Revenue. The term "Net Revenue," as used in
this Agreement, means Gross Revenue, excluding income to Age from interest and
similar passive investments unrelated to the operation of the Facility.
15.17 Severability. If any provision of this Agreement is
construed to be invalid, illegal or unenforceable, then the remaining provisions
hereof shall not be affected thereby and shall be enforceable without regard
thereto.
15.18 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original hereof, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one original counterpart
hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on their behalf their duly authorized representatives, as of the day
and year first above written.
OWNER:
AGE INSTITUTE OF FLORIDA, INC.
ATTEST:___________________ By:_____________________________
Name: Name:
Title: Title:
MANAGER:
GENESIS ELDERCARE NETWORK SERVICES,
INC.
ATTEST:___________________ By:____________________________
Name: Name:
Title: Title:
GENESIS HEALTH NETWORK AFFILIATION:
GENESIS HEALTH VENTURES, INC.
ATTEST:___________________ By:____________________________
Name: Name:
Title: Title:
<PAGE>
Exhibit 10.48
ACQUISITION LOAN AND SECURITY AGREEMENT
Dated as of August 31, 1996
between
GENESIS HEALTH VENTURES, INC.
and
AGE INSTITUTE OF FLORIDA, INC.
<PAGE>
ACQUISITION LOAN AND SECURITY AGREEMENT
This ACQUISITION LOAN AND SECURITY AGREEMENT is made and entered into
as of this 31st day of August, 1996, between AGE INSTITUTE OF FLORIDA, INC., a
Florida non-profit corporation (together with its successors in interest and
assigns, "Borrower") and GENESIS HEALTH VENTURES, INC., a Pennsylvania business
corporation (together with its successors in interest and assigns, "Lender").
BACKGROUND
A. On the date hereof, Borrower has acquired from Edgemont
Partners, L.P., a Tennessee limited partnership ("Edgemont") eleven (11) health
care facilities located in Pinellas, Polk, Volusia, Bay and Okaloosa Counties in
the State of Florida as listed on Exhibit "A" attached hereto and made a part
hereof (collectively, the "Facilities"), together with all equipment, fixtures
and other tangible and intangible assets of Edgemont as more particularly
described in that certain Asset Purchase Agreement dated the date hereof by and
between Borrower and Edgemont (the "Asset Purchase Agreement") (the Facilities
and all such equipment, fixtures and assets, collectively, the "Property").
B. Borrower has requested and Lender has agreed to advance a certain
acquisition loan upon the terms and conditions more particularly set forth
below, which loan is intended to be secured by, among other things, a first
priority mortgage lien on each of the Facilities and a second priority lien on
and security interest in Gross Patient Accounts Receivable (as hereinafter
defined) and all Personal Property (as hereinafter defined).
Terms
NOW, THEREFORE, in consideration of the terms and conditions
set forth herein, and of any loans, advances, or extensions of credit
heretofore, now or hereafter made to or for the benefit of the Borrower by
Lender, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Loans.
1.1 Commitment for Loans. Subject to the terms and conditions
hereof, and in reliance on the representations and warranties contained in this
Agreement, Lender agrees to make an acquisition loan (the "Acquisition Loan") to
Borrower in the principal amount of FORTY-FIVE MILLION DOLLARS ($45,000,000.00).
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1.2 Note. Borrower's obligation to repay the Acquisition Loan
with interest in accordance with the terms of this Agreement shall be evidenced
by a single promissory note (the "Note") in the amount of Forty-Five Million
Dollars ($45,000,000.00) substantially in the form of Exhibit 1.2 attached
hereto. The Note shall be dated the date of this Agreement, shall mature and
become due and payable on the Maturity Date (as hereinafter defined) and shall
bear interest as set forth in Section 1.3.
1.3 Payment of Principal and Interest on Acquisition Loan. The
outstanding principal amount of the Acquisition Loan and all interest then due
or accrued thereon if not sooner paid shall be paid in full on August 31, 2001
(as may be extended pursuant to the provisions of Section 1.10 hereof, the
"Maturity Date"). Borrower shall pay interest on the unpaid principal amount of
the Acquisition Loan at a rate per annum of ten and one-quarter percent (10
1/4%), payable in arrears, commencing on October 1, 1996 and on the first day of
each and every calendar month thereafter up to and including September 1, 1997.
Commencing on September 1, 1997 (the "First Escalation Date") and on each
ensuing anniversary thereof (each such date being an "Escalation Date") until
the Maturity Date, the interest rate per annum of the Acquisition Loan shall be
increased by the same percentage by which the cost of health care shall have
increased over such cost for the immediately preceding year, as such increase is
reflected in that certain Consumer Price Index for All Urban Consumers:
(1982-84=100) for Medical Care Services: Hospital and Related Services
promulgated by the United States Bureau of Labor Statistics (the "Index") and,
the increased per annum interest rate being so determined on a given Escalation
Date, Age shall pay interest only at such increased interest rate on the unpaid
principal amount of the Acquisition Loan from time to time on the first day of
each calendar month following a given Escalation Date until the next Escalation
Date, this process to be repeated until the Maturity Date. Interest shall be
calculated based upon a three hundred sixty (360) day year and charged on the
basis of actual days elapsed.
1.4 Security for the Acquisition Loan.
(a) Borrower hereby grants to Lender (i) a first priority lien and
security interest on the Facilities and all proceeds and products thereof,
together with all documents, contracts, guarantees, books and records,
processing cards, tapes, tabulating runs, programs and similar material related
thereto and (ii) a second priority lien and security interest on all of
Borrower's Gross Patients Accounts Receivable and other personal property
utilized in the Facilities or in connection with the operation thereof, tangible
or intangible, whether now owned or hereafter
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acquired, and all proceeds and products thereof, together with all documents,
contracts, guarantees, books and records, processing cards, tapes, tabulating
runs, programs and similar material related thereto (collectively, "Personal
Property;" and together with the Facilities, the "Collateral"). Said liens shall
secure the repayment of the Acquisition Loan. Said liens shall also secure the
payment of management fees owed to Genesis Eldercare Network Services, Inc.
(together with any successors, the "Manager") and payments with respect to
services supplied to the Facility by Lender, Manager, or affiliates of either,
for pharmaceutical, rehabilitation and other services as permitted by that
certain Management Agreement dated the date hereof between Lender, Borrower and
Manager (as amended, modified, renewed, restated, or substituted from time to
time, the "Management Agreement"). Notwithstanding the foregoing, in the absence
of an Event of Default (as defined herein), Borrower shall be entitled to pay
from the Gross Patients Accounts Receivable ordinary and necessary expenses and
costs of operation of the Facilities, including, without limitation, payroll
expenses and utility charges and the payment of Home Office Fees (as defined and
permitted herein).
(b) This Agreement constitutes a security agreement under the
Pennsylvania Uniform Commercial Code and the Florida Uniform Commercial Code.
Borrower agrees to execute and/or deliver to Lender all security documents,
assignments, financing statements and other documents requested by Lender or its
affiliates from time to time to perfect and protect its interest in the
Collateral and enforce this Agreement at Borrower's sole expense.
1.5 Use of Proceeds. Borrower shall use the proceeds of the
Acquisition Loan solely for the purchase of the Property from Edgemont.
1.6 Payment. Any principal, interest, or other obligations
payable by Borrower hereunder shall be paid to Lender in immediately available
funds before 12:00 noon (Eastern time) on the date due at the principal office
of the Lender set forth in this Agreement.
1.7 Prepayment. Borrower may, without premium or penalty,
prepay at any time the Acquisition Loan, in whole or in part, by paying to
Lender the amount to be prepaid with accrued interest thereon to the date of
such prepayment by 12:00 noon (Eastern time) on any business day.
1.8 Late Charges; Default Interest.
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(A) If any scheduled payment of principal or
interest, or any other agreed charge, is not paid within ten (10) days after
due, Borrower agrees to pay Lender a late charge equal to five percent (5%) of
the amount of such payment or charge.
(B) If Borrower shall default in the payment of the
principal or interest on the Acquisition Loan or any other amount becoming due
hereunder, whether by scheduled maturity, acceleration or otherwise, Borrower
shall on demand from time to time pay interest, to the extent permitted by law,
on the outstanding amount of the Acquisition Loan and other overdue amounts
outstanding up to the date of actual payment (after as well as before judgment)
at a rate equal to 3% per annum above the interest rate then applicable to the
Acquisition Loan.
1.9 Maximum Rate. Nothing contained in this Agreement or the
Note shall require Borrower to pay interest at a rate prohibited by applicable
statute. If interest payable to Lender on any date would be in a prohibited
amount, it shall be automatically reduced to an amount which is not prohibited
and any amounts paid in excess of the prohibited amount shall be applied to the
reduction of the principal of the Note.
1.10 Extension of Maturity Date. Borrower may provide Lender
notice no later than 12:00 noon (Eastern time) at least ninety (90) days prior
to the current Maturity Date that Borrower desires to extend the Maturity Date
of the Acquisition Loan for an additional period of five years. In such case,
the Maturity Date shall be extended to August 31, 2006, and the monthly payments
under this Agreement for each year of the extended term shall be increased to
include a repayment of principal in such amounts as would be necessary to
amortize fully the then outstanding principal balance of the Acquisition Loan
over 30 years (with respect to year one of the extended term), 29 years (with
respect to year two of the extended term), 28 years (with respect to year three
of the extended term), 27 years (with respect to year four of the extended
term), and 26 years (with respect to year five of the extended term),
respectively, at the then applicable interest rates.
2. Conditions Precedent to Acquisition Loan. The obligation of Lender
to fund the Acquisition Loan hereunder shall be subject to the prior or
concurrent fulfillment of each of the following conditions precedent:
2.1 Representations. The representations and warranties of
Borrower contained in this Agreement and in any other writings delivered to
Lender pursuant hereto, or in connection herewith, on or prior to the date
hereof, shall be true and correct on and as of the date hereof.
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2.2 Deliveries to Lender. Lender shall have received on or
before the date hereof the following, each in form and substance satisfactory to
Lender:
(A) the Note, duly executed and delivered by
Borrower;
(B) The Mortgage covering each of the Facilities,
duly executed and acknowledged by Borrower;
(C) The Security Agreement, duly executed and
delivered by Borrower;
(D) appropriate financing statements on Form UCC-1,
duly executed by Borrower in proper form for filing in such offices as may be
necessary or, in the opinion of Lender, desirable to perfect the security
interests in the Collateral purported to be created by the Mortgage, the
Security Agreement and this Agreement;
(E) a marked-up commitment to issue a Title Insurance
Policy satisfactory to Lender with respect to each Facility;
(F) copies of all environmental reports prepared for
each of the Facilities;
(G) if required by Lender, searches of appropriate
state and local records listing all effective financing statements which name as
Borrower, Borrower or any predecessor of Borrower (or the owner of the assets of
Borrower or any predecessor of Borrower) which are filed in governmental
offices, together with copies of such financing statements, none of which shall
cover any of the Collateral;
(H) evidence of such insurance coverage with respect
to the respective business and operations of Borrower as Lender may reasonably
request;
(I) The following authorizing documents from
Borrower: (a) a copy of the resolutions adopted by its governing body (and if
required its members) certified by Borrower's authorized officer as of the date
hereof, authorizing the execution, delivery and performance of this Agreement,
the Note and the other Loan Documents; (b) an incumbency certificate with
officers' signatures; (c) a copy of Borrower's organizational documents and all
amendments thereto certified by the Secretary of Borrower as of the date hereof;
(d) a copy of the Borrower's bylaws or similar governance document, as amended,
certified by the Secretary of Borrower as of the date hereof; and (e) a good
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standing certificate from the Secretary of State of the state of organization of
Borrower;
(J) copies of all current licenses, certifications
and financial information as Lender shall reasonably require;
(K) a letter of direction from Borrower addressed to
Lender with respect to the disbursement of the proceeds of the funding;
(L) the favorable written opinion of counsel to
Borrower, dated the date hereof, in form and substance satisfactory to Lender
and as to such matters as Lender may reasonably request; and
(M) such other approvals, opinions or documents as
any Lender may reasonably request.
3. Representations and Warranties of Borrower. Borrower hereby
represents and warrants as follows:
3.1 Corporate Status. Borrower is a not for profit corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. Borrower has the power and authority to own its own property
and assets and to transact the business in which it is engaged. Borrower is not
required to qualify to do business in any state or jurisdiction except the State
of Florida. Borrower does not have any subsidiaries nor does Borrower operate
any portion of its business through any other person.
3.2 Corporate Power and Authority. Borrower has the power and
authority to execute, deliver and perform, as the case may be, the terms and
provisions of this Agreement, the Note and the other Loan Documents, and
Borrower has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement, the borrowings hereunder, the liens
granted upon the Collateral pursuant hereto, and the making and delivery of the
Note and the other Loan Documents. This Agreement constitutes, the Note and all
of the other Loan Documents, when executed and delivered pursuant hereto,
constitute or will constitute, the authorized, valid and legally binding
obligations of Borrower enforceable in accordance with their respective terms,
except to the extent that their enforceability is limited by applicable
bankruptcy, reorganization, insolvency, receivership or other laws of general
application or equitable principles relating to or affecting the enforcement of
creditors' rights.
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3.3 No Violation of Agreements or Laws. Borrower is not in
default under the provisions of any agreement to which it is a party and
Borrower is not in violation of any applicable provision of law or any
applicable regulation of any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, environmental laws and
regulations). Neither the execution and delivery of this Agreement, the Note or
any of the other Loan Documents nor the consummation of the transactions herein
or therein contemplated, nor compliance with the terms and provisions hereof or
thereof, will violate any applicable provision of law or any applicable
regulation, or any order, writ, injunction or decree of any court or
governmental department, commission, board, bureau, agency or instrumentality or
will conflict or will be inconsistent with, or will result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to impose)
any lien, charge or encumbrance upon any of the property or assets of Borrower
pursuant to the terms of any indenture, franchise, license, permit, mortgage,
deed of trust, agreement or other instrument to which Borrower is a party or by
which Borrower may be bound, or to which Borrower may be subject. No order,
consent, approval or authorization of any public body, agency, commission or
board is necessary for the execution, delivery and performance of this
Agreement, the Note or any of the other Loan Documents, except for such orders,
consents, approvals or authorizations which have been obtained.
3.4 Recording. There are no agreements, documents or
instruments that affect, and Borrower has not taken any action that will or may
affect, the first lien priority of Lender's security interest in the Borrower's
Facilities and the second lien priority of Lender's security interest in
Borrower's Personal Property.
3.5 Litigation and Labor Disputes. To Borrower's knowledge,
there are no actions, suits or proceedings, pending or threatened, against or
affecting Borrower before any court or before any governmental or administrative
body or agency, which if determined adversely to Borrower, individually or in
the aggregate, would have a material adverse effect on Borrower's business or
properties. Borrower is not a party to any labor dispute.
3.6 Good Title to Properties. Based on Lawyers Title Insurance
Corporation (commitment numbers 9602867, 2960352a, 2960352b, 9606449, 9602854
and 9606397, upon closing the acquisition, Borrower has good and marketable
title to its property and assets subject to no liens, mortgages, pledges,
encumbrances or charges of any kind, except the Permitted Liens.
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3.7 Franchises, License and Permits. Prior to the funding of
the Acquisition Loan, Borrower shall hold all material franchises, agreements,
licenses and grants of authority as are necessary in connection with the conduct
by it of its business, except that Borrower will not receive approval of its
application for licensure from the State of Florida as of the closing date of
the acquisition.
3.8 Outstanding Indebtedness. Except for (a) indebtedness
secured by Permitted Liens, (b) indebtedness represented by the Note and (c)
accounts and other current payables and accrued expenses arising from the
ordinary course of business, no material portion of which are past due, Borrower
does not have any indebtedness.
3.9 Trademarks, Patents, Licenses, Etc.. Borrower possesses
all necessary trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses needed to conduct its
businesses. Borrower does not know of, nor has Borrower received any notice of,
any conflict between its trademarks, trademark rights, trade names, trade name
rights, copyrights, patent rights and licenses and the rights or claimed rights
of others.
3.10 Names and Locations. Borrower does not operate or do
business, and, within the past five years, has not operated and done business,
under a fictitious, trade or assumed name, except the names set forth on Exhibit
3.10. All of the locations at which Borrower conducts its business are listed on
Exhibit 3.10.
3.11 Tax Returns and Payments. Borrower has filed all tax
returns required by law to be filed by it and has paid all taxes, assessments
and other governmental charges levied upon it and any of its respective
properties, assets, income or franchises which are due and payable, other than
those presently payable without penalty or interest.
3.12 Compliance with ERISA. Borrower is in compliance with all
applicable provisions of ERISA.
3.13 Financial Statements. Borrower is a newly formed
corporation and has no audited or unaudited financial statements as of the date
of this Agreement.
3.14 The Security Documents. The provisions of the Security
Documents are effective to create in favor of Lender a legal, valid and
enforceable security interest in all right, title and interest of Borrower in
the Collateral; when the Mortgage has been recorded and financing statements
have been filed in the
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offices in the jurisdictions listed in Exhibit 3.14 hereto, the Security
Documents shall constitute a fully perfected lien on, and security interest in
all right, title and interest of Borrower in the Collateral described therein to
the extent the filing of financing statements under the Uniform Commercial Code
is a permissible method of perfection of security interests in the Collateral
described therein in each such jurisdiction, subject to no prior liens except
(a) as permitted by Section 4.8, and (b) as to such liens as have been granted
pursuant to the Working Capital Loan Agreement; and the Mortgage and the
Security Agreement shall constitute a lien on the property described therein
subject to no prior liens.
3.15 Ownership. The ownership of Borrower is correctly and
accurately set forth on Exhibit 3.15 hereto.
3.16 Disclosure. Neither this Agreement nor any other Loan
Document delivered to Lender by or on behalf of Borrower in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in this Agreement and in such other documents, certificates
or instruments not misleading. There is no fact (other than matters of a general
economic or political nature which do not affect Borrower uniquely) which
materially adversely affects or in the future may (so far as Borrower can now
foresee) materially adversely affect the business, condition (financial or
otherwise), operations, properties or prospects of Borrower which has not been
set forth in this Agreement or in the other Loan Documents delivered to Lender
by or on behalf of Borrower specifically for use in connection with the
transactions contemplated by this Agreement.
4. Covenants.
So long as the Acquisition Loan remains outstanding or
unsatisfied, Borrower agrees to the following:
4.1 Reporting Requirements. Borrower will furnish to Lender:
4.1.1 as soon as available and in any event within
sixty (60) days after the end of each calendar quarter, unaudited financial
statements of Borrower for the calendar quarter then ended, prepared on a basis
consistent with the annual statements, and certified by an authorized financial
officer of Borrower to be true and correct;
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4.1.2 as soon as available and in any event within
one hundred and twenty (120) days after the end of each calendar year of
Borrower, financial statements of Borrower, prepared in accordance with
generally accepted accounting principles, and including a balance sheet, a
statement of income and expenses for the year then ended and which, at Lender's
request, shall be reviewed by a nationally recognized certified public
accounting firm or other independent certified public accounting firm acceptable
to Lender;
4.1.3 as soon as available and in any event within
fifteen (15) days of the end of each calendar quarter, an aged accounts
receivable report in sufficient detail to show amounts due by the account age
classifications of thirty (30) days, sixty (60) days, ninety (90) days, one
hundred twenty (120) days, and over one hundred twenty (120) days, certified by
an authorized financial officer of Borrower to be true and correct;
4.1.4 as soon as possible and in any event within
five (5) business days of the receipt by such Borrower, any and all notices
(regardless of form) from any licensing and/or certifying agency that Borrower's
license or the Medicare or Medicaid certification of Borrower is being revoked
or suspended, or that action is pending or being considered to revoke or suspend
Borrower's license or certification;
4.1.5 as soon as possible and in any event within
five (5) business days after Borrower obtains knowledge of the occurrence of a
Default or an Event of Default, or any material adverse change in the condition
or operations, financial or otherwise, of Borrower, the written statement of the
Authorized Financial Officer of Borrower setting forth the details of such
Default, Event of Default, event or material adverse change;
4.1.6 promptly after the commencement thereof but in
any event not later than five (5) business days after service of process with
respect thereto on, or the obtaining of knowledge thereof by, Borrower, notice
of each action, suit or proceeding before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality concerning the
operations, financial or otherwise, of Borrower;
4.1.7 as soon as practicable and in any event within
ten (10) Business Days of delivery to Borrower, a copy of any letter issued by
Borrower's independent public accountants or other management consultants with
respect to Borrower's financial or accounting systems or controls, including all
so-called "management letters;" and
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4.1.8 promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of Borrower as
Lender, may from time to time reasonably request.
Notwithstanding the foregoing, so long as the Management Agreement remains in
full force and effect and to the extent that the current Manager or an Affiliate
or successor thereof is the party with responsibility for any such report or
document, Borrower shall not be required to furnish Lender the reports and
documents required by subsections 4.1.1 through 4.1.5.
4.2 Use of Proceeds. Borrower will use the proceeds of the
Acquisition Loan made hereunder for the purposes set forth in Section 1.5.
4.3 Compliance with Laws, Etc. Borrower will comply in all
material respects with all applicable laws, rules, regulations and orders, and
all contracts and agreements to which it or its properties are subject, paying
before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or its
properties, and paying all lawful claims which if unpaid might become a lien or
charge upon any of its properties, except to the extent such taxes, assessments
and governmental charges or levies are contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof.
4.4 Preservation of Existence, Etc. Borrower will maintain and
preserve its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
4.5 Obtaining of Permits, Etc. Borrower will obtain, maintain
and observe all material permits, licenses, authorizations, approvals and
accreditation necessary or useful in the proper conduct of its business, except
that Borrower will use its best efforts to receive approval of its application
for licensure from the State of Florida.
4.6 Maintenance of Insurance. Borrower will maintain with
responsible and reputable insurance companies or associations insurance
(including, without limitation, comprehensive general liability and hazard
insurance) with respect to its properties and business, in such amounts and
covering such risks, as is required
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by any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated or as is required by any Loan Document.
4.7 Maintenance of Properties, Etc. Borrower will maintain and
preserve all of its properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the material provisions of all leases to which it
is or becomes a party or under which it now or hereafter occupies property, so
as to prevent any material loss or forfeiture thereof or thereunder.
4.8 Liens on Property. Borrower will not create or suffer to
exist, any lien, security interest or other charge or encumbrance, or any other
type of preferential arrangement, upon or with respect to any of its properties,
rights or other assets, whether now owned or hereafter acquired, other than the
following (referred to collectively as "Permitted Liens"):
4.8.1 the liens or security interests granted to
Lender pursuant to this Agreement and the other Loan Documents;
4.8.2 the liens to the Lender pursuant to that
certain Working Capital Loan and Security Agreement dated the date
hereof in the initial principal amount of $10,000,000;
4.8.3 liens for taxes, assessments or other
governmental charges which are non-delinquent or being contested in good faith
and by appropriate proceedings and with respect to which proper reserves have
been taken in accordance with generally accepted accounting principles;
4.8.4 deposits or pledges to secure obligations
under workers' compensation, social security or similar laws, or
under unemployment insurance; and
4.8.5 judgment liens that have been stayed or
bonded.
4.9 Indebtedness. Borrower will not create, incur, suffer to
exist any indebtedness other than (a) indebtedness created by the Loan Documents
and (b) indebtedness which is secured by Permitted Liens.
4.10 Merger, Consolidation. Borrower will not enter into any
merger, consolidation or similar transaction, or sell assign, lease or otherwise
dispose of (whether in one transaction or in a
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series of transactions), all or substantially all of its assets (whether now or
hereafter acquired), without the prior written consent of Lender, which may be
granted or refused by Lender in Lender's sole discretion.
4.11 Sale of Assets, Etc. Borrower will not assign, lease or
otherwise dispose of any of its properties or assets (whether now owned or
hereafter acquired) to any Person, other than sales in the ordinary course of
business for a full and fair consideration (except as prohibited by any Loan
Document), which in no event shall include a transfer for full or partial
satisfaction of a preexisting debt, unless pursuant to enforcement of this
Agreement.
4.12 Guaranties, Etc. Borrower will not assume, guarantee,
endorse or otherwise become directly or contingently liable, including, without
limitation, liable by way of agreement, contingent or otherwise, to purchase, to
provide funds for payment, or to supply funds, in connection with any
indebtedness of any other Person without the prior consent of Lender.
4.13 Change in Nature of Business. Borrower will not make any
material change in the nature of its business, or discontinue or liquidate any
material part of its operations without the prior written consent of Lender.
4.14 Pension Plans. Borrower will comply in all material
respects with all material requirements of ERISA and will notify Lender
immediately upon receipt by Borrower of any notice of the institution of any
proceeding or other action which may result in the termination of any employee
plan, and deliver to Lender, promptly after the filing or receipt thereof,
copies of all reports or notices relating to such proceeding or related action
which Borrower files or receives under ERISA with or from the Internal Revenue
Service, the Pension Benefit Guaranty Corporation, or the U.S. Department of
Labor.
4.15 Environmental Compliance. Borrower will with respect to
its properties (now owned or hereafter acquired) comply in all material respects
with applicable Environmental Laws, including, without limitation, obtaining,
remaining in material compliance with, and maintaining all necessary permits,
certificates, licenses, approvals and other authorizations required by such
Environmental Laws, and filing when due all notifications required by such
Environmental Laws in connection with its ownership or use of any real estate or
the operation of its business. Borrower shall not send any wastes to any site
listed or formally proposed for listing on the National Priority List
promulgated pursuant to CERCLA or to any site listed pursuant to
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any similar state law on any state list of hazardous substance sites requiring
investigation or clean-up.
4.16 Transactions with Affiliates; Payments to Affiliates.
Borrower will not directly or indirectly enter into any transaction with an
Affiliate on terms less favorable (including, but not limited to, price and
credit terms) to Borrower than would be the case if such transaction had been
effected at arms length with a Person other than an Affiliate.
4.17 Limitation on Leases. Borrower will not incur, create or
assume any commitment to make any direct or indirect payment, whether as rent or
otherwise, under any lease, rental or other arrangement for the use of real or
personal property, or both, without the prior consent of Lender.
4.18 Restricted Payments; Executive Compensation; Loans and
Advances. Borrower will not declare or make any (i) distributions in respect of
any ownership interest of Borrower or to any Affiliate of Borrower; (ii) any
payment of compensation to any officer, director of Borrower, any shareholder of
Borrower, or any Affiliate of any such Person, or (iii) any loans or advances to
any officer, director or shareholder of Borrower, or any Affiliate of any such
Person, except that Borrower will be paid certain home office fees
(collectively, the "Home Office Fee"), which Home Office Fee shall be paid from
net cash flow and have the priority of an operating expense, and may be paid
Excess Cash pursuant to the Management Agreement, any and all of which shall be
distributable as Borrower sees fit in its good business judgment. The Home
Office Fee shall be paid as follows: Fifty Thousand Dollars ($50,000) shall be
payable upon execution hereof; One Hundred Thousand Dollars ($100,000) shall be
payable in twelve (12) equal monthly installments of $8,333.33 each until and
including the first anniversary of the date hereof; from and after such date,
One Hundred Fifteen Thousand Dollars ($115,000) shall be payable in twelve (12)
equal monthly installments of $9,583.33; from and after the third anniversary of
the date hereof, One Hundred Thirty-Two Thousand Dollars ($132,000) shall be
payable in twelve (12) equal monthly installments of $11,000.00; and from and
after the fourth anniversary of the date hereof, and on each such anniversary
thereafter, the Home Office Fee shall be increased by the same percentage by
which the cost of health care shall have increased over the immediately
preceding year as evidenced by the Index; such increased Home Office Fee shall
be payable until the next ensuing anniversary hereof in twelve (12) equal
monthly installments.
4.19 Accounts Receivable. So long as Lender has a lien on
Borrower's accounts receivable, Borrower will not sell, discount or otherwise
dispose of notes, accounts receivable or other
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obligations owing to Borrower except for the purpose of collection in the
ordinary course of business, and except that Borrower may pay or distribute Home
Office Fees permitted pursuant to Section 4.18 hereof.
4.20 Inconsistent Agreements. Borrower will not enter into any
agreement containing any provision which would be violated or breached by any
borrowing hereunder or by the performance by Borrower of its obligations
hereunder or under any Loan Document.
4.21 Locations and Change In Names. The location of the
principal place of business and chief executive office of Borrower shall not be
changed, without thirty (30) days' prior written notice to Lender.
4.22 Debt Service Reserve Fund. Borrower agrees to establish,
out of the proceeds of the Acquisition Loan, a debt service reserve fund with
Lender in the amount of $1,153,125.00 for application by Lender against monthly
interest payments due under the Note in the event that Gross Patients Accounts
Receivable are insufficient at any time to fund such payments. Borrower grants
Lender a security interest in the debt service reserve fund to secure Borrower's
obligations to Lender under this Agreement. Borrower additionally grants to
Lender a right of setoff against all moneys from time to time held in such debt
service reserve fund, and Borrower shall not permit any other lien to exist upon
such debt service reserve fund. Moneys in such fund shall be invested in the
manner determined by Lender, but the interest thereon shall accrue to the
benefit of Borrower. Borrower shall have the right, with the consent of Lender,
to draw upon such fund for use for working capital or to pay for capital
improvements to the Facilities, any such withdrawn amounts to be repaid into the
fund by Borrower within six months following such withdrawal. Except as provided
in the immediately preceding sentence, Borrower shall have no obligation to
replenish the fund.
4.23 Capital Improvements Fund. Borrower agrees to establish,
out of the proceeds of the Acquisition Loan, a capital improvement fund with
Lender in the amount of $846,875.00. Moneys in the capital improvement fund
shall be invested in the manner determined by Lender, interest to accrue for
Borrower's benefit. Borrower hereby grants Lender a security interest in the
capital improvement fund to secure Borrower's obligations under this Agreement.
So long as no Event of Default exists hereunder, advances from the capital
improvement fund will be disbursed as follows:
4.23.1 each advance must be for reimbursement of
costs incurred or to be incurred by Borrower for capital
improvements or renovations to one or more of the Facilities;
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4.23.2 each request for an advance shall be
accompanied by invoices or other evidence reasonably acceptable to
Lender representing the amounts for which the Borrower seeks
payment;
4.23.3 if required by Lender, each request for an
advance shall be accompanied by lien waiver affidavits from contractors
performing any work with respect to the capital improvements to the Facilities;
4.23.4 Borrower shall submit its request for an
advance at least ten (10) days prior to the requested advance date.
5. Events of Default. If any of the following events of default (each
an "Event of Default") shall occur and be continuing (whatever the reason for
such Event of Default, whether it shall be voluntary or involuntary or be
affected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
instrumentality):
5.1 Subject to the terms and conditions contained herein,
Borrower shall fail to pay any principal of or interest on the Note (whether by
maturity, voluntary or required prepayment, acceleration, demand or otherwise)
or any amount payable hereunder in accordance with the terms of this Agreement,
and such failure shall remain unremedied for ten (10) days; or
5.2 Any representation or warranty made by Borrower in this
Agreement, the Note, or any other Loan Document shall have been incorrect in any
material respect when made; or
5.3 Borrower shall fail to perform or observe any term,
covenant, condition or agreement contained in this Agreement, the Note or any
other Loan Document to be performed or observed by Borrower (excluding matters
set forth in Section 5.1 above), and such failure shall remain unremedied for
thirty (30) days following written notice to Borrower; or
5.4 A default shall occur under that certain Working Capital
Loan and Security Agreement of even date between Borrower and Lender, as amended
or restated from time to time, and such default shall continue after the
expiration of any applicable grace period; or
5.5 Borrower shall default in payment or performance of any
material obligation or indebtedness not described above in excess of $50,000 to
Lender or any other Person and such failure shall continue after the expiration
of any applicable grace period,
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if such default is not being contested in good faith and by appropriate
proceedings with respect to which proper reserves have been taken in accordance
with generally accepted accounting principles; or
5.6 Borrower shall be generally not paying its debts as they
become due or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any petition
shall be filed by or against Borrower under the federal bankruptcy laws, or any
other proceeding shall be instituted by or against Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such person or for any substantial part
of its property; or Borrower shall take any action to authorize or effect any of
the actions set forth above in this Section and, in the case of the institution
of any involuntary proceeding against Borrower, such proceeding shall not be
discharged within ninety (90) days of its commencement; or
5.7 Any material provision of this Agreement, the Note or any
other Loan Document shall at any time for any reason be declared to be null and
void, or the validity or enforceability thereof shall be contested by Borrower
or a proceeding shall be commenced by Borrower or by any governmental agency or
authority having jurisdiction over Borrower seeking to establish the invalidity
or unenforceability thereof, or Borrower shall deny that it has any liability or
obligation purported to be created under this Agreement, the Note, or any other
Loan Document; or
5.8 A judgment or order for the payment of money exceeding any
applicable insurance coverage by more than $50,000 shall be rendered against
Borrower and either (a) enforcement proceedings shall have been commenced and be
unstayed or (b) there shall be any period of thirty (30) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
5.9 The Management Agreement shall terminate for any reason,
except for termination by Borrower for cause of the Management Agreement or for
Manager's termination thereof without cause; or
5.10 The sale of substantially all of the assets of any
Facility;
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then, at the election of Lender, Lender may by notice to Borrower, (a) declare
the Note and all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Note and all such
interest, and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower; and (b) exercise any and all of its
other rights under applicable laws, hereunder and under any other Loan
Documents; provided, that no notice need be given to Borrower upon the
occurrence of any Event of Default described in Section 5.7 and the obligations
shall be automatically accelerated.
6. Right of Set-Off. Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by Lender to or for the
credit or the account of Borrower against any and all of the obligations of
Borrower now or hereafter existing under the Loan Documents, irrespective of
whether or not Lender shall have made any demand hereunder or under any other
Loan Document, and although such obligations may be unmatured. Lender agrees
promptly to notify Borrower after any such set-off and application made by
Lender; provided, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
7. Definitions; Accounting and Other Terms.
7.1 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of such terms):
"Acquisition Loan" has the meaning given to such term in
Section 1.1 hereof.
"Affiliate", as to any Person, means any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person, or any relative (by blood or marriage) of such Person.
"Asset Purchase Agreement" has the meaning given to such term
in the Background Section hereof.
"Borrower" has the meaning given to such term in the
Preamble hereto.
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"Collateral" has the meaning given to such term in
Section 1.4 hereof.
"Default" shall mean any event or occurrence which with the
passing of time, the giving of notice, or both, could become an Event of
Default.
"Edgemont" has the meaning given to such term in the
Background Section hereof.
"Environmental Laws" means all statutes, laws, rules,
regulations or judicial rulings pertaining to health or the environment
applicable to the properties of Borrower, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as heretofore or hereafter amended, the Resource Conservation and Recovery Act
of 1976, as heretofore or hereafter amended, and any other federal, state or
local statute, law, rule, regulation, or judicial ruling, whether now or
hereafter in existence, relating to, or imposing standards of conduct
concerning, the existence, release, disposal or handling of any waste,
substance, or material (including, but not limited to, asbestos, petroleum
products, radon and any substances that are considered hazardous or toxic).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with the rules and regulations
promulgated thereunder as in effect from time to time.
"Escalation Date" has the meaning given such term in
Section 1.3 hereof.
"Event of Default" means any of the events set forth in
Section 5 hereof.
"Excess Cash" shall have the meaning ascribed to such term in
Section 7.2 of the Management Agreement.
"Facilities" has the meaning given to such term in the
Background Section hereof.
"First Escalation Date" has the meaning given to such term in
Section 1.3 hereof.
"Gross Patients Accounts Receivable" shall mean all accounts
receivable of Borrower, including all rights of Borrower, if any, arising from
the payment for goods sold or leased or for services rendered with respect to
the Facilities, including, without limitation, (i) all accounts arising from the
operation of the Facilities and (ii) all rights to payment from the Medicare
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program, Medicaid program or similar state or federal programs, boards, bureaus
or agencies and rights to payments from patients or private insurers and others
arising from the operation of their businesses, including rights to payment from
reimbursement contracts. Gross Patients Accounts Receivable shall include the
proceeds of the foregoing (whether cash or noncash, movable or immovable,
tangible or intangible) received from the sale, exchange, transfer, collection
or other disposition or substitution thereof; but shall not include (i) gifts,
grants, bequests, donations and/or contributions made to Borrower and (ii) with
respect to reimbursements from Medicare or Medicaid or like programs, those
accounts receivable in excess of allowable reimbursement amounts.
"Index" has the meaning given to such terms in Section
1.3 hereof.
"Home Office Fee" has the meaning given to such term in
Section 4.18 hereof.
"Lender" has the meaning given to such term in the
preamble hereto.
"Loan Documents" means, collectively, this Agreement, the
Note, and all other documents, instruments or agreements hereafter executed and
delivered to Lender by Borrower or others, evidencing or otherwise relating to
the Acquisition Loan and the Collateral.
"Maturity Date" has the meaning given to such term in
Section 1.3 hereof.
"Mortgage" means that certain Mortgage, Assignment of Rents,
and Security Agreement of even date given by Borrower in favor of Lender, as may
be amended, modified, or restated from time to time.
"Note" means Borrower's single promissory note, substantially
in the form of Exhibit 1.2 hereto, in the principal amount of Forty-Five Million
Dollars ($45,000,000), evidencing the indebtedness of Borrower to Lender
resulting from the making of Acquisition Loan, and any promissory note or notes
issued in exchange, renewal, or replacement therefor, evidencing the
indebtedness of Borrower to Lender resulting from the making of the Acquisition
Loan.
"Permitted Liens" has the meaning given to that term in
Section 4.8 hereof.
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"Person" means an individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or joint
venture, or a court or government or any agency or political subdivision
thereof.
"Personal Property" has the meaning given such term in
Section 1.4 hereof.
"Property" has the meaning given such term in the
Background Section hereof.
"Security Agreement" means that certain Security Agreement of
even date given by Borrower in favor of Lender, as may be amended, modified, or
restated from time to time.
"Security Documents" means, collectively, the Mortgage,
Security Agreement, and the UCC-1 financing statements.
7.2 Accounting and Other Terms. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed in
accordance with generally accepted accounting principles unless otherwise
expressly stated herein. All terms used in this Agreement which are defined in
Article 9 of the Uniform Commercial Code in effect in the State of Florida on
the date hereof and which are not otherwise defined shall have the same meanings
herein as set forth therein.
8. Miscellaneous.
8.1 Notices, Etc. Except as otherwise provided herein, all
notices, requests, consents, demands, approvals and other communications
hereunder shall be deemed to have been duly given, made, served or received if
in writing and on the same day as sent when delivered personally or by telecopy,
on the third day after being sent when mailed first class mail, postage prepaid,
or on the next day after being sent when delivered by an overnight delivery
courier, charges prepaid, to the respective parties to this Agreement as
follows:
(A) If to Borrower:
AGE Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, PA 17201
Attention: Carol A. Tschop, President
(B) If to Lender:
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<PAGE>
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Law Department
Attention: Chief Financial Officer
The designation of the person to be so notified or the address
of such person for the purposes of such notice may be changed from time to time
by similar notice in writing, except that any communication with respect to a
change of address shall be deemed to be given or made when actually received by
the party to whom such communication was sent. No other method of written notice
is precluded by this Section.
8.2 Amendments, Etc. No amendment of any provision of this Agreement or
the Note shall be effective unless it is in writing and signed by Borrower and
Lender, and no waiver of any provision of this Agreement or the Note, nor
consent to any departure by Borrower therefrom, shall be effective unless it is
in writing and signed by Borrower and Lender and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
8.3 No Waiver; Remedies, Etc. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies of
Lender provided herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of Lender under any Loan Document against any party thereto are not
conditional or contingent on any attempt by Lender to exercise any of its rights
under any other Loan Document against such party or against any other person.
8.4 Fees, Costs, Expenses and Taxes. Whether or not any advances under
the Acquisition Loan are made hereunder or the transactions contemplated hereby
are consummated, Borrower will pay on demand all fees, costs and expenses in
connection with the preparation, execution, delivery, filing, and recording, if
applicable, of the Loan Documents and the other documents to be delivered under
the Loan Documents, and all costs and expenses, if any, in connection with any
waiver or amendment of any Loan Document or in connection with the enforcement
of the Loan Documents and the other documents to be delivered under the Loan
Documents. In addition, Borrower will any and all other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing
and recording, if applicable, of the
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Loan Documents and the other documents to be delivered under the Loan Documents,
and will save Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees.
8.5 Severability of Provisions. Any provision of this Agreement or of
any other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or invalidity without invalidating the remaining portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Lender.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
8.8 Headings. The captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
8.9 Entire Agreement. This Agreement and the other Loan Documents
represent the entire agreement between the parties with respect to the
transactions contemplated hereby and supersedes all prior agreements and
understandings, written or oral.
8.10 Waiver of Jury Trial; Consent to Jurisdiction.
(A) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(B) BORROWER IRREVOCABLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF ANY OF THE COURTS OF THE STATE OF FLORIDA OR THE COMMONWEALTH OF
PENNSYLVANIA AND OF ANY FEDERAL COURT SITTING IN THE STATE OF FLORIDA OR THE
COMMONWEALTH OF PENNSYLVANIA OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS, AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH COURT. BORROWER AGREES THAT SERVICE OF COPIES
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OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
SUCH ACTION MAY BE MADE AT THE ADDRESS SPECIFIED IN SECTION 8.1 IN THE MANNER
PROVIDED BY LAW.
8.11 Exculpation. Notwithstanding anything to the contrary contained in
the Loan Documents, the liability and obligation of Borrower to perform and
observe and make good the obligations contained in the Loan Documents and to pay
the Acquisition Loan in accordance with the provisions of the Note and other
Loan Documents shall not be enforced by any action or proceeding wherein damages
or any money judgment or any deficiency judgment or any judgment establishing
any personal obligation or liability shall be sought, collected or otherwise
obtained against Borrower or against any past, present or future partner,
officer, director, shareholder or member of Borrower, and Lender for itself and
its successors and assigns hereby irrevocably, knowingly, voluntarily and
intentionally waives any and all right to sue for, seek or demand any such
damages, money judgment, deficiency judgment or personal judgment against
Borrower or against any past, present or future partner, officer, director,
shareholder or member of Borrower under or by reason of or in connection with
any of the Loan Documents and agrees to look solely to the Collateral held under
or in connection with the Loan Documents for the enforcement of such liability
and obligation of Borrower.
8.13 Governing Law. This Agreement, the Note, the Mortgage and the
other Loan Documents and the rights and obligation of the parties thereunder
shall be executed, delivered and accepted in the Commonwealth of Pennsylvania
and governed by, and construed and interpreted in accordance with, the laws of
the State of Florida.
24
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
ATTEST: AGE INSTITUTE OF FLORIDA, INC.
_______________________________ By:______________________________
Secretary Name:
Title:
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
25
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ATTEST: GENESIS HEALTH VENTURES, INC.
_______________________________ By:______________________________
Secretary Name:
Title:
26
<PAGE>
Exhibit 10.49
WORKING CAPITAL LOAN AND SECURITY AGREEMENT
Dated as of August 31, 1996
between
GENESIS HEALTH VENTURES, INC.
and
AGE INSTITUTE OF FLORIDA, INC.
<PAGE>
WORKING CAPITAL LOAN AND SECURITY AGREEMENT
This WORKING CAPITAL LOAN AND SECURITY AGREEMENT is made and entered
into as of this 31st day of August, 1996, between AGE INSTITUTE OF FLORIDA,
INC., a Florida non-profit corporation (together with its successors in interest
and assigns, "Borrower") and GENESIS HEALTH VENTURES, INC., a Pennsylvania
business corporation (together with its successors in interest and assigns,
"Lender").
BACKGROUND
A. On the date hereof, Borrower has acquired from Edgemont
Partners, L.P., a Tennessee limited partnership ("Edgemont") eleven (11) health
care facilities located in Pinellas, Polk, Volusia, Bay and Okaloosa Counties in
the State of Florida, as listed on Exhibit "A" attached hereto and made a part
hereof (collectively, the "Facilities"), together with all equipment, fixtures
and other tangible and intangible assets of Edgemont as more particularly
described in that certain Asset Purchase Agreement dated the date hereof by and
between Borrower and Edgemont (the "Asset Purchase Agreement") (the Facilities
and all such equipment, fixtures and assets, collectively, the "Property").
B. Borrower will need funds for the Facility's working capital
needs and Lender has agreed to enter into this Agreement with Borrower to
provide Borrower with such working capital funds, subject to the terms and
conditions contained in this Agreement.
TERMS
NOW, THEREFORE, in consideration of the terms and conditions
set forth herein, and of any loans, advances, or extensions of credit
heretofore, now or hereafter made to or for the benefit of Borrower by Lender,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Loans.
1.1 Commitment for Loans. Subject to the terms and conditions
hereof, and in reliance on the representations and warranties contained in this
Agreement, Lender agrees to make loans (such loans being collectively referred
to herein as the "Working Capital Loan") to Borrower at any time or from time to
time between the date of this Agreement and August 31, 2001 (as may be extended
pursuant to the provisions of Section 1.12 hereof, the "Expiration Date") up to
TEN MILLION DOLLARS ($10,000,000.00) (the "Loan
<PAGE>
Commitment"). Subject to the terms and conditions hereof, Borrower may draw upon
the Working Capital Loan, repay amounts drawn thereunder and draw again on such
loan.
1.2 Note. Borrower's obligation to repay the Working Capital
Loan with interest in accordance with the terms of this Agreement shall be
evidenced by a single promissory note (the "Note") in the amount of Ten Million
Dollars ($10,000,000.00) substantially in the form of Exhibit 1.2 attached
hereto. The Note shall be dated the date of this Agreement, shall mature and
become due and payable on the Expiration Date and shall bear interest as set
forth in Section 1.3.
1.3 Payment of Principal and Interest on Working Capital Loan.
The outstanding principal amount of the Working Capital Loan and all interest
then due or accrued thereon if not sooner paid shall be paid in full on the
Expiration Date. Borrower shall pay interest on the unpaid principal amount of
the Working Capital Loan at a rate per annum of thirteen percent (13%), payable
in arrears, commencing on October 1, 1996 and continuing on the first day of
each and every calendar month thereafter up to and including the Expiration
Date. Interest shall be calculated based upon a three hundred sixty (360) day
year and charged on the basis of actual days elapsed.
1.4 Making the Working Capital Loan. Borrower may give Lender
notice no later than 12:00 noon (Eastern time) at least one (1) business day
prior to the date of the proposed borrowing. Each such notice shall be in
writing given by Borrower setting forth the amount of the proposed borrowing and
the date of the proposed borrowing. Each such notice for a Working Capital Loan
such constitute a reaffirmation by the Borrower, effective as the date of such
advance, that (a) the representations and warranties contained in Section 4 of
this Agreement are true and correct, and will be true and correct, on the date
of the proposed borrowing, (b) no Default or Event of Default has occurred and
is continuing hereunder and (c) no material adverse change in the operations or
condition, financial or otherwise, of Borrower has occurred and is continuing.
Each such notice for a Working Capital Loan hereunder shall constitute a
representation and warranty by Borrower that all the conditions in Sections 2 or
3, as the case may be, have been satisfied. Subject to the satisfaction of the
terms and conditions hereof, Lender shall make the requested Working Capital
Loan available to the Borrower by depositing the proposed borrowing amount into
the operating account of the Facility.
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<PAGE>
1.5 Security for the Working Capital Loan.
(a) Borrower hereby grants to Lender a first priority lien and security
interest on all of Borrower's Gross Patients Accounts Receivable and other
personal property utilized in the Facilities or in connection with the operation
thereof, tangible or intangible, whether now owned or hereafter acquired, and
all proceeds and products thereof, together with all documents, contracts,
guarantees, books and records, processing cards, tapes, tabulating runs,
programs and similar material related thereto (collectively, "Personal Property"
and the "Collateral"). Said lien shall secure the repayment of the Working
Capital Loan. Said lien shall also secure the payment of management fees owed to
Genesis Eldercare Network Services, Inc. (together with any successors, the
"Manager") and payments with respect to services supplied to the Facilities by
Lender, Manager, or affiliates of either for pharmaceutical, rehabilitation and
other services as permitted by that certain Management Agreement dated the date
hereof among Borrower, Lender and Manager (as amended, modified, renewed,
restated or substituted from time to time, the "Management Agreement").
Notwithstanding the foregoing, in the absence of an Event of Default (as defined
herein), Borrower shall be entitled to pay from the Gross Patients Accounts
Receivable ordinary and necessary expenses and costs of operation of the
Facilities, including, without limitation, payroll expenses and utility charges
and the payment of Home Office Fees (as defined and permitted herein) to
Borrower prior to payment of interest on the Working Capital Loan as provided
herein, and any such unpaid interest shall accrue (without additional interest
or penalty) and be payable at the Expiration Date.
(b) This Agreement constitutes a security agreement under the
Pennsylvania Uniform Commercial Code and Florida Uniform Commercial Code.
Borrower agrees to execute and/or deliver to Lender all security documents,
assignments, financing statements and other documents requested by Lender or its
affiliates from time to time to perfect and protect its interest in the
collateral and enforce this Agreement at Borrower's sole expense.
1.6 Use of Proceeds. Borrower shall use the proceeds of the
Working Capital Loan solely for the purchase of the Property from Edgemont and
for working capital purposes.
1.7 Payment. Any principal, interest, or other obligations
payable by Borrower hereunder shall be paid to Lender in immediately available
funds before 12:00 noon (Eastern time) on the date due at the principal office
of the Lender set forth in this Agreement.
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<PAGE>
1.8 Excess Over Loan Commitment. Borrower agrees that the
aggregate unpaid principal balance of the Working Capital Loan at any one time
outstanding hereunder shall not exceed the Loan Commitment, and that, if for any
reason such aggregate unpaid principal balance should at any time exceed the
Loan Commitment, Borrower shall immediately pay to Lender in cash an amount
equal to the excess. Borrower shall immediately notify Lender of any such
deficiency.
1.9 Prepayment. Borrower may, without premium or penalty,
prepay at any time the Working Capital Loan, in whole or in part, by paying to
Lender the amount to be prepaid with accrued interest thereon to the date of
such prepayment by 12:00 noon (Eastern time) on any business day.
1.10 Late Charges; Default Interest.
(A) If any scheduled payment of principal or
interest, or any other agreed charge, is not paid within ten (10) days after
due, Borrower agrees to pay Lender a late charge equal to five percent (5%) of
the amount of such payment or charge.
(B) If Borrower shall default in the payment of the
principal or interest on the Working Capital Loan or any other amount becoming
due hereunder, whether by scheduled maturity, acceleration or otherwise,
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on the outstanding amount of the Working Capital Loan and other overdue
amounts outstanding up to the date of actual payment (after as well as before
judgment) at a rate equal to 3% per annum above the interest rate then
applicable to the Working Capital Loan.
1.11 Maximum Rate. Nothing contained in this Agreement or the
Note shall require Borrower to pay interest at a rate prohibited by applicable
statute. If interest payable to Lender on any date would be in a prohibited
amount, it shall be automatically reduced to an amount which is not prohibited
and any amounts paid in excess of the prohibited amount shall be applied to the
reduction of the principal of the Note.
1.12 Extension of Expiration Date. Borrower may provide Lender
notice no later than 12:00 noon (Eastern time) at least ninety (90) days prior
to the current Expiration Date that Borrower desires to extend the Expiration
Date of the Working Capital Loan for up to five additional years, to August 31,
2006; provided, that in such event, Borrower shall be required to amortize the
then outstanding principal balance of the Working Capital Loan by the sum of
$1,000,000 per year.
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<PAGE>
2. Conditions Precedent to Working Capital Loan. The obligation of
Lender to fund the Working Capital Loan hereunder shall be subject to the prior
or concurrent fulfillment of each of the following conditions precedent:
2.1 Representations. The representations and warranties of
Borrower contained in this Agreement and in any other writings delivered to
Lender pursuant hereto, or in connection herewith, on or prior to the date
hereof, shall be true and correct on and as of the date hereof.
2.2 Deliveries to Lender. Lender shall have received on or
before the date hereof the following, each in form and substance satisfactory to
Lender:
(A) the Note, duly executed and delivered by
Borrower;
(B) the Security Agreement, duly executed and
delivered by Borrower;
(C) appropriate financing statements on Form UCC-1,
duly executed by Borrower in proper form for filing in such offices as may be
necessary or, in the opinion of Lender, desirable to perfect the security
interests in the Collateral purported to be created by the Security Agreement
and this Agreement;
(D) if required by Lender, searches of appropriate
state and local records listing all effective financing statements which name as
Borrower, Borrower or any predecessor of Borrower (or the owner of the assets of
Borrower or any predecessor of Borrower) which are filed in the governmental
offices, together with copies of such financing statements, none of which shall
cover any of the Collateral;
(E) evidence of such insurance coverage with respect
to the respective business and operations of Borrower as Lender may reasonably
request;
(F) the following authorizing documents from
Borrower: (a) a copy of the resolutions adopted by its governing body (and if
required its members) certified by Borrower's authorized officer as of the date
hereof, authorizing the execution, delivery and performance of this Agreement,
the Note and the other Loan Documents; (b) an incumbency certificate with
officers' signatures; (c) a copy of Borrower's organizational documents and all
amendments thereto certified by the Secretary of Borrower as of the date hereof;
(d) a copy of the Borrower's
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<PAGE>
bylaws or similar governance document, as amended, certified by the Secretary of
Borrower as of the date hereof; and (e) a good standing certificate from the
Secretary of State of the state of organization of Borrower;
(G) copies of all current licenses, certifications
and financial information as the Lender shall reasonably require;
(H) a letter of direction from Borrower addressed to
Lender with respect to the disbursement of the proceeds of the funding;
(I) favorable written opinion of counsel to Borrower,
dated the date hereof, in form and substance satisfactory to Lender and as to
such matters as Lender may reasonably request; and
(J) such other approvals, opinions or documents as
any Lender may reasonably request.
3. Conditions Precedent to Additional Loans. The obligation of Lender
to make any Working Capital Loan, other than in connection with the initial
borrowing, is subject to the prior or concurrent fulfillment of each of the
following conditions precedent, and, except with respect to Section 3.3 hereof,
Borrower shall be deemed to have certified to Lender by a request for a Working
Capital Loan that each of the conditions precedent have been fulfilled:
3.1 Representations; No Default. The representations and
warranties contained in Article 4 of this Agreement and in any other writing
delivered to Lender pursuant hereto on or prior to the date of such borrowing
shall be true and correct in all material respects on and as of such date as
though made on and as of such date; and no Default or Event of Default shall
have occurred and be continuing or would result from the making of the Working
Capital Loan to be made on the date of such borrowing.
3.2 Notice. Lender shall have received a notice for such
borrowing pursuant to Section 1.4 hereof.
3.3 No Violation. The making of such Working Capital Loan
shall not contravene any law, rule or regulation enacted after the date hereof
applicable to Lender.
4. Representations and Warranties of Borrower. Borrower hereby
represents and warrants as follows:
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<PAGE>
4.1 Corporate Status. Borrower is a not for profit corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. Borrower has the power and authority to own its own property
and assets and to transact the business in which it is engaged. Borrower is not
required to qualify to do business in any state or jurisdiction except the State
of Florida. Borrower does not have any subsidiaries nor does Borrower operate
any portion of its business through any other person.
4.2 Corporate Power and Authority. Borrower has the power and
authority to execute, deliver and perform, as the case may be, the terms and
provisions of this Agreement, the Note and the other Loan Documents, and
Borrower has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement, the borrowings hereunder, the liens
granted upon the Collateral pursuant hereto, and the making and delivery of the
Note and the other Loan Documents. This Agreement constitutes, the Note and all
of the other Loan Documents, when executed and delivered pursuant hereto,
constitute or will constitute, the authorized, valid and legally binding
obligations of Borrower enforceable in accordance with their respective terms,
except to the extent that their enforceability is limited by applicable
bankruptcy, reorganization, insolvency, receivership or other laws of general
application or equitable principles relating to or affecting the enforcement of
creditor's rights.
4.3 No Violation of Agreements or Laws. Borrower is not in
default under the provisions of any agreement to which it is a party and
Borrower is not in violation of any applicable provision of law or any
applicable regulation of any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, environmental laws and
regulations). Neither the execution and delivery of this Agreement, the Note or
any of the other Loan Documents nor the consummation of the transactions herein
or therein contemplated, nor compliance with the terms and provisions hereof or
thereof, will violate any applicable provision of law or any applicable
regulation, or any order, writ, injunction or decree of any court or
governmental department, commission, board, bureau, agency or instrumentality or
will conflict or will be inconsistent with, or will result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to impose)
any lien, charge or encumbrance upon any of the property or assets of Borrower
pursuant to the terms of any indenture, franchise, license, permit, mortgage,
deed of trust, agreement or other instrument to which Borrower is a party or by
which Borrower may be bound, or to which Borrower may be subject.
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<PAGE>
No order, consent, approval or authorization of any public body, agency,
commission or board is necessary for the execution, delivery and performance of
this Agreement, the Note or any of the other Loan Documents, except for such
orders, consents, approvals or authorizations which have been obtained.
4.4 Recording. There are no agreements, documents or
instruments that affect, and Borrower has not taken any action that will or may
affect, the first lien priority of Lender's security interest in Borrower's
Personal Property.
4.5 Litigation and Labor Disputes. To Borrower's knowledge,
there are no actions, suits or proceedings, pending or threatened, against or
affecting Borrower before any court or before any governmental or administrative
body or agency, which if determined adversely to Borrower, individually or in
the aggregate, would have a material adverse effect on Borrower's business or
properties. Borrower is not a party to any labor dispute.
4.6 Good Title to Properties. Based on Lawyers Title Insurance
Corporation commitment numbers 9602867, 2960352a, 2960352b, 9606449, 9602854,
and 9606397, upon closing the acquisition, Borrower has good and marketable
title to its property and assets subject to no liens, mortgages, pledges,
encumbrances or charges of any kind, except the Permitted Liens.
4.7 Franchises, License and Permits. Prior to the funding of
the Working Capital Loan, Borrower shall hold all material franchises,
agreements, licenses and grants of authority as are necessary in connection with
the conduct by it of its business, except that Borrower will not receive
approval of its application for licensure from the State of Florida as of the
closing date of the acquisition.
4.8 Outstanding Indebtedness. Except for (a) indebtedness
secured by Permitted Liens, (b) indebtedness represented by the Note and (c)
accounts and other current payables and accrued expenses arising from the
ordinary course of business, no material portion of which are past due, Borrower
does not have any indebtedness.
4.9 Trademarks, Patents, Licenses, Etc.. Borrower possesses
all necessary trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses needed to conduct its
businesses. Borrower does not know of, nor has Borrower received any notice of,
any conflict between its trademarks, trademark rights, trade names, trade name
rights,
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<PAGE>
copyrights, patent rights and licenses and the rights or claimed rights of
others.
4.10 Names and Locations. Borrower does not operate or do
business, and, within the past five years, has not operated or done business,
under a fictitious, trade or assumed name, except the names set forth on Exhibit
4.10. All of the locations at which Borrower conducts its business are listed on
Exhibit 4.10.
4.11 Tax Returns and Payments. Borrower has filed all tax
returns required by law to be filed by it and has paid all taxes, assessments
and other governmental charges levied upon it and any of its respective
properties, assets, income or franchises which are due and payable, other than
those presently payable without penalty or interest.
4.12 Compliance with ERISA. Borrower is in compliance with all
applicable provisions of ERISA.
4.13 Financial Statements. Borrower is a newly formed
corporation and has no audited or unaudited financial statements as of the date
of this Agreement.
4.14 The Security Documents. The provisions of the Security
Documents are effective to create in favor of Lender a legal, valid and
enforceable security interest in all right, title and interest of Borrower in
the Collateral; when financing statements have been filed in the offices in the
jurisdictions listed in Exhibit 4.14 hereto, the Security Documents shall
constitute a fully perfected lien on, and security interest in all right, title
and interest of Borrower in the Collateral described therein to the extent the
filing of financing statements under the Uniform Commercial Code is a
permissible method of perfection of security interests in the Collateral
described therein in each such jurisdiction, subject to no prior liens except as
permitted by Section 5.8; and the Security Agreement shall constitute a lien on
the property described therein subject to no prior liens.
4.15 Ownership. The ownership of Borrower is correctly and
accurately set forth on Exhibit 4.15 hereto.
4.16 Disclosure. Neither this Agreement nor any other Loan
Document delivered to Lender by or on behalf of Borrower in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in this Agreement and in such other documents, certificates
or instruments not misleading. There is no fact (other than matters
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of a general economic or political nature which do not affect Borrower uniquely)
which materially adversely affects or in the future may (so far as Borrower can
now foresee) materially adversely affect the business, condition (financial or
otherwise), operations, properties or prospects of Borrower which has not been
set forth in this Agreement or in the other Loan Documents delivered to Lender
by or on behalf of Borrower specifically for use in connection with the
transactions contemplated by this Agreement.
5. Covenants.
So long as the Working Capital Loan remains outstanding or
unsatisfied, Borrower agrees to the following:
5.1 Reporting Requirements. Borrower will furnish to Lender:
5.1.1 as soon as available and in any event within
sixty (60) days after the end of each calendar quarter, unaudited financial
statements of Borrower for the calendar quarter then ended, prepared on a basis
consistent with the annual statements, and certified by an authorized financial
officer of Borrower to be true and correct;
5.1.2 as soon as available and in any event within
one hundred and twenty (120) days after the end of each calendar year of
Borrower, financial statements of Borrower, prepared in accordance with
generally accepted accounting principles, and including a balance sheet, a
statement of income and expenses for the year then ended and which, at Lender's
request, shall be reviewed by a nationally recognized certified public
accounting firm or other independent certified public accounting firm acceptable
to Lender;
5.1.3 as soon as available and in any event within
fifteen (15) days of the end of each calendar quarter, an aged accounts
receivable report in sufficient detail to show amounts due by the account age
classifications of thirty (30) days, sixty (60) days, ninety (90) days, one
hundred twenty (120) days, and over one hundred twenty (120) days, certified by
an authorized financial officer of Borrower to be true and correct;
5.1.4 as soon as possible and in any event within
five (5) business days of the receipt by Borrower, any and all notices
(regardless of form) from any licensing and/or certifying agency that Borrower's
license or the Medicare or Medicaid certification of Borrower is being revoked
or suspended,
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or that action is pending or being considered to revoke or suspend Borrower's
license or certification;
5.1.5 as soon as possible and in any event within
five (5) business days after Borrower obtains knowledge of the occurrence of a
Default or an Event of Default, or any material adverse change in the condition
or operations, financial or otherwise, of Borrower, the written statement of the
Authorized Financial Officer of Borrower setting forth the details of such
Default, Event of Default, event or material adverse change;
5.1.6 promptly after the commencement thereof but in
any event not later than five (5) business days after service of process with
respect thereto on, or the obtaining of knowledge thereof by, Borrower, notice
of each action, suit or proceeding before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality concerning the
operations, financial or otherwise, of Borrower;
5.1.7 as soon as practicable and in any event within
ten (10) business days of delivery to Borrower, a copy of any letter issued by
Borrower's independent public accountants or other management consultants with
respect to Borrower's financial or accounting systems or controls, including all
so-called "management letters"; and
5.1.8 promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of Borrower as
Lender, may from time to time reasonably request.
Notwithstanding the foregoing, so long as the Management Agreement remains in
full force and effect and to the extent that the current Manager or its
Affiliate or successor is the party with responsibility for any such report or
document, Borrower shall not be required to furnish Lender the reports and
documents required by subsections 5.1.1 through 5.1.5.
5.2 Use of Proceeds. Borrower will use the proceeds of the
Working Capital Loan made hereunder for the purposes set forth in Section 1.6.
5.3 Compliance with Laws, Etc. Borrower will comply in all
material respects with all applicable laws, rules, regulations and orders, and
all contracts and agreements to which it or its properties are subject, paying
before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or its
properties, and paying
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all lawful claims which if unpaid might become a lien or charge upon any of its
properties, except to the extent such taxes, assessments and governmental
charges or levies are contested in good faith by proper proceedings which stay
the imposition of any penalty, fine or lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof.
5.4 Preservation of Existence, Etc. Borrower will maintain and
preserve its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
5.5 Obtaining of Permits, Etc. Borrower will obtain, maintain
and observe all material permits, licenses, authorizations, approvals and
accreditation necessary or useful in the proper conduct of its business, except
that Borrower will use its best efforts to receive approval of its application
for licensure from the State of Florida.
5.6 Maintenance of Insurance. Borrower will maintain with
responsible and reputable insurance companies or associations insurance
(including, without limitation, comprehensive general liability and hazard
insurance) with respect to its properties and business, in such amounts and
covering such risks, as is required by any governmental authority having
jurisdiction with respect thereto or as is carried generally in accordance with
sound business practice by companies in similar businesses similarly situated or
as is required by any Loan Document.
5.7 Maintenance of Properties, Etc. Borrower will maintain and
preserve all of its properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the material provisions of all leases to which it
is or becomes a party or under which it now or hereafter occupies property, so
as to prevent any material loss or forfeiture thereof or thereunder.
5.8 Liens on Property. Borrower will not create or suffer to
exist, any lien, security interest or other charge or encumbrance, or any other
type of preferential arrangement, upon or with respect to any of its properties,
rights or other assets, whether now owned or hereafter acquired, other than the
following (referred to collectively as "Permitted Liens"):
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5.8.1 the liens or security interests granted to
Lender pursuant to this Agreement and the other Loan Documents;
5.8.2 the liens to Lender pursuant to that certain
Acquisition Loan and Security Agreement dated the date hereof in
the initial principal amount of $45,000,000;
5.8.3 liens for taxes, assessments or other
governmental charges which are non-delinquent or being contested in good faith
and by appropriate proceedings and with respect to which proper reserves have
been taken in accordance with generally accepted accounting principles;
5.8.4 deposits or pledges to secure obligations under
workers' compensation, social security or similar laws, or under unemployment
insurance; and
5.8.5 judgment liens that have been stayed or bonded.
5.9 Indebtedness. Borrower will not create, incur, suffer to
exist any indebtedness other than (a) indebtedness created by the Loan Documents
and (b) indebtedness which is secured by Permitted Liens.
5.10 Merger, Consolidation. Borrower will not enter into any
merger, consolidation or similar transaction, or sell assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now or hereafter acquired), without the
prior written consent of Lender, which may be granted or refused by Lender in
Lender's sole discretion.
5.11 Sale of Assets, Etc. Borrower will not assign, lease or
otherwise dispose of any of its properties or assets (whether now owned or
hereafter acquired) to any Person, other than sales in the ordinary course of
business for a full and fair consideration (except as prohibited by any Loan
Document), which in no event shall include a transfer for full or partial
satisfaction of a preexisting debt, unless pursuant to enforcement of this
Agreement.
5.12 Guaranties, Etc. Borrower will not assume, guarantee,
endorse or otherwise become directly or contingently liable, including, without
limitation, liable by way of agreement, contingent or otherwise, to purchase, to
provide funds for payment, or to supply funds, in connection with any
indebtedness of any other Person without the prior consent of Lender.
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5.13 Change in Nature of Business. Borrower will not make any
material change in the nature of its business, or discontinue or liquidate any
material part of its operations without the prior written consent of Lender.
5.14 Pension Plans. Borrower will comply in all material
respects with all material requirements of ERISA and will notify Lender
immediately upon receipt by Borrower of any notice of the institution of any
proceeding or other action which may result in the termination of any employee
plan, and deliver to Lender, promptly after the filing or receipt thereof,
copies of all reports or notices relating to such proceeding or related action
which Borrower files or receives under ERISA with or from the Internal Revenue
Service, the Pension Benefit Guaranty Corporation, or the U.S. Department of
Labor.
5.15 Environmental Compliance. Borrower will with respect to
its properties (now owned or hereafter acquired) comply in all material respects
with applicable Environmental Laws, including, without limitation, obtaining,
remaining in material compliance with, and maintaining all necessary permits,
certificates, licenses, approvals and other authorizations required by such
Environmental Laws, and filing when due all notifications, required by such
Environmental Laws in connection with its ownership or use of any real estate or
the operation of its business. Borrower shall not send any wastes to any site
listed or formally proposed for listing on the National Priority List
promulgated pursuant to CERCLA or to any site listed pursuant to any similar
state law on any state list of hazardous substance sites requiring investigation
or clean-up.
5.16 Transactions with Affiliates; Payments to Affiliates.
Borrower will not directly or indirectly enter into any transaction with an
Affiliate on terms less favorable (including, but not limited to, price and
credit terms) to Borrower than would be the case if such transaction had been
effected at arms length with a Person other than an Affiliate.
5.17 Limitation on Leases. Borrower will not incur, create or
assume any commitment to make any direct or indirect payment, whether as rent or
otherwise, under any lease, rental or other arrangement for the use of real or
personal property, or both, without the prior consent of Lender.
5.18 Restricted Payments; Executive Compensation; Loans and
Advances. Borrower will not declare or make any (i) distributions in respect of
any ownership interest of Borrower or to any Affiliate of Borrower; (ii) any
payment of compensation to
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any officer, director of Borrower, any shareholder of Borrower, or any Affiliate
of any such Person, or (iii) any loans or advances to any officer, director or
shareholder of Borrower, or any Affiliate of any such Person, except that
Borrower will be paid certain home office fees (collectively, the "Home Office
Fee"), which Home Office Fee shall be paid from net cash flow and have the
priority of an operating expense and may be paid Excess Cash pursuant to the
Management Agreement, any and all of which shall be distributable as Borrower
sees fit in its good business judgment. The Home Office Fee shall be paid as
follows: Fifty Thousand Dollars ($50,000) shall be payable upon execution
hereof; One Hundred Thousand Dollars ($100,000) shall be payable in twelve (12)
equal monthly installments of $8,333.33 each until and including the first
anniversary of the date hereof; from and after such date, One Hundred Fifteen
Thousand Dollars ($115,000) shall be payable in twelve (12) equal monthly
installments of $9,583.33; from and after the third anniversary of the date
hereof, One Hundred Thirty Thousand Dollars ($132,000) shall be payable in
twelve (12) equal monthly installments of $11,000.00; and from and after the
fourth anniversary of the date hereof, and on each such anniversary thereafter,
the Home Office Fee shall be increased by the same percentage by which the cost
of health care shall have increased over the immediately preceding year as
evidenced by the Index; such increased Home Office Fee shall be payable until
the next ensuing anniversary hereof in twelve (12) equal monthly installments.
5.19 Accounts Receivable. So long as Lender has a lien on
Borrower's accounts receivable, Borrower will not sell, discount or otherwise
dispose of notes, accounts receivable or other obligations owing to Borrower
except for the purpose of collection in the ordinary course of business, and
except that Borrower may pay or distribute Home Office Fees permitted pursuant
to Section 5.18 hereof.
5.20 Inconsistent Agreements. Borrower will not enter into any
agreement containing any provision which would be violated or breached by any
borrowing hereunder or by the performance by Borrower of its obligations
hereunder or under any Loan Document.
5.21 Locations and Change In Names. The location of the
principal place of business and chief executive office of Borrower shall not be
changed, without thirty (30) days' prior written notice to Lender.
6. Events of Default. If any of the following events of default (each
an "Event of Default") shall occur and be continuing (whatever the reason for
such Event of Default, whether it shall be voluntary or involuntary or be
affected by operation of law or
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pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental instrumentality):
6.1 Subject to the terms and conditions contained herein,
Borrower shall fail to pay any principal of or interest on the Note (whether by
maturity, voluntary or required prepayment, acceleration, demand or otherwise)
or any amount payable hereunder in accordance with the terms of this Agreement,
and such failure shall remain unremedied for ten (10) days; or
6.2 Any representation or warranty made by Borrower in this
Agreement, the Note or any other Loan Document shall have been incorrect in any
material respect when made; or
6.3 Borrower shall fail to perform or observe any term,
covenant, condition or agreement contained in this Agreement, the Note or any
other Loan Document to be performed or observed by Borrower (excluding matters
set forth in Section 6.1 above), and such failure shall remain unremedied for
thirty (30) days following written notice to Borrower; or
6.4 A default shall occur under that certain Acquisition Loan
and Security Agreement of even date between Borrower and Lender, as amended or
restated from time to time, and such default shall continue after the expiration
of any applicable grace period; or
6.5 Borrower shall default in payment or performance of any
material obligation or indebtedness not described above in excess of $50,000 to
Lender or any other person, and such failure shall continue after the expiration
of any applicable grace period, if such default is not being contested in good
faith and by appropriate proceedings and with respect to which proper reserves
have been taken in advance in accordance with generally accepted accounting
principles; or
6.6 Borrower shall be generally not paying its debts as they
become due or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any petition
shall be filed by or against Borrower under the federal bankruptcy laws, or any
other proceeding shall be instituted by or against Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar
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official for such person or for any substantial part of its property; or
Borrower shall take any action to authorize or effect any of the actions set
forth above in this Section and, in the case of the institution of any
involuntary proceeding against Borrower such proceeding shall not be discharged
within ninety (90) days of its commencement; or
6.7 Any material provision of this Agreement, the Note or any
other Loan Document shall at any time for any reason be declared to be null and
void, or the validity or enforceability thereof shall be contested by Borrower,
or a proceeding shall be commenced by Borrower or by any governmental agency or
authority having jurisdiction over Borrower, seeking to establish the invalidity
or unenforceability thereof, or Borrower shall deny that it has any liability or
obligation purported to be created under this Agreement, the Note or any other
Loan Document; or
6.8 A judgment or order for the payment of money exceeding any
applicable insurance coverage by more than $50,000 shall be rendered against
Borrower and either (a) enforcement proceedings shall have been commenced and be
unstayed or (b) there shall be any period of thirty (30) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
6.9 The Management Agreement shall terminate for any reason,
except for termination for cause or for Manager's termination thereof without
cause; or
6.10 The sale of substantially all of the assets of any
Facility;
then, the obligation of Lender to make any further advances hereunder shall
immediately terminate, and at the election of Lender, Lender may by notice to
Borrower, (a) declare the Note and all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the Note
and all such interest, and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower; and (b) exercise any and
all of its other rights under applicable laws, hereunder and under any other
Loan Document; provided, that no notice need be given to Borrower upon the
occurrence of any Event of Default described in Section 6.7 and the obligations
shall be automatically accelerated.
7. Right of Set-Off. Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law,
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to set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by Lender to or for the credit or the account of Borrower against any and all of
the obligations of Borrower now or hereafter existing under the Loan Documents,
irrespective of whether or not Lender shall have made any demand hereunder or
under any other Loan Document, and although such obligations may be unmatured.
Lender agrees promptly to notify Borrower after any such set-off and application
made by Lender; provided, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
8. Definitions; Accounting and Other Terms.
8.1 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of such terms):
"Affiliate", as to any Person, means any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person, or any relative (by blood or marriage) of such Person.
"Agreement" means this Working Capital Loan and Security
Agreement, as the same may be amended or restated from time to time.
"Asset Purchase Agreement" has the meaning given to such term
in the Background Section hereof.
"Borrower" has the meaning given to such term in the preamble
hereof.
"Collateral" has the meaning given to such term in Section 1.5
hereof.
"Default" shall mean any event or occurrence which with the
passing of time, the giving of notice, or both, could become an Event of
Default.
"Edgemont" has the meaning given to such terms in the
Background Section hereof.
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"Environmental Laws" means all statutes, laws, rules,
regulations or judicial rulings pertaining to health or the environment
applicable to the properties of Borrower, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as heretofore or hereafter amended, the Resource Conservation and Recovery Act
of 1976, as heretofore or hereafter amended, and any other federal, state or
local statute, law, rule, regulation, or judicial ruling, whether now or
hereafter in existence, relating to, or imposing standards of conduct
concerning, the existence, release, disposal or handling of any waste,
substance, or material (including, but not limited to, asbestos, petroleum
products, radon and any substances that are considered hazardous or toxic).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with the rules and regulations
promulgated thereunder as in effect from time to time.
"Event of Default" means any of the events set forth in
Section 6 hereof.
"Excess Cash" has the meaning ascribed to such term in Section
7.2 of the Management Agreement.
"Expiration Date" has the meaning given to such term in
Section 1.1 hereof.
"Facilities" has the meaning given to such term in the
Background Section hereof.
"Gross Patients Accounts Receivable" shall mean all accounts
receivable of Borrower, including all rights of Borrower, if any, arising from
the payment for goods sold or leased or for services rendered with respect to
the Facilities, including, without limitation, (i) all accounts arising from the
operation of the Facilities and (ii) all rights to payment from the Medicare
program, Medicaid program or similar state or federal programs, boards, bureaus
or agencies and rights to payments from patients or private insurers and others
arising from the operation of their businesses, including rights to payment from
Reimbursement Contracts. Gross Patients Accounts Receivable shall include the
proceeds of the foregoing (whether cash or noncash, movable or immovable,
tangible or intangible) received from the sale, exchange, transfer, collection
or other disposition or substitution thereof; but, shall not include, (i) gifts,
grants, bequests, donations and/or contributions made to Borrower and (ii) with
respect to reimbursements from Medicare or Medicaid or like
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programs, not those accounts receivable in excess of allowable reimbursement
amounts.
"Home Office Fees" has the meaning given to such term in
Section 5.18 hereof.
"Lender" has the meaning given to such term in the
preamble hereof.
"Loan Commitment" has the meaning given to such term in
Section 1.1 hereof.
"Loan Documents" means, collectively, this Agreement, the
Note, and all other documents, instruments or agreements hereafter executed and
delivered to Lender by Borrower or others, evidencing or otherwise relating to
the Working Capital Loan and the Collateral.
"Management Agreement" has the meaning given to such term
in Section 1.5 hereof.
"Manager" has the meaning given to such term in
Section 1.5 hereof.
"Note" means Borrower's single promissory note, substantially
in the form of Exhibit 1.2 hereto, in the principal amount of Ten Million
Dollars ($10,000,000), evidencing the indebtedness of Borrower to Lender
resulting from the making of the Working Capital Loan, and any promissory note
or notes issued in exchange, renewal or replacement therefor, evidencing the
indebtedness of Borrower to Lender resulting from the making of the Working
Capital Loan.
"Permitted Liens" has the meaning given to such term in
Section 5.8 hereof.
"Person" means an individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or joint
venture, or a court or government or any agency or political subdivision
thereof.
"Personal Property" has the meaning given to such term in
Section 1.5 hereof.
"Property" has the meaning given to such term in the
Background Section hereof.
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"Security Agreement" means that certain Security Agreement of
even date given by Borrower in favor of Lender, as may be amended, modified, or
restated from time to time.
"Security Documents" means, collectively, the Security
Agreement and the UCC-1 financing statements.
"Working Capital Loan" means the loans made pursuant to
Section 1 hereof.
8.2 Accounting and Other Terms. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed in
accordance with generally accepted accounting principles unless otherwise
expressly stated herein. All terms used in this Agreement which are defined in
Article 9 of the Uniform Commercial Code in effect in the State of Florida on
the date hereof and which are not otherwise defined shall have the same meanings
herein as set forth therein.
9. Miscellaneous.
9.1 Notices, Etc. Except as otherwise provided herein, all
notices, requests, consents, demands, approvals and other communications
hereunder shall be deemed to have been duly given, made, served or received if
in writing and on the same day as sent when delivered personally or by telecopy,
on the third day after being sent when mailed first class mail, postage prepaid,
or on the next day after being sent when delivered by an overnight delivery
courier, charges prepaid, to the respective parties to this Agreement as
follows:
(A) If to Borrower:
AGE Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, PA 17201
Attention: Carol A. Tschop, President
(B) If to Lender:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Law Department
Attention: Chief Financial Officer
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The designation of the person to be so notified or the address
of such person for the purposes of such notice may be changed from time to time
by similar notice in writing, except that any communication with respect to a
change of address shall be deemed to be given or made when actually received by
the party to whom such communication was sent. No other method of written notice
is precluded by this Section.
9.2 Amendments, Etc. No amendment of any provision of this Agreement or
the Note shall be effective unless it is in writing and signed by Borrower and
Lender, and no waiver of any provision of this Agreement or the Note, nor
consent to any departure by Borrower therefrom, shall be effective unless it is
in writing and signed by Borrower and Lender and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
9.3 No Waiver; Remedies, Etc. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder or under any other
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies of
Lender provided herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights of Lender under any Loan Document against any party thereto are not
conditional or contingent on any attempt by Lender to exercise any of its rights
under any other Loan Document against such party or against any other person.
9.4 Fees, Costs, Expenses and Taxes. Whether or not any advances under
the Working Capital Loan are made hereunder or the transactions contemplated
hereby are consummated, Borrower will pay on demand all fees, costs and expenses
in connection with the preparation, execution, delivery, filing, and recording,
if applicable, of the Loan Documents and the other documents to be delivered
under the Loan Documents, and all costs and expenses, if any, in connection with
any waiver or amendment of any Loan Document or in connection with the
enforcement of the Loan Documents and the other documents to be delivered under
the Loan Documents. In addition, Borrower will any and all other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording, if applicable, of the Loan Documents and the other
documents to be delivered under the Loan Documents, and will save Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
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9.5 Severability of Provisions. Any provision of this Agreement or of
any other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or invalidity without invalidating the remaining portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
9.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Lender.
9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
9.8 Headings. The captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
9.9 Entire Agreement. This Agreement and the other Loan Documents
represent the entire agreement between the parties with respect to the
transactions contemplated hereby and supersedes all prior agreements and
understandings, written or oral.
9.10 Waiver of Jury Trial; Consent to Jurisdiction.
(A) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(B) BORROWER IRREVOCABLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF ANY OF THE COURTS OR THE STATE OF FLORIDA OR THE COMMONWEALTH OF
PENNSYLVANIA AND OR ANY FEDERAL COURT SITTING IN THE STATE OF FLORIDA OR THE
COMMONWEALTH OF PENNSYLVANIA OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS, AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH COURT. BORROWER AGREES THAT SERVICE OF COPIES OF ANY SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION MAY BE
MADE AT THE ADDRESS SPECIFIED IN Section 9.1 IN THE MANNER PROVIDED BY LAW.
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<PAGE>
9.11 Exculpation. Notwithstanding anything to the contrary contained in
the Loan Documents, the liability and obligation of Borrower to perform and
observe and make good the obligations contained in the Loan Documents and to pay
the Working Capital Loan in accordance with the provisions of the Note and other
Loan Documents shall not be enforced by any action or proceeding wherein damages
or any money judgment or any deficiency judgment or any judgment establishing
any personal obligation or liability shall be sought, collected or otherwise
obtained against Borrower or against any past, present or future partner,
officer, director, shareholder or member of Borrower, and Lender for itself and
its successors and assigns hereby irrevocably, knowingly, voluntarily and
intentionally waives any and all right to sue for, seek or demand any such
damages, money judgment, deficiency judgment or personal judgment against
Borrower or against any past, present or future partner, officer, director,
shareholder or member of Borrower under or by reason of or in connection with
any of the Loan Documents and agrees to look solely to the Collateral held under
or in connection with the Loan Documents for the enforcement of such liability
and obligation of Borrower.
9.12 Governing Law. This Agreement, the Note, and the other Loan
Documents and the rights and obligation of the parties thereunder shall be
executed, delivered and accepted in the Commonwealth of Pennsylvania and
governed by, and construed and interpreted in accordance with, the laws of the
State of Florida.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
ATTEST: AGE INSTITUTE OF FLORIDA, INC.
_______________________________ By:__________________________________
Name: Name:
Title: Title:
ATTEST: GENESIS HEALTH VENTURES, INC.
_______________________________ By:__________________________________
Secretary Name:
Title:
21597-7
TPA2-366124.4
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<PAGE>
EXHIBIT 10.50
===============================================================================
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of October 7, 1996
by and among
GENESIS HEALTH VENTURES, INC. and
certain of its Subsidiaries, as Borrowers,
the institutions identified herein as Lenders,
MELLON BANK, N.A. as Issuer of Letters of Credit,
MELLON BANK, N.A. as Administrative Agent and Co-Syndication Agent,
CITIBANK, N.A. as Co-Syndication Agent, and
other CO-AGENTS specified herein,
$300,000,000
------------------
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 - DEFINITIONS; CONSTRUCTION........................................... 2
1.1 Certain Definitions....................................... 2
1.2 Construction.............................................. 28
1.3 Accounting Principles..................................... 29
ARTICLE 2 - THE CREDITS......................................................... 29
2.1 Revolving Credit Loans.................................... 29
2.2 Reduction of Commitment................................... 30
2.3 Making of Loans........................................... 31
2.4 Interest Rates............................................ 31
2.5 Conversion or Renewal of Interest Rate Options............ 35
2.6 Prepayments Generally..................................... 35
2.7 Optional Prepayments...................................... 36
2.8 Mandatory Prepayments in connection with
Mandatory Reductions of Commitment........................ 36
2.9 Interest Payment Dates.................................... 37
2.10 Fees...................................................... 37
2.11 Pro Rata Treatment; Joint and Several Liability;
Payments Generally; Interest on Overdue Amounts;
Authorization of Genesis by Other Borrowers............... 39
2.12 Additional Compensation in Certain
Circumstances............................................. 40
2.13 Taxes..................................................... 44
2.14 [Intentionally Omitted]................................... 46
2.15 Funding by Branch, Subsidiary or Affiliate................ 46
2.16 Transitional Provisions................................... 47
ARTICLE 3 - LETTER OF CREDIT SUBFACILITY........................................ 48
3.1 The Letter of Credit Subfacility.......................... 48
3.2 Procedure for Issuance and Amendment of Letters
of Credit................................................. 50
3.3 Letter of Credit Participating Interests.................. 52
3.4 Letter of Credit Drawings and Reimbursements.............. 53
3.5 Obligations Absolute...................................... 55
3.6 Further Assurances........................................ 56
3.7 Cash Collateral for Letters of Credit..................... 56
3.8 Certain Provisions Relating to the Issuer................. 57
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES...................................... 59
4.1 Status.................................................... 59
4.2 Power and Authorization................................... 59
4.3 Execution and Binding Effect.............................. 60
4.4 Governmental Approvals and Filings........................ 60
4.5 Absence of Conflicts...................................... 60
4.6 Audited Financial Statements.............................. 61
4.7 Interim Financial Statements.............................. 61
</TABLE>
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<TABLE>
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4.8 INTENTIONALLY OMITTED..................................... 62
4.9 Projections............................................... 62
4.10 Solvency.................................................. 62
4.11 Absence of Undisclosed Liabilities........................ 62
4.12 Absence of Material Adverse Changes....................... 63
4.13 Accurate and Complete Disclosure.......................... 63
4.14 Margin Regulations........................................ 63
4.15 Subsidiaries.............................................. 64
4.16 Partnerships, Investments, Etc............................ 64
4.17 Litigation................................................ 64
4.18 Absence of Events of Default.............................. 65
4.19 Absence of Other Conflicts................................ 65
4.20 Power To Carry On Business................................ 65
4.21 Insurance................................................. 66
4.22 Third-Party Reimbursement Programs........................ 66
4.23 Title to Property......................................... 67
4.24 Intellectual Property..................................... 67
4.25 Taxes..................................................... 67
4.26 Employee Benefits......................................... 68
4.27 Environmental Matters..................................... 68
4.28 Proceeds of Loans; Obligations Secured By
Letters of Credit......................................... 69
4.29 Regulatory Restrictions................................... 69
4.30 Regulation O.............................................. 70
4.31 Security Documents........................................ 70
4.32 1993 Subordinated Debentures, 1995 Subordinated
Notes, and the 1996 Subordinated Notes.................... 70
ARTICLE 5 - CONDITIONS.......................................................... 71
5.1 Conditions to Effectiveness............................... 71
5.2 Conditions to All Loans and to Issuance of All
Letters of Credit......................................... 74
ARTICLE 6 - AFFIRMATIVE COVENANTS............................................... 75
6.1 Reporting Requirements.................................... 75
6.2 Insurance................................................. 81
6.3 Payment of Taxes and Other Potential Charges and
Priority Claims........................................... 81
6.4 Preservation of Status.................................... 81
6.5 Governmental Approvals and Filings........................ 82
6.6 Power To Carry On Business................................ 82
6.7 Maintenance of Properties................................. 82
6.8 Material Restricted Subsidiaries As Borrowers............. 82
6.9 Financial Accounting Practices............................ 83
6.10 Use of Proceeds........................................... 83
6.11 Preservation of Status as Senior Indebtedness............. 83
6.12 Interest Rate Hedging Agreements.......................... 83
6.13 Continuation of or Change in Business..................... 84
6.14 Corporate Separateness.................................... 84
ARTICLE 7 - NEGATIVE COVENANTS.................................................. 84
7.1 Financial Covenants....................................... 84
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
7.2 Liens..................................................... 86
7.3 Indebtedness.............................................. 87
7.4 Avoidance of Other Conflicts.............................. 88
7.5 Loans, Advances and Investments........................... 88
7.6 Issuance of Subsidiary Stock or Other Ownership
Interests; Designation of "Unrestricted Entity",
Etc....................................................... 90
7.7 Dividends and Related Distributions....................... 93
7.8 Leases.................................................... 94
7.9 Acquisitions, Etc......................................... 94
7.10 Dispositions of Properties................................ 97
7.11 Dealings with Affiliates.................................. 99
7.12 Consolidated Tax Return...................................100
7.13 Limitation on Payments, Prepayments and Other
Action with Respect to Certain Obligations................100
7.14 Limitations on Modification of Certain
Documents.................................................102
7.15 Limitation on Other Restrictions on Dividends by
Subsidiaries, Etc.........................................102
7.16 Limitation on Other Restrictions on Liens.................103
7.17 Limitation on Other Restrictions in Agreements............103
7.18 Amendments to Synthetic Lease Facility
Documents.................................................103
7.19 Mergers, Etc..............................................104
ARTICLE 8 - DEFAULTS............................................................104
8.1 Events of Default.........................................104
8.2 Consequences of an Event of Default.......................108
8.3 Application of Proceeds...................................109
ARTICLE 9 - THE AGENT...........................................................110
9.1 Appointment...............................................110
9.2 General Nature of Agent's Duties..........................111
9.3 Exercise of Powers........................................111
9.4 General Exculpatory Provisions............................112
9.5 Administration by the Agent...............................113
9.6 Lender Parties Not Relying on Agent or Other
Lenders...................................................114
9.7 Indemnification...........................................114
9.8 Agent in its Individual Capacity..........................115
9.9 Holders of Notes..........................................115
9.10 Successor Agent...........................................116
9.11 Additional Agents.........................................116
9.12 Calculations..............................................117
9.13 Agent's Fee...............................................117
9.14 Funding by Agent..........................................117
9.15 Co-Agent..................................................117
ARTICLE 10 - MISCELLANEOUS......................................................117
10.1 Holidays..................................................117
10.2 Records...................................................118
10.3 Amendments and Waivers....................................118
</TABLE>
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<TABLE>
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10.4 No Implied Waiver; Cumulative Remedies....................120
10.5 Notices...................................................120
10.6 Expenses; Taxes; Indemnity................................121
10.7 Severability; Modification to Conform to Law;
Maximum Amount of Joint and Several Liability.............122
10.8 Obligations Absolute; Certain Waivers by
Borrowers.................................................123
10.9 Prior Understandings......................................124
10.10 Duration; Survival........................................124
10.11 Counterparts..............................................124
10.12 Limitation on Payments....................................124
10.13 Set-Off...................................................125
10.14 Sharing of Collections....................................125
10.15 Successors and Assigns; Participations;
Assignments; Etc..........................................126
10.16 Addition of Subsidiary Borrowers..........................129
10.17 Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial; Limitation of Liability.............131
</TABLE>
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<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
October 7, 1996, by and among GENESIS HEALTH VENTURES, INC., a Pennsylvania
corporation (together with its successors, "Genesis"), the Subsidiaries of
Genesis which are parties hereto from time to time (collectively with Genesis,
the "Borrowers"), the Lenders parties hereto from time to time (together with
their successors and assigns, the "Lenders"), MELLON BANK, N.A., a national
banking association, as issuer of Letters of Credit hereunder (in such capacity,
together with its successors and assigns in such capacity, the "Issuer"), MELLON
BANK, N.A., a national banking association, as Administrative Agent, and for the
Lenders and the Issuer hereunder and under the other Loan Documents (in such
capacity, together with its successors and assigns in such capacity, the
"Agent") and as Co- Syndication Agent, CITIBANK, N.A., a national banking
association, as Co-Syndication Agent and the other Co-Agents specified in the
signature pages hereto.
W I T N E S E T H T H A T
WHEREAS, certain Borrowers, certain Lenders, the Issuer and
the Agent are parties to that certain Credit Agreement, dated as of November 22,
1993, as amended by that certain First Amendment and Waiver to Loan Documents
dated as of July 15, 1994, as further amended by that certain Second Amendment
to Credit Agreement dated as of September 23, 1994, as further amended by that
certain Third Amendment to Credit Agreement dated as of February 10, 1995, as
further amended by that certain Fourth Amendment and Modification to Loan
Documents and Consent dated as of June 15, 1995, as further amended by that
certain Amended and Restated Credit Agreement dated as of September 29, 1995, as
further amended by that First Amendment to Credit Documents, dated as of April
12, 1996, and as further amended by that Second Amendment and Waiver to Loan
Documents dated as of July 19, 1996 (as so amended, the "Original Credit
Agreement");
WHEREAS, certain Borrowers, certain Lenders and the Agent were
parties to a certain Acquisition Credit Agreement, dated as of September 29,
1995, (as amended, the "Acquisition Credit Agreement");
WHEREAS, Genesis Eldercare Properties, Inc. a Borrower under
the Original Credit Agreement and Mellon Financial Services Corporation #4
entered into a certain Lease and Agreement, dated as of July 24, 1996 which was
a Synthetic Lease (as defined below);
<PAGE>
WHEREAS, such Synthetic Lease replaced the Acquisition Credit
Agreement and substantially contemporaneously with the closing of such Synthetic
Lease, the Borrowers party to the Acquisition Credit Agreement terminated such
agreement;
WHEREAS, Genesis Eldercare Properties, Inc., a Borrower
hereunder, is concurrently herewith entering into a certain Amended and Restated
Lease and Agreement, dated as of the date hereof, with Mellon Financial Services
Corporation #4 (as the same may be amended, modified or supplemented from time
to time consistent with the terms thereof and Section 7.18 hereof, the
"Synthetic Lease Facility") which amends and restates the Synthetic Lease
referred to above;
WHEREAS, the Borrowers have requested the Lenders under the
Original Credit Agreement to increase the amount of their commitments to Three
Hundred Million Dollars ($300,000,000), to modify the security arrangements such
that the collateral will consist solely of equity interests of the Borrowers
(but no inventory, accounts or general intangibles) and make certain other
changes to the Original Credit Agreement;
WHEREAS, the Borrowers hereunder are the guarantors (and
certain Borrowers are the lessee or subtenants) under the Synthetic Lease
Facility and the Lenders hereunder are the participants in the debt financing
supporting the Synthetic Lease Facility;
WHEREAS, the Lenders are willing so to amend and restate the
Original Credit Agreement and so to extend credit to the Borrowers on the terms
and subject to the conditions set forth herein; and
WHEREAS, ALL OBLIGATIONS HEREUNDER AND UNDER EACH AGREEMENT
AND INSTRUMENT DELIVERED IN CONNECTION HEREWITH FROM TIME TO TIME SHALL
CONSTITUTE "SENIOR INDEBTEDNESS" AND "DESIGNATED SENIOR INDEBTEDNESS" WITHIN THE
MEANING OF THE 1993 SUBORDINATED DEBENTURE INDENTURE AND THE 1995 SUBORDINATED
NOTE INDENTURE, AND AFTER THE EFFECTIVENESS OF THE 1996 SUBORDINATED NOTE
INDENTURE, WITHIN THE MEANING OF THE 1996 SUBORDINATED NOTE INDENTURE (as each
such term is defined below);
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and intending to be legally bound hereby, the
parties hereto hereby agree as follows;
ARTICLE 1 - DEFINITIONS; CONSTRUCTION
1.1 Certain Definitions. In addition to other words
and terms defined elsewhere in this Agreement, as used herein the
following words and terms shall have the following meanings,
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<PAGE>
respectively, unless the context hereof otherwise clearly
requires:
"Acquisition" shall mean any acquisition by one or more of the
Borrowers or their Restricted Subsidiaries, directly or indirectly,
whether in one transaction or in a series of related transactions (and
whether by merger, consolidation, acquisition of assets or otherwise)
of all or any substantial portion of the ownership interests in or
assets of any separate business enterprise.
"Acquisition Cost" shall mean, with respect to any
Acquisition, the value in Dollars, of the total consideration paid or
payable (whether immediate or deferred and whether in cash, equity or
other assets) by any of the Borrowers or any of their Restricted
Subsidiaries (such consideration including the amount of any Assumed
Indebtedness) for or in respect of the ownership interests or assets
being acquired in such Acquisition.
"Adjusted Contract Rate" shall have the meaning set forth in
Section 2.12(b) hereof.
"Affiliate" of a Person shall mean (a) any other Person which
directly or indirectly controls, or is controlled by, or is under
common control with, such Person, (b) any director or officer (or, in
the case of a Person which is not a corporation, any individual having
analogous powers) of such Person or of a Person who is an Affiliate of
such Person, and (c) any individual related to such Person or Affiliate
by consanguinity or adoption within the third degree. For purposes of
the preceding sentence, "control" of a Person means (a) the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise and (b) in any
case shall include direct or indirect ownership (beneficially or of
record) of, or direct or indirect power to vote, 5% or more of the
outstanding shares of any class of capital stock of such Person (or in
the case of a Person that is not a corporation, 5% or more of any class
of equity interest).
"AGE Florida" shall mean the AGE Institute of Florida, Inc., a
Florida not-for-profit corporation and member organization of AGE
Institute, a Pennsylvania 501(c)(3) organization.
"AGE Florida Documents" shall mean collectively (a) the AGE
Florida Financing Facility and (b) the AGE Florida Management Agreement
in each case as the same may be
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<PAGE>
amended, modified, or supplemented from time to time in accordance with
the provisions of Section 7.14 hereof.
"AGE Florida Financing Facility" shall mean collectively that
certain Acquisition Loan and Security Agreement dated as of August 31,
1996, and that certain Working Capital Loan and Security Agreement
dated as of August 31, 1996, in each case as the same may be amended,
modified or supplemented from time to time in accordance with the
provisions of Section 7.14 hereof.
"AGE Florida Management Agreement" shall mean the
Management and Affiliation Agreement, dated as of August 31,
1996 among AGE Florida, Genesis Eldercare Network Services,
Inc. and Genesis.
"Agreement" shall mean this Second Amended and Restated Credit
Agreement as the same may be amended, modified or supplemented from
time to time in accordance with its terms.
"Applicable Margin" shall mean the incremental amount added to
the Prime Rate or Euro-Rate to determine the interest rate on Loans as
set forth in Section 2.4(b) hereof.
"Assumed Indebtedness" shall mean Indebtedness incurred by a
Person which is not a Borrower or a Restricted Subsidiary of a Borrower
and which (a) is existing at the time such Person (or assets of such
Person) is acquired by a Borrower or Restricted Subsidiary and (b) is
assumed by a Borrower or a Restricted Subsidiary in connection with
such Acquisition, other than Indebtedness incurred by the original
obligor in connection with, or in contemplation of, such Acquisition.
"Borrowers" shall have the meaning ascribed to such term in
the preamble hereto. It is the intent of the parties (and a covenant of
the Borrowers below) that each of the Material Restricted Subsidiaries
shall at all times be "Borrowers" pursuant to the terms of this
Agreement.
"Business Day" shall mean any day other than a Saturday,
Sunday, public holiday under the laws of the Commonwealth of
Pennsylvania or other day on which banking institutions are authorized
or obligated to close in the city in which the Agent's Office is
located or in the city in which the Issuer's Office is located.
"Capital Expenditures", with respect to any Person, shall
mean, for any period, all expenditures (whether paid in cash or accrued
as liabilities) of such Person during
-4-
<PAGE>
such period which are, or should be, classified as capital expenditures
in accordance with GAAP.
"Capitalized Lease" shall mean at any time any lease which is,
or should be, capitalized on the balance sheet of the lessee at such
time in accordance with GAAP, and "Capitalized Lease Obligation" of any
Person at any time shall mean the aggregate amount which is, or should
be, reported as a liability on the balance sheet of such Person at such
time as lessee under a Capitalized Lease in accordance with GAAP.
"Carry-Over Letters of Credit" shall have the meaning set
forth in Section 3.1(e) hereof.
"Cash Equivalent Investments" shall mean any of the following:
(i) full faith and credit obligations of the United States of America,
or fully guaranteed as to interest and principal by the full faith and
credit of the United States of America, maturing in not more than one
year from the date such investment is made; (ii) time deposits and
certificates of deposit having a final maturity of not more than one
year after the date of issuance thereof of any commercial bank
incorporated under the laws of the United States of America or any
state thereof or the District of Columbia, which bank is a member of
the Federal Reserve System and has a combined capital and surplus of
not less than $500,000,000 and with a senior unsecured debt credit
rating of at least "A" by Moody's Investors Service, Inc. or "A" by
Standard & Poor's Ratings Group; (iii) commercial paper of companies,
banks, trust companies or national banking associations (in each case
excluding Lessee and its Affiliates) incorporated or doing business
under the laws of the United States or one of the States thereof, in
each case having a remaining term until maturity of not more than 180
days from the date such investment is made and rated at least P-1 by
Moody's Investors Service, Inc. or at least A-1 by Standard & Poor's
Ratings Group; and (iv) repurchase agreements with any financial
institution having combined capital and surplus of not less than
$500,000,000 with a term of not more than seven days for underlying
securities of the type referred to in clause (i) above.
"Cash Flow", with respect to any Person, for any period, shall
mean (a) Net Income of such Person plus (b) each of the following to
the extent deducted in determining Net Income: (i) Interest Expense,
(ii) Rental Expense, (iii) depreciation expense, (iv) amortization
expense, (v) taxes and (vi) extraordinary losses minus (c)
extraordinary gains to the extent included in determining such Net
Income, in each case for such period.
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<PAGE>
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and any successor statute
of similar import, and regulations thereunder, in each case as in
effect from time to time.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be
amended from time to time.
"Change of Control" shall mean the occurrence of any of
the following events:
(a) any Person, in a single transaction or through a
series of related transactions, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of more than
50% of the total Voting Stock (as hereinafter defined) of
Genesis;
(b) Genesis consolidates or merges with or into
another corporation or conveys, transfers or leases all or
substantially all of its assets to any Person, or any
corporation consolidates or merges with or into Genesis, in
any such event pursuant to a transaction in which the
outstanding Voting Stock of Genesis is changed into or
exchanged for cash, securities or other property, other than
any such transaction where (i) the outstanding Voting Stock of
Genesis is changed into or exchanged for (x) Voting Stock of
the surviving corporation which is not Redeemable Capital
Stock (as hereinafter defined) or (y) cash, securities or
other property in an amount which Genesis would not be
prohibited, under Section 5.10 of the 1995 Subordinated Note
Indenture if then in effect, from paying as a Restricted
Payment (as defined in the 1995 Subordinated Note Indenture),
and (ii) the holders of the Voting Stock of Genesis
immediately prior to such transaction own, directly or
indirectly, not less than 50% of the Voting Stock of the
surviving corporation immediately after such transaction;
(c) during any period of two consecutive years,
individuals who at the beginning of such period constituted
the Board of Directors of Genesis (together with any new
directors whose election by such Board of Directors or whose
nomination for election by the stockholders of Genesis was
approved by a vote of at least 66-2/3% of the directors then
still in office who were either directors at the beginning of
such period or whose election or nomination for election was
previously so approved) cease for any reason to
-6-
<PAGE>
constitute a majority of the Board of Directors of
Genesis then in office; or
(d) Genesis is liquidated or dissolved or adopts
a plan of liquidation.
For purposes of this definition of "Change of Control," (A) "Voting
Stock" shall mean stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or might
have voting power by reason of the happening of any contingency); (B)
"Redeemable Capital Stock" of a Person shall mean any capital stock or
equity interests that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or otherwise, is,
or upon the happening of an event or passage of time would be, required
to be redeemed prior to any stated maturity of the principal of the
1995 Subordinated Notes or is redeemable at the option of the holder
thereof at any time prior to any such stated maturity, or is
convertible into or exchangeable for debt securities at any time prior
to any such stated maturity at the option of the holder thereof; and
(C) "Board of Directors" of Genesis shall mean the board of directors
of Genesis or the executive committee of Genesis.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time.
"Collateral" shall mean the collateral in respect of the
Letter of Credit Collateral Account from time to time and the
collateral subject to, or purported to be subject to, the Liens of the
Pledge Agreement from time to time.
"Collateral Agency Agreement" shall mean the Second Amended
and Restated Collateral Agency Agreement, dated as of the date hereof,
in substantially the form attached hereto as Exhibit B, as the same may
be amended, modified or supplemented from time to time consistent with
the terms hereof.
"Collateral Agent" shall have the meaning assigned to that
term in the Collateral Agency Agreement.
"Commitment Fee" shall have the meaning set forth in
Section 2.10(a) hereof.
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<PAGE>
"Commitment Fee Factor" shall have the meaning set forth in
Section 2.10(a) hereof.
"Commitment Percentage" of a Lender at any time shall mean the
Commitment Percentage for such Lender set forth below its name on
Exhibit F hereto, subject to transfer to or purchase from another
Lender as provided in Section 10.15 hereof.
"Commitment" shall mean, with respect to any Lender, the
obligation of such Lender to make Loans pursuant to the terms of this
Agreement and, with respect to all Lenders, the sum of all of the
Lenders' Commitments.
"Controlled Group Member" shall mean each trade or business
(whether or not incorporated) which together with any Borrower or any
Subsidiary of any Borrower is treated as a single employer under
Sections 4001(a)(14) or 4001(b)(1) of ERISA or Sections 414(b), (c),
(m) or (o) of the Code.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Edella Street Intercreditor Agreement" shall mean that
certain Intercreditor Agreement, dated as of November 30, 1993 among
(a) First Fidelity Bank, N.A., Pennsylvania (formerly Fidelity Bank,
National Association), as Trustee (relating to Edella Street Associates
Project), (b) Edella Street Associates, a Pennsylvania limited
partnership and (c) Genesis, as it may be amended, modified or
supplemented from time to time.
"Effective Date" shall mean the date on which this Agreement
shall become effective pursuant to the terms of Section 5.1.
"Environmental Affiliate" shall mean, with respect to any
Person, any other Person whose liability (contingent or otherwise) for
any Environmental Claim such Person has retained, assumed or otherwise
is liable for (by Law, agreement or otherwise).
"Environmental Approvals" shall mean any Governmental Action
pursuant to or required under any Environmental law.
"Environmental Claim" shall mean, with respect to any Person,
any action, suit, proceeding, investigation, notice, claim, complaint,
demand, request for information or other communication (written or
oral) by any other Person (including but not limited to any
Governmental Authority, citizens' group or present or former employee
of such Person) alleging, asserting or claiming any actual or
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<PAGE>
potential (a) violation of any Environmental Law, (b) liability under
any Environmental Law or (c) liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, fines or penalties arising out of, based on
or resulting from the presence, or release into the environment, of any
Environmental Concern Materials at any location, whether or not owned
by such Person.
"Environmental Cleanup Site" shall mean any location which is
listed or proposed for listing on the National Priorities List (as
established under CERCLA), on CERCLIS or on any similar state list of
sites requiring investigation or cleanup, or which is the subject of
any pending or threatened action, suit, proceeding or investigation
related to or arising from any alleged violation of any Environmental
Law.
"Environmental Concern Materials" shall mean (a) any flammable
substance, explosive, radioactive material, hazardous material,
hazardous waste, toxic substance, solid waste, pollutant, contaminant
or any related material, raw material, substance, product or by-product
of any substance specified in or regulated or otherwise affected by any
Environmental Law (including but not limited to any "hazardous
substance" as defined in CERCLA or any similar state Law), (b) any
toxic chemical or other substance from or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline,
diesel fuel, motor oil, waste and used oil, heating oil and other
petroleum products or compounds, polychlorinated biphenyls, radon and
urea formaldehyde.
"Environmental Law" shall mean any Law, whether now existing
or subsequently enacted or amended, relating to (a) pollution or
protection of the environment, including natural resources, (b)
exposure of Persons, including but not limited to employees, to
Environmental Concern Materials, (c) protection of the public health or
welfare from the effects of products, by-products, wastes, emissions,
discharges or releases of Environmental Concern Materials or (d)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials including their manufacture,
formulation, packaging, labeling, distribution, transportation,
handling, storage or disposal. Without limitation, "Environmental Law"
shall also include any Environmental Approval and the terms and
conditions thereof.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute
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of similar import, and regulations thereunder, in each case as in
effect from time to time.
"Euro-Rate" shall have the meaning set forth in Section
2.4(a) hereof.
"Euro-Rate Option" shall have the meaning set forth in
Section 2.4(a) hereof.
"Euro-Rate Portion" of any Loan or Loans shall mean at any
time the portion of such Loans bearing interest under the Euro-Rate
Option or at a rate calculated by reference to the Euro-Rate under
Section 2.11(d) hereof. A "Euro-Rate Portion" may either refer to a
specific Loan with a specified Funding Period or all Loans bearing
interest at the Euro-Rate Option, as the context requires.
"Euro-Rate Reserve Percentage" shall have the meaning set
forth in Section 2.4(a) hereof.
"Event of Default" shall mean any of the Events of Default
described in Section 8.1 hereof.
"Federal Funds Effective Rate" for any day shall mean the rate
per annum determined by the Agent (which determination shall be
conclusive) to be the rate per annum announced by the Federal Reserve
Bank of New York on such day as being the weighted average of the rates
on overnight Federal funds transactions arranged by federal funds
brokers on the previous trading day, or, if such Federal Reserve Bank
does not announce such rate on any day, the rate for the last day on
which such rate was announced.
"First Mortgage Bond Documents" shall mean, collectively, (a)
the Indenture of Mortgage and Deed of Trust, dated as of September 1,
1992, from Genesis to Delaware Trust Company (as Corporate Trustee) and
Richard N. Smith (as Individual Trustee), relating to the First
Mortgage Bonds described in clause (a) of the definition of "First
Mortgage Bonds" herein; (b) the Trust Indenture, dated as of June 1,
1992, from the Luzerne County Industrial Development Authority to
Fidelity Bank, National Association, as Trustee, relating to the First
Mortgage Bonds described in clause (b) of the definition of "First
Mortgage Bonds" herein; (c) the Trust Indenture, dated as of June 1,
1992, from the Lackawanna County Industrial Development Authority to
Fidelity Bank, National Association, as Trustee, relating to the First
Mortgage Bonds described in clause (c) of the definition of "First
Mortgage Bonds" herein; (d) the Installment Sale Agreement, dated as of
June 1, 1992, between the Luzerne County Industrial Development
Authority and River Street
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Associates; (e) the Installment Sale Agreement, dated as of June 1,
1992, between the Lackawanna County Industrial Development Authority
and Edella Street Associates; (f) all other documents, instruments and
agreements securing, constituting a Guaranty with respect to, or
otherwise relating to the foregoing; and (g) all amendments,
supplements and modifications from time to time to any of the
foregoing, to the extent permitted under this Agreement.
"First Mortgage Bonds" shall mean, collectively, (a) the
9-1/4% First Mortgage Bonds (Series A) Due 2007 issued by Genesis in
the original aggregate principal amount of $25,000,000; (b) the First
Mortgage Revenue Refunding Bonds, Series of 1992 (River Street
Associates Project) issued by the Luzerne County Industrial Development
Authority in the original aggregate principal amount of $3,915,000; and
(c) the First Mortgage Revenue Refunding Bonds, Series of 1992 (Edella
Street Associates Project) issued by the Lackawanna County Industrial
Development Authority in the original aggregate principal amount of
$4,115,000.
"Fixed Charge Coverage Ratio" shall mean, as of any
date of determination:
(a) Cash Flow of Genesis and its Restricted
Subsidiaries on a consolidated basis for the four
fiscal quarters ending on, or most recently prior to,
such date of determination
divided by
(b) the sum of (i) Interest Expense and Rental
Expense of Genesis and its Restricted Subsidiaries on
a consolidated basis for the four fiscal quarters
ending on, or most recently prior to such date of
determination and (ii) principal payments scheduled
or required to be made by Genesis and its Restricted
Subsidiaries on any Indebtedness (including (without
duplication) principal obligations under the
Synthetic Lease Facility) during the four fiscal
quarters beginning on, or most recently prior to, the
date of determination.
"Funding Breakage Date" shall have the meaning set forth in
Section 2.12(b) hereof.
"Funding Breakage Indemnity" shall have the meaning set forth
in Section 2.12(b) hereof.
"Funding Periods" shall have the meaning set forth in
Section 2.4(c) hereof.
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"Future Value Amount" shall have the meaning set forth in
Section 2.12(b) hereof.
"GAAP" shall have the meaning set forth in Section 1.3
hereof.
"Geri-Med Debt" shall mean any Assumed Indebtedness which a
Borrower or Restricted Subsidiary may assume in connection with an
Acquisition of Geriatric & Medical Companies, Inc., in accordance with
the terms of this Agreement, so long as such Assumed Indebtedness is as
set forth on Schedule 1.1 hereto, which schedule sets forth a list of
such Assumed Indebtedness and includes the following information with
respect thereto: the term, the interest rate, material prepayment
provisions and certain other material terms.
"Governmental Action" shall have the meaning set forth
in Section 4.4 hereof.
"Governmental Authority" shall mean any government or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
"Guaranty" shall mean, with respect to any Person (a
"Guarantor"), any contractual or other obligation, contingent or
otherwise, of such Person to pay any Indebtedness or other obligation
of any other Person or to otherwise protect the holder of any such
Indebtedness or other obligation against loss (whether such obligation
arises by agreement to pay, to keep well, to purchase assets, goods,
securities or services or otherwise) provided, however, that the term
"Guaranty" shall not include an endorsement for collection or deposit
in the ordinary course of business. The term, "Guaranty," when used as
a verb has the correlative meaning.
"Indebtedness" of any Person shall mean (without
duplication):
(a) All obligations on account of money borrowed
by, or credit extended to or on behalf of, or for or on
account of deposits with or advances to, such Person;
(b) All obligations of such Person evidenced by
bonds, debentures, notes or similar instruments;
(c) All obligations of such Person for the
deferred purchase price of property or services;
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(d) All obligations secured by a Lien on property
owned by such Person (whether or not assumed) provided,
however, for purposes of determining the amount of such
Indebtedness under this clause (d), the amount of any such
non-recourse Indebtedness shall be limited to the fair market
value of the asset subject to such Lien; and all obligations
of such Person under Capitalized Leases (without regard to any
limitation of the rights and remedies of the holder of such
Lien or the lessor under such Capitalized Lease to
repossession or sale of such property);
(e) The face amount of all letters of credit issued
for the account of such Person and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all
other obligations of such Person associated with such letters
of credit or draws thereon;
(f) All obligations of such Person with respect
to acceptances or similar obligations issued for the
account of such Person;
(g) All obligations of such Person under a
product financing or similar arrangement described in
paragraph 8 of FASB Statement of Accounting Standards
No. 49 or any similar requirement of GAAP;
(h) All obligations of such Person under any
Interest Rate Hedging Agreement or any currency
protection agreement, currency future, option or swap
or other currency hedge agreement;
(i) all Guaranties of such Person; and
(j) all obligations of such Person under, or in
respect of, any Synthetic Leases.
Indebtedness shall not include accounts payable to trade creditors
arising out of purchases of goods or services in the ordinary course of
business, provided that (i) such accounts payable are payable on usual
and customary trade terms, and (ii) such accounts payable are not
overdue by more than 60 days according to the original terms of sale
except (if no foreclosure, distraint, levy, sale or similar proceeding
shall have been commenced) where such payments are being contested in
good faith by appropriate proceedings diligently conducted and subject
to such reserves or other appropriate provisions as may be required by
GAAP. Indebtedness of Genesis and/or its Restricted Subsidiaries shall
include any Indebtedness of any Unrestricted Entities
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for which there is recourse to Genesis and/or such
Restricted Subsidiaries.
"Indemnified Parties" shall mean the Lender Parties and their
respective Affiliates and (without duplication) the directors,
officers, employees, attorneys and agents of each of the foregoing.
"Intercreditor Agreements" shall mean (a) the Edella
Street Intercreditor Agreement and (b) the River Street
Intercreditor Agreement.
"Interest Expense" shall mean, for any Person, for any period,
the sum (without duplication) of (a) all interest accrued (or accreted)
on Indebtedness of such Person during such period whether or not
actually paid (including (without duplication) any obligations under
any Synthetic Leases in respect of the interest or yield component of
rent) plus (b) the net amount accrued under any Interest Rate Hedging
Agreements (or less the net amount receivable thereunder) during such
period.
"Interest Rate Hedging Agreement" shall mean any interest rate
swap, cap or collar agreement.
"Investments" shall have the meaning set forth in
Section 7.5 hereof.
"Joinder Effective Date" shall have the meaning set forth in
Section 10.16 hereof.
"Joinder Supplement" shall have the meaning set forth
in Section 10.16 hereof.
"Joining Subsidiary" shall have the meaning set forth
in Section 10.16 hereof.
"Law" shall mean any law (including common law), constitution,
statute, treaty, convention, regulation, rule, ordinance, order,
injunction, writ, decree or award of any Governmental Authority.
"Lender" shall have the meaning set forth in the
preamble hereto.
"Lender Parties" shall mean collectively the Lenders,
the Issuer, and the Agent.
"Letter of Credit" shall have the meaning set forth in
Section 3.1(a) hereof.
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"Letter of Credit Availability" shall mean, as of any
particular date, the difference (but not less than zero) of
(i) the lower of (A) and (B) where (A) is the
difference between the amount of the Commitment as of
such date and the aggregate principal amount of the
Loans then outstanding or requested hereunder and (B)
is $25,000,000,
minus
(ii) the sum of the Letter of Credit Usage plus the
face amount of all Letters of Credit requested (but
not yet issued) as of such date.
"Letter of Credit Collateral Account" shall have the meaning
set forth in Section 3.7(b) hereof.
"Letter of Credit Commission" shall have the meaning set forth
in Section 2.10(b) hereof.
"Letter of Credit Disbursement" shall mean any payment or
disbursement by the Issuer under any Letter of Credit, and "Letter of
Credit Disbursement Date" shall mean the date on which any such Letter
of Credit Disbursement is made.
"Letter of Credit Facing Fee" shall have the meaning set forth
in Section 2.10(b) hereof.
"Letter of Credit Participation" shall have the meaning set
forth in Section 3.3(a) hereof.
"Letter of Credit Undrawn Availability" with respect to a
specific Letter of Credit shall mean, as of any particular date, the
maximum aggregate amount which is then available for drawing under such
Letter of Credit (assuming compliance with all conditions for drawing
under such Letter of Credit).
"Letter of Credit Usage" shall mean, as of any particular
date, the sum of (i) the aggregate Letter of Credit Undrawn
Availability for all Letters of Credit outstanding on such date plus
(ii) the aggregate amount of all Reimbursement Obligations of the
Borrowers outstanding as of such date.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement
of any nature whatsoever, including but not limited to any conditional
sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
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"Loans" shall have the meaning set forth in Section 2.1
hereof.
"Loan Documents" shall mean this Agreement, the Notes, the
Transfer Supplements, the Letters of Credit, the Security Documents,
each Joinder Supplement and all other agreements and instruments
executed in connection herewith or therewith in each case as the same
may be amended, modified or supplemented from time to time.
"Loan Obligations" shall mean all obligations, from time to
time, of any Loan Party to any Lender Party or other Indemnified Party
under, or arising out of, this Agreement or any Loan Document.
"Loan Parties" shall mean the Borrowers and any other Person
who from time to time grants or purports to grant to the Collateral
Agent a Lien on any property pursuant to the Security Documents or is a
Guarantor of any Loan Obligations.
"London Business Day" shall mean a day for dealing in deposits
in Dollars by and among banks in the London interbank market and which
is a Business Day.
"Management Agreement" shall mean any agreement pursuant to
which Genesis or any Restricted Subsidiary manages the business of
another Person that is not a Restricted Subsidiary.
"Material Adverse Effect" shall mean (a) a material adverse
effect on the business, operations, condition (financial or otherwise)
or prospects of the Borrowers taken as a whole or the Borrowers and the
Restricted Subsidiaries taken as a whole or (b) an adverse effect on
the legality, validity, binding effect or enforceability of any Loan
Document, or the ability of the Collateral Agent or any Lender Party to
enforce any rights or remedies under or in connection with any Loan
Document.
"Maturity Date" shall mean the date which is five years after
the date hereof, or, if earlier, the date when all of the Commitments
shall have terminated pursuant to the terms of Section 2.2 below.
"Material Restricted Subsidiaries" shall mean, at any time,
any Subsidiary of Genesis designated as a Material Restricted
Subsidiary pursuant to the provisions of Section 7.6 below.
"Mellon" shall mean Mellon Bank, N.A., a national banking
association, and any successor.
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"Multiemployer Plan" shall mean any employee benefit plan
which is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA and to which any Loan Party, any Subsidiary of any
Loan Party or any other Controlled Group Member has or had an
obligation to contribute.
"Net Cash Proceeds" shall mean, with respect to any Recapture
Event, the gross proceeds thereof in the form of cash or cash
equivalents, net of the sum of the following (without duplication): (A)
payments made to retire obligations (other than to a Borrower or a
Restricted Subsidiary) that are attributable to or secured by the
properties that are the subject of such Recapture Event, (B) reasonable
brokerage commissions and other reasonable fees and expenses (including
reasonable fees and expenses of legal counsel and investment bankers)
related to such Recapture Event and (C) all taxes actually paid or
estimated in good faith to be or become payable as a result of such
Recapture Event.
"Net Income" shall mean, with respect to any Person, for any
period the net earnings (or loss) after taxes of such Person for such
period; provided, that there shall be excluded from the determination
thereof (a) income (or loss) accounted for by such Person on the equity
method because of the income (or deficit) during such period of any
other Person in which the former Person had an ownership interest to
the extent that any amount was not actually received by such Person,
(b) income (or loss) of a foreign consolidated Subsidiary of such
Person to the extent that any amount was not actually received by such
Person, (c) the undistributed earnings of any consolidated Subsidiary
of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is restricted,
(d) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made against income during
such period, and (e) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of
such Person. Net Income of Genesis and its Restricted Subsidiaries
shall exclude any income (or loss) that is attributable to, or derived
from, any consolidated Unrestricted Entity.
"1993 Subordinated Debenture Indenture" shall mean the
Indenture dated as of November 30, 1993 between Genesis and First
Fidelity Bank, N.A., Pennsylvania, as Trustee, relating to the 1993
Subordinated Debentures, as such Indenture may be amended, modified or
supplemented from time to time in accordance with the terms of this
Agreement.
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"1993 Subordinated Debentures" shall mean the Genesis' 6%
Convertible Senior 1993 Subordinated Debentures due November 30, 2003
issued under the 1993 Subordinated Debenture Indenture in the original
aggregate principal
amount of $86,250,000.
"1995 Subordinated Note Indenture" shall mean the Indenture
dated as of June 15, 1995 between Genesis and Delaware Trust Company,
as Trustee, relating to the 1995 Subordinated Notes, as such Indenture
may be amended, modified or supplemented from time to time in
accordance with the terms of this Agreement.
"1995 Subordinated Notes" shall mean Genesis' 9-3/4% Senior
Subordinated Notes issued under the 1995 Subordinated Note Indenture in
the original aggregate principal amount of $120,000,000.
"1996 Subordinated Note Indenture" shall mean an indenture, on
substantially the terms described in the Preliminary Offering
Memorandum dated September 30, 1996, with such changes thereto as shall
not be adverse to the interests of the Lender Parties hereunder, and
with subordination provisions substantially similar to those in the
1995 Subordinated Note Indenture, as such 1996 Subordinated Note
Indenture may be amended, modified or supplemented from time to time in
accordance with the terms of this Agreement.
"1996 Subordinated Notes" shall mean the senior subordinated
notes issued pursuant to the 1996 Subordinated Note Indenture, which
notes shall be subordinated to the Loan Obligations as set forth in the
1996 Subordinated Note Indenture and shall be in an aggregate principal
amount not exceeding One Hundred and Twenty Five Million Dollars
($125,000,000).
"Non-Material Restricted Subsidiary" shall mean, at any
time, any "Non-Material Restricted Subsidiary" designated
pursuant to Section 7.6 hereof.
"Note" shall mean each promissory note of the Borrowers
executed and delivered under Section 2.1(c) hereof, substantially in
the form of Exhibit A hereto, together with any allonges thereto from
time to time and any promissory note issued in substitution therefor
pursuant to the terms hereof, together with all extensions, renewals,
refinancings or refundings thereof in whole or part, in each case as
the same may be amended, modified or supplemented from time to time.
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"Notional Euro-Rate Funding Office" shall have the meaning set
forth in Section 2.15(a) hereof.
"Office," (a) when used in connection with the Agent shall
mean its office located at Mellon Bank Center, 1735 Market Street,
Philadelphia, Pennsylvania 19103; (b) when used in connection with the
Issuer shall mean its office located at Three Mellon Bank Center,
Pittsburgh, Pennsylvania 15259; and (c) when used in connection with
any Lender, shall mean such Lender's office at such domestic address as
is specified for such Lender on the signature pages hereof, provided,
that in each case, the office may be changed by the specified Person by
notice to the other parties hereto.
"Officer's Compliance Certificate" shall mean a certificate,
as of a specified date, of a Responsible Officer of Genesis as to each
of the following: (a) the absence of any Event of Default or Potential
Default on such date, (b) the truth of the representations and
warranties herein and in the other Loan Documents as of such date and
(c) compliance (or if required by the terms of this Agreement
respecting the delivery of any such Officer's Compliance Certificate,
pro forma compliance after taking account of such acquisitions,
dispositions, indebtedness or other events as this Agreement shall
direct for such pro forma compliance statement) with the financial
covenants set forth in Section 7.1 and the financial limitations set
forth in Sections 7.3(j), 7.5(f), 7.7, 7.8(d), 7.9(b) and 7.10(e)
hereof.
"Option" shall mean the Prime Rate Option or the Euro- Rate
Option, as the case may be.
"Original Credit Agreement" shall have the meaning set
forth in the recitals hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental agency,
department or instrumentality succeeding to the functions of said
corporation.
"Pension-Related Event" shall mean any of the following
events or conditions:
(a) Any action is taken by any Person (i) to
terminate, or which would result in the termination of, a
Plan, either pursuant to its terms or by operation of law
(including any amendment of a Plan which would result in a
termination under Section 4041(e) of ERISA), or (ii) to have a
trustee appointed for a Plan pursuant to Section 4042 of
ERISA;
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(b) PBGC notifies any Person of its determination
that an event described in Section 4042 of ERISA has occurred
with respect to a Plan, that a Plan should be terminated, or
that a trustee should be appointed for a Plan;
(c) Any Reportable Event occurs with respect to a
Plan;
(d) Any action occurs or is taken which could result
in any Loan Party, any Subsidiary of any Loan Party or any
other Controlled Group Member becoming subject to liability
for a complete or partial withdrawal by any Person from a
Multiemployer Plan (including seller liability incurred under
Section 4204(a)(2) of ERISA), or any Loan Party, any
Subsidiary of any Loan Party or any other Controlled Group
Member receives from any Person a notice or demand for payment
on account of any such alleged or asserted liability; or
(e) (i) There occurs any failure to meet the minimum
funding standard under Section 302 of ERISA or Section 412 of
the Code with respect to a Plan, or any tax return is filed
showing any tax payable under Section 4971(a) of the Code with
respect to any such failure, or any Loan Party, any Subsidiary
of any Loan Party or any other Controlled Group Member
receives a notice of deficiency from the Internal Revenue
Service with respect to any alleged or asserted such failure,
or (ii) any request is made by any Person for a variance from
the minimum funding standard, or an extension of the period
for amortizing unfunded liabilities, with respect to a Plan.
"Permitted Liens" shall have the meaning set forth in
Section 7.2 hereof.
"Person" shall mean an individual, corporation, partnership,
trust, unincorporated association, joint venture, joint-stock company,
Governmental Authority or any other entity.
"Plan" shall mean any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (other than a Multiemployer Plan)
covered by Title IV of ERISA by reason of Section 4021 of ERISA, of
which any Loan Party, any Subsidiary of any Loan Party or any other
Controlled Group Member is or has been within the preceding five years
a "contributing sponsor" within the meaning of Section 4001(a)(13) of
ERISA, or which is or has been within the preceding five years
maintained for employees of any Loan
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Party, any Subsidiary of any Loan Party or any other
Controlled Group Member.
"Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement, dated as of the date hereof, in substantially the form of
Exhibit C hereto, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof.
"Postretirement Benefits" shall mean any benefits, other than
retirement income, provided by any Borrower to retired employees, or to
their spouses, dependents or beneficiaries, including group medical
insurance or benefits, or group life insurance or death benefits.
"Potential Default" shall mean any event or condition which
with notice, passage of time or a determination by the Required
Lenders, or any combination of the foregoing, would constitute an Event
of Default.
"Present Value Amount" shall have the meaning set forth in
Section 2.12(b) hereof.
"Prime Rate" shall mean the interest rate per annum announced
from time to time by Mellon as its prime rate. The Prime Rate may be
greater or less than other interest rates charged by Mellon to other
borrowers.
"Prime Rate Option" shall have the meaning set forth in
Section 2.4(a) hereof.
"Prime Rate Portion" of any Loan or Loans shall mean at any
time the portion, of such Loan or Loans bearing interest at such time
(i) under the Prime Rate Option or (ii) in accordance with Section
2.11(d) hereof.
"Pro Rata Share" of each Lender shall mean a share
proportional to such Lender's Commitment Percentage.
"Qualifying Interest Rate Hedging Agreements" at any time
shall mean Interest Rate Hedging Agreements to which Genesis is a party
and which is on terms and conditions (including without limitation the
counterparties thereto) satisfactory to the Agent; provided, however,
the notional amounts covered by all such Interest Rate Hedging
Agreements at any time outstanding shall not exceed $50,000,000 in the
aggregate. With respect to any Qualifying Interest Rate Hedging
Agreement having a Lender as the counterparty, the Agent shall, if
requested by Genesis, consent to a joinder supplement to the Collateral
Agency Agreement whereby, subject to the terms of the Collateral Agency
Agreement, such Qualifying Interest Rate Hedging Agreement shall be
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entitled to the security provided for in the Security
Documents.
"Quarterly Compliance Certificate" shall have the meaning set
forth in Section 6.1(d) hereof.
"Recapture Event" shall mean any sale, assignment, transfer or
other disposition by any Borrower or any Restricted Subsidiary of any
assets (other than inventory or other assets sold or disposed of in the
ordinary course of business according to ordinary business terms, and
other than obsolete or worn-out assets), in each case whether now owned
or hereafter acquired, provided, however, that any sale of Synthetic
Lease Property shall not constitute a Recapture Event.
"Redeployment Period" shall have the meaning set forth
in Section 2.12(b) hereof.
"Redeployment Rate" shall have the meaning set forth in
Section 2.12(b) hereof.
"Regular Payment Date" shall mean the last day of each March,
June, September and December after the date hereof.
"Reimbursement Obligation" shall have the meaning set
forth in Section 3.4(a) hereof.
"Related Litigation" shall have the meaning set forth
in Section 10.17(b) hereof.
"Rental Expense" shall mean, with respect to any Person for
any period, the aggregate rental obligations of such Person, payable in
respect of any leases other than Capital Leases or Synthetic Leases
during such period, but in any case including obligations for taxes,
insurance, maintenance and similar costs which the lessee is obligated
to pay under the terms of such leases and which are attributable to the
leases for such period (whether such amounts are accrued or paid during
such period).
"Reportable Event" shall mean (i) a reportable event described
in Section 4043 of ERISA and regulations thereunder, (ii) a withdrawal
by a substantial employer from a Plan to which more than one employer
contributes, as referred to in Section 4063(b) of ERISA, (iii) a
cessation of operations at a facility causing more than twenty percent
(20%) of Plan participants to be separated from employment, as referred
to in Section 4062(e) of ERISA, or (iv) a failure to make a required
installment or other payment with respect to a Plan when due in
accordance with Section 412 of the Code or Section 302 of ERISA which
causes the total
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unpaid balance of missed installments and payments (including unpaid
interest) to exceed $750,000.
"Required Lenders" shall mean, as of any date, Lenders
holding, in the aggregate, at least 51% of the Commitment.
"Responsible Officer" of a Person shall mean the
President, the Chief Executive Officer, any Vice President,
the Controller, the Treasurer or the Chief Financial Officer
of such Person.
"Restricted Subsidiaries" shall mean all direct and indirect
Subsidiaries of Genesis other than Unrestricted Entities. When
reference is made to Restricted Subsidiaries of a specified Person, it
shall mean Restricted Subsidiaries that are Subsidiaries of such
Person. Restricted Subsidiaries shall be either "Material Restricted
Subsidiaries" or "Non-Material Restricted Subsidiaries" as designated
by Genesis pursuant to the terms of this Agreement.
"Revolver Participant" shall have the meaning set forth
in Section 10.15(b) hereof.
"River Street Intercreditor Agreement" shall mean that certain
Intercreditor Agreement, dated as of November 30, 1993 among (a) First
Fidelity Bank, N.A., Pennsylvania (formerly Fidelity Bank, National
Association), as Trustee under a Trust Indenture dated as of June 1,
1992 relating to $3,915,000 aggregate principal amount of First
Mortgage Revenue Refunding Bonds, Series of 1992 (River Street
Associates Project), (b) River Street Associates, a Pennsylvania
limited partnership, (c) the Collateral Agent and (d) Genesis, as it
may be amended, modified or supplemented from time to time.
"Secured Parties" shall have the meaning ascribed to such term
in the Collateral Agency Agreement.
"Security Documents" shall mean the Collateral Agency
Agreement, the Pledge Agreement, and any other agreement or instrument
from time to time granting or purporting to grant the Agent or the
Collateral Agent a Lien in any property for the benefit of the Lender
Parties to secure the Loan Obligations, or constituting a Guaranty for
such Loan Obligations, or subordinating other obligations to such Loan
Obligations.
"Senior Funded Debt/Cash Flow Ratio" shall mean as at
any date of determination:
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(a) Senior Funded Indebtedness as of such date of
determination
divided by
(b) Cash Flow of Genesis and its Restricted
Subsidiaries on a consolidated basis for the four
fiscal quarters ending on, or most recently prior to,
such date of determination.
"Senior Funded Indebtedness" at any time shall mean Total
Funded Indebtedness of Genesis and its Restricted Subsidiaries on a
consolidated basis, other than (a) Indebtedness which is evidenced by
the 1993 Subordinated Debentures, (b) Indebtedness which is evidenced
by the 1995 Subordinated Notes and (c) any other Indebtedness which is
both permitted under the terms of this Agreement and expressly
subordinated in right of payment to all Loan Obligations under terms
satisfactory to the Agent.
"Silver Lake Bristol Documents" shall mean any agreement or
instrument relating to financing of a nursing facility known on
November 30, 1993 as "Silver Lake Bristol" which financing constitutes
Indebtedness of any Borrower or any Subsidiary of any Borrower or with
respect to which any Borrower or any Subsidiary of any Borrower
provides a Guaranty, in each case as the same may be amended, modified
or supplemented from time to time.
"Silver Lake Dover Documents" shall mean (a) the Trust
Indenture dated as of February 1, 1993 between The Delaware Economic
Development Authority and Fidelity Bank, National Association, as
Trustee, relating to The Delaware Economic Development Authority's
First Mortgage Revenue Refunding Bonds (Dover Health Care Associates,
Inc. Project), (b) the Loan Agreement referenced in such Trust
Indenture, (c) the Guaranty Agreement dated as of February 1, 1993
between Genesis and The Delaware Economic Development Authority and (d)
any other agreement or instrument providing for security for or a
Guaranty of the obligations under or with respect to the documents
described in this definition or the Bonds issued under such Trust
Indenture, in each case as the same may be amended, modified or
supplemented from time to time.
"Solvent" shall mean, with respect to the Borrowers (treated
as if they comprised a single consolidated entity) at any time, that at
such time (a) the sum of the debts and liabilities (including
contingent liabilities) of the Borrowers is not greater than all of the
assets of the Borrowers at a fair valuation, (b) the present value of
the assets at fair valuation of the Borrowers is not less than the
amount that will be required to pay the probable
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liability of the Borrowers on their debts as they become absolute and
matured, (c) the Borrowers have not incurred, will not incur, do not
intend to incur, and do not believe that they will incur, debts or
liabilities (including contingent liabilities) beyond their ability to
pay as such debts and liabilities mature, (d) the Borrowers are not
engaged in, and are not about to engage in, a business or a transaction
for which their property constitutes or would constitute unreasonably
small capital, and (e) the Borrowers are not otherwise insolvent as
defined in, or otherwise in a condition which could in any
circumstances then or subsequently render any transfer, conveyance,
obligation or act then made, incurred or performed by them avoidable or
fraudulent pursuant to, any Law that may be applicable to them
pertaining to bankruptcy, insolvency or creditors' rights (including
but not limited to the Bankruptcy Code of 1978, as amended, and, to the
extent applicable to them, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act, or any other applicable Law pertaining
to fraudulent conveyances or fraudulent transfers or preferences).
"Standard Notice" shall mean an irrevocable notice
provided to the Agent on a Business Day which is
(a) At least one Business Day in advance in the case
of (i) the making of any Loan to which only the Prime Rate
Option shall be applicable, (ii) conversion to or renewal of a
Loan to which only the Prime Rate Option shall be applicable
or (iii) prepayment of any Prime Rate Portion; and
(b) At least three London Business Days in advance in
the case of (i) the making of any Loan to which the Euro-Rate
Option shall be applicable in whole or in part, (ii)
conversion to or renewal of a Loan to which the Euro-Rate
Option shall be applicable in whole or in part or (iii)
prepayment of any Euro-Rate Portion.
Standard Notice must be provided no later than 10:00 o'clock a.m.,
Philadelphia, Pennsylvania time, on the last day permitted for such
notice.
"Stock Payment" by any Person shall mean any dividend,
distribution or payment of any nature (whether in cash, securities, or
other property) on account of or in respect of any shares of the
capital stock (or warrants, options or rights therefor) of such Person,
including but not limited to any payment on account of the purchase,
redemption, retirement, defeasance or acquisition of any shares of the
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capital stock (or warrants, options or rights therefor) of such Person,
in each case regardless of whether required by the terms of such
capital stock (or warrants, options or rights) or any other agreement
or instrument.
"Subordinated Affiliate Notes" shall mean promissory notes
issued, from time to time, by a Borrower to an Affiliate which is not a
Borrower evidencing an obligation of such Borrower to repay a cash
advance, in each case made in accordance with terms of this Agreement
and having maturities, subordination provisions, and the other terms
which shall be reasonably satisfactory in form and substance to the
Agent.
"Subsidiary" of a Person at any time shall mean
(a) any corporation of which a majority (by number of
shares or number of votes) of any class of outstanding capital
stock normally entitled to vote for the election of one or
more directors (regardless of any contingency which does or
may suspend or dilute the voting rights of such class) is at
such time owned directly or indirectly, beneficially or of
record, by such Person or one or more Subsidiaries of such
Person;
(b) any trust of which a majority of the beneficial
interest is at such time owned directly or indirectly,
beneficially or of record, by such Person or one or more
Subsidiaries of such Person; and
(c) any partnership, joint venture or other entity of
which ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons
performing similar functions are at such time owned directly
or indirectly, beneficially or of record, by, or which is
otherwise controlled directly, indirectly or through one or
more intermediaries by, such Person or one or more
Subsidiaries of such Person;
"Synthetic Lease" shall mean any lease (other than a Capital
Lease) wherein the lessee is treated (or purported to be treated) as
the owner of the leased property for income tax purposes, including the
Synthetic Lease Facility.
"Synthetic Lease Facility" shall have the meaning ascribed to
such term in the recitals to this Agreement.
"Synthetic Lease Facility Documents" shall mean the Synthetic
Lease Facility, any subleases entered into from time to time pursuant
to Section 12.1(a) of the Synthetic Lease Facility (or any successor
Section thereto) and all
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other documents, agreements and instruments delivered thereunder or in
connection therewith, as the same may be amended, modified or
supplemented from time to time in accordance with the terms of Section
7.18 of this Agreement.
"Synthetic Lease Participant" shall have the meaning ascribed
to such term in the Collateral Agency Agreement.
"Synthetic Lease Property" shall mean all real property,
personal property and fixtures of every kind, now or hereafter, leased
pursuant to the Synthetic Lease Facility.
"Tax Sharing Agreement" shall mean an agreement among Genesis
and each of its Subsidiaries (that file tax returns on a consolidated
basis with Genesis) limiting, as between the parties thereto, the tax
liabilities of Genesis and its Restricted Subsidiaries in connection
with any consolidated tax filings (which may include as part of the
consolidated group for tax purposes both Restricted Subsidiaries and
Unrestricted Entities) to the amount of tax liabilities Genesis and its
Restricted Subsidiaries would have incurred had they filed separately.
"Taxes" shall have the meaning set forth in Section
2.13(a) hereof.
"Total Assets" shall mean, with respect to any Person all
assets which are, or should be included on such Person's balance sheet
in accordance with GAAP.
"Total Funded Debt/Cash Flow Ratio" as of any date of
determination shall mean the ratio of:
(a) Total Funded Indebtedness of Genesis and its
Restricted Subsidiaries on a consolidated basis as
of such date of determination
divided by
(b) Cash Flow of Genesis and its Restricted
Subsidiaries on a consolidated basis for the four
fiscal quarters ended on, or most recently prior to,
such date of determination.
"Total Funded Indebtedness" of any Person, as at any date of
determination, shall mean the sum of (a) all Indebtedness (including
the current portion thereof) of such Person (including all Indebtedness
consisting of obligations under any Synthetic Lease, Capitalized Lease
Obligations, Guaranties and letter of credit reimbursement obligations)
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as at such date of determination plus (b) the product of (i) Rental
Expense for the four fiscal quarters ended on, or most recently prior
to, such date of determination multiplied by (ii) eight (8).
"Transfer Effective Date" shall have the meaning ascribed to
such term in the applicable Transfer Supplement.
"Transfer Supplement" shall have the meaning set forth
in Section 10.15(c) hereof.
"Treasury Rate" as of any Funding Breakage Date shall mean the
rate per annum determined by the applicable Lender (which determination
shall be conclusive) to be the semiannual equivalent yield to maturity
(expressed as a semiannual equivalent and decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) for
United States Treasury securities maturing on the last day of the
corresponding Funding Period and trading in the secondary market in
reasonable volume (or if no such securities mature on such date, the
rate determined by standard securities interpolation methods as applied
to the series of securities maturing as close as possible to, but
earlier than, such date, and the series of such securities maturing as
close as possible to, but later than, such date).
"Unrestricted Entities" shall mean any Subsidiaries or
Investments which are designated as "Unrestricted Entities" in
accordance with the terms of Section 7.6 hereof.
1.2 Construction. In this Agreement and each other Loan
Document, unless the context otherwise clearly requires, references to the
plural include the singular, the singular the plural and the part the whole;
"or" has the inclusive meaning represented by the phrase "and/or;" and the terms
"property" and "assets" each include all properties and assets of any kind or
nature, tangible or intangible, real, personal or mixed, now existing or
hereafter acquired. The words "hereof," "herein" and "hereunder" (and similar
terms) in this Agreement or any other Loan Document refer to this Agreement or
such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document. The words
"includes" and "including" (and similar terms) in this Agreement or any other
Loan Document mean "includes without limitation" and "including without
limitation," respectively (and similarly for similar terms). References in this
Agreement or any other Loan Document to "determination" (and similar terms) by
any Lender Party include good faith estimates by such Lender Party (in the case
of quantitative determinations) and good faith beliefs by such Lender Party (in
the case of
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qualitative determinations). No doctrine of construction of ambiguities in
agreements or instruments against the interests of the party controlling the
drafting thereof shall apply to this Agreement or any other Loan Document. The
section and other headings contained in this Agreement and in each other Loan
Document, and any tables of contents contained herein or therein, are for
reference purposes only and shall not affect the construction or interpretation
of this Agreement or such other Loan Document in any respect. Whenever this
Agreement requires the delivery of financial projections, it is understood that
the projections shall be made in good faith, consistent with the Loan Documents
and based on Genesis' best judgment as to the anticipated financial performance
and results of operations. However, any such financial projections shall not
constitute a representation or warranty that such future financial performance
or results of operations will in fact be achieved.
1.3 Accounting Principles.
(a) As used herein, "GAAP" shall mean generally accepted
accounting principles (other than as set forth in this Section 1.3(a) as to
consolidation) in the United States, applied on a basis consistent with the
principles used in preparing the financial statements of Genesis and its
consolidated Subsidiaries as of September 30, 1995 and for the fiscal year then
ended, as referred to in Section 4.6 hereof. When the word "consolidated" is
used in this Agreement with respect to "Genesis and its Subsidiaries on a
consolidated basis" or "Genesis and its consolidated Subsidiaries" or similar
phrases, it shall be used in a manner consistent with generally accepted
accounting principles in the United States. However, when the word
"consolidated" is used with respect to "Genesis and its Restricted Subsidiaries"
or another group of Persons, it shall imply principles respecting elimination of
inter-company obligations and similar concepts under generally accepted
accounting principles but shall not imply adherence to any principles directing
which Persons should be included in such group.
(b) Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters shall be
made, and all financial statements to be delivered pursuant to this Agreement
shall be prepared, in accordance with GAAP and all accounting or financial terms
shall have the meanings ascribed to such terms by GAAP.
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ARTICLE 2 - THE CREDITS
2.1 Revolving Credit Loans.
(a) Commitment to Lend. Subject to Section 2.3 and the other
terms and conditions set forth herein, each Lender, severally and not jointly,
agrees to make loans (the "Loans") to the Borrowers in an aggregate principal
amount not to exceed the amount of such Lender's Commitment, at any time and
from time to time, on or after the Effective Date and to, but not including, the
Maturity Date.
Each Lender's Commitment shall initially be equal to the
amount set forth as its "Initial Commitment" below its name on the signature
pages hereof, and shall be subject to adjustment pursuant to the terms hereof. A
Lender shall have no obligation to make any proposed Loan, however, to the
extent that, after giving effect to the proposed Loan, the aggregate principal
amount of such Lender's Pro Rata Share of all Loans would exceed the amount of
(i) such Lender's Commitment at such time less (ii) such Lender's Pro Rata Share
of the Letter of Credit Usage at such time.
(b) Nature of Credit. Subject to the restrictions set forth in
this Section 2.1 above, and elsewhere in this Agreement, the Borrowers may
borrow, repay and reborrow Loans until the Maturity Date.
(c) Notes. The obligation of the Borrowers to repay the
principal amount of the Loans and to pay interest thereon shall be evidenced by
separate Notes issued to each Lender. Such notes may be amended by appropriate
allonges or replaced in whole as required by the terms hereof.
(d) Due Date. To the extent not due and payable
earlier, Loan Obligations shall be due and payable on the
Maturity Date.
2.2 Reduction of Commitment.
(a) Voluntary Reductions. Genesis, on behalf of the Borrowers,
may at any time or from time to time on two (2) Business Days prior written
notice (which shall be irrevocable) permanently reduce, by amounts proportional
to the respective Lenders' Pro Rata Shares, the Commitment. Each such reduction
of Commitment shall be in an aggregate amount which is an integral multiple of
$1,000,000.
(b) Mandatory Reductions in Connection with Asset
Sales. No more than five Business Days after the date of any
Recapture Event, Genesis, on behalf of the Borrowers, shall
notify the Agent in writing that a Recapture Event has occurred,
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the date of such event and the amount of the Net Cash Proceeds received in
connection therewith. In the event that the Borrowers do not, within 364 days
after the date of any sale of assets constituting a Recapture Event, reinvest
all of the corresponding Net Cash Proceeds in their business (and so state in a
certificate delivered by Genesis (on their behalf) to the Agent), then on or
before the 364th day following such sale, Genesis, on behalf of the Borrowers,
shall, by written notice to the Agent, permanently reduce the amount of the
Commitment, by an amount equal to the amount of such Net Cash Proceeds not so
reinvested. (In addition, the Borrowers shall prepay the Loans as required by
Section 2.8 below.)
2.3 Making of Loans.
(a) Borrowing Notice. Subject to the
restrictions set forth in this Agreement, whenever a Borrower desires that the
Lenders make Loans, Genesis, on behalf of such Borrower, shall provide Standard
Notice to the Agent setting forth the following information:
(a) The date, which shall be a Business Day, on which
such proposed Loans are to be made;
(b) The aggregate principal amount of the Loans (which
shall be in integral multiples of Five Hundred Thousand
Dollars ($500,000));
(c) The interest rate Option or Options (each separate Option
to be in an amount which is an integral multiple of Five Hundred
Thousand Dollars ($500,000));
(d) With respect to each Euro-Rate Portion, the
Funding Period to apply; and
(e) The name of such Borrower.
(g) Timing. Upon receipt of a Standard Notice requesting a
Loan, the Agent shall promptly notify each Lender of the information contained
therein and of the amount of such Lender's portion of the Loan, which shall
equal such Lender's Pro Rata Share of the aggregate principal amount of the
entire Loan to be made on a given day. Unless any applicable condition specified
in Article 5 hereof has not been satisfied, on the date specified in such
Standard Notice, each Lender shall make the proceeds of its portion of the Loan
available to the Agent at the Agent's Office, no later than 12:00 o'clock Noon,
Philadelphia, Pennsylvania time, in funds immediately available at such Office.
The Agent will make the funds so received available to the Borrowers in funds
immediately available at the Agent's Office.
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2.4 Interest Rates.
(a) Bases of Borrowing. The unpaid principal amount of the
Loans shall bear interest for each day until due on one or more bases selected
by Genesis on behalf of the Borrowers from among the interest rate Options set
forth below. Subject to the provisions of this Agreement, Genesis on behalf of
the Borrowers may select different Options to apply simultaneously to different
portions of the Loans and may select different Funding Periods to apply
simultaneously to different Euro-Rate Portions. The aggregate number of
different Funding Periods applicable to the Euro-Rate Portions at any time shall
not exceed six (or, if the Prime Rate Option is applicable to any Loans, five).
Without limiting any right or remedies of the Lenders hereunder, the Euro-Rate
Option may not be selected at any time there is an Event of Default or Potential
Default.
(i) Prime Rate Option: The "Prime Rate Option" shall mean a
rate per annum (computed on the basis of a year of 365/6 days and
actual days elapsed) for each day equal to the Prime Rate for such day
plus the Applicable Margin for such day.
(ii) Euro-Rate Option: The "Euro-Rate Option" shall mean a
rate per annum (based on a year of 360 days and actual days elapsed)
for each day equal to the Euro-Rate for such day plus the Applicable
Margin for such day. "Euro- Rate" for any day, as used herein, shall
mean the rate per annum determined by the Agent by dividing (the
resulting quotient to be rounded upward to the nearest 1/100 of 1%) (A)
the rate of interest (which shall be the same for each day in such
Funding Period) determined in good faith by the Agent (which
determination shall be conclusive) to be the average of the rates per
annum for deposits in Dollars offered to major money center banks in
the London interbank market at approximately 11:00 o'clock a.m., London
time, two London Business Days prior to the first day of such Funding
Period for delivery on the first day of such Funding Period in similar
amounts and maturities as the proposed Euro-Rate Portion and Funding
Period by (B) a number equal to 1.0 minus the Euro-Rate Reserve
Percentage.
"Euro-Rate Reserve Percentage" for any day shall mean
the percentage (expressed as a decimal, rounded upward to
the nearest 1/100 of 1%), as determined in good faith by the
Agent (which determination shall be conclusive), which is in
effect on such day as prescribed by the Board of Governors
of the Federal Reserve System representing the maximum
reserve requirement (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency
liabilities") of a member bank in such System. The Euro-
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Rate shall be adjusted automatically as of the effective date of each
change in the Euro-Rate Reserve Percentage.
(b) Applicable Margins.
(i) From the Effective Date until the conditions set forth in
Section 2.4(b)(ii) hereof apply, the Applicable Margin for any Prime
Rate Portion of the Loans shall be 0.00% and the Applicable Margin for
each Euro-Rate Portion of the Loans shall be 1.25%.
(ii) Commencing on the first day of the calendar month
following the calendar month in which the Agent shall have received
from Genesis, on behalf of the Borrowers, a Quarterly Compliance
Certificate in accordance with Section 6.1(d) hereof, the Applicable
Margin for each interest rate Option shall mean the percentage set
forth below.
Applicable Applicable
Margin for Margin for
Total Funded Debt/ Prime Rate Euro-Rate
Cash Flow Ratio Option Option
------------------ ----------- -----------
less than 3.0 0.00% 0.50%
equal to or greater
than 3.0 but less
than 3.5 0.00% 0.75%
equal to or greater
than 3.5 but less
than 4.0 0.00% 1.00%
equal to or greater
than 4.0 but less
than 4.5 0.00% 1.25%
equal to or greater
than 4.5 0.00% 1.50%
The Applicable Margin shall be adjusted quarterly when the Quarterly
Compliance Certificate is delivered pursuant to Section 6.1(d) below
provided, however, at any time that Genesis shall fail to deliver on
the designated date a Quarterly Compliance Certificate pursuant to
Section 6.1(d) hereof the Applicable Margin shall be 0.00% for any
Prime Rate Portion of the Loans and 1.50% for any Euro-Rate Portion of
the Loans until such time as a new Quarterly Compliance Certificate is
delivered hereunder.
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(c) Funding Periods. At any time when Genesis on behalf of the
Borrowers shall select or renew the Euro-Rate Option to apply to any part of the
Loans, Genesis on behalf of the Borrowers, shall specify one or more periods
(the "Funding Periods") during which each such Option shall apply, such Funding
Periods being one, two, three or six months; provided,
(i) Each Funding Period shall begin on a London Business Day,
and the term "month", when used in connection with a Funding Period,
shall be construed in accordance with prevailing practices in the
interbank eurodollar market at the commencement of such Funding Period,
as determined in good faith by the Agent (which determination shall be
conclusive);
(ii) Genesis on behalf of the Borrowers may not select
a Funding Period that would end after the Maturity Date; and
(iii) Genesis on behalf of the Borrowers shall, in selecting
any Funding Period, allow for foreseeable mandatory prepayments and
scheduled amortization, if any, of the Loans.
(d) Euro-Rate Unascertainable; Impracticability. If
(i) on any date on which a Euro-Rate would otherwise be set,
the Agent (in the case of clauses (A) or (B) below) or any Lender (in
the case of clause (C) below) shall have determined in good faith
(which determination shall be conclusive) that:
(A) adequate and reasonable means do not exist
for ascertaining such Euro-Rate, or
(B) a contingency has occurred which materially
and adversely affects the interbank eurodollar market,
or
(C) the effective cost to such Lender of funding
the Euro-Rate Portion (or deemed cost in the good faith
determination of such Lender) shall exceed the relevant
Euro-Rate, or
(ii) at any time any Lender shall have determined in good
faith (which determination shall be conclusive ) that the making,
maintenance or funding of any part of the Euro- Rate Portion has been
made impracticable or unlawful by compliance with any Law or with any
request or directive of any Governmental Authority (whether or not
having the force of Law);
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then, and in any such event, the Agent or such Lender, as the case may be, may
notify Genesis, on behalf of the Borrowers, of such determination. Upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given), the obligation of each of the affected Lenders to
allow the Borrowers to select, convert to or renew the Euro-Rate Option shall be
suspended (and all such existing Loans made by such Lenders shall automatically
convert to Loans bearing interest at the Prime Rate Option and all outstanding
requests for Loans from the relevant Lenders shall be deemed requests for Loans
bearing interest at the Prime Rate Option) until the Agent or such Lender, as
the case may be, shall have notified Genesis, on behalf of the Borrowers, of the
Agent's or such Lender's determination that the circumstance giving rise to such
previous determination no longer exist.
2.5 Conversion or Renewal of Interest Rate Options.
(a) Conversion or Renewal. Subject to the provisions of
Section 2.12(b) hereof, and if no Event of Default or Potential Default shall
have occurred and be continuing, Genesis, on behalf of the Borrowers, may
convert any part of the Loans from any interest rate Option or Options to one or
more different interest rate Options:
(i) At any time with respect to conversion from the
Prime Rate Option; or
(ii) At the expiration of any Funding Period with
respect to conversions from or renewals of any Euro-Rate
Portions.
Whenever Genesis, on behalf of the Borrowers, desires to convert or renew any
interest rate Option or Options, Genesis, on behalf of the Borrowers, shall
provide to the Agent Standard Notice setting forth the following information:
(w) The date, which shall be a Business Day, on which
the proposed conversion or renewal is to be made;
(x) The principal amount of each Prime Rate Portion
and each Euro-Rate Portion being continued or converted;
(y) The principal amount of the Prime Rate Portion, if any,
and the principal amount of each Euro-Rate Portion, if any, selected
(each such Euro-Rate Portion and the Prime Rate Portion being in a
principal amount at least equal to Five Hundred Thousand Dollars
($500,000)); and
(z) With respect to each conversion to or
continuation of a EuroRate Portion, the Funding Period
selected.
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(b) Failure to Convert or Renew. Absent due notice from
Genesis, on behalf of the Borrowers, of conversion or renewal in the
circumstances described in Section 2.5(a) hereof, any part of the Euro-Rate
Portion for which such notice is not received shall be converted automatically
to the Prime Rate Option on the last day of the expiring Funding Period.
2.6 Prepayments Generally. Whenever any Borrower
desires or is required to prepay any part of the Loans, it shall
provide Standard Notice to the Agent setting forth the following
information:
(a) The name of such Borrower;
(b) The date, which shall be a Business Day, on which
the proposed prepayment is to be made;
(c) The total principal amount of such prepayment, specifying
the Prime Rate Portion and each Euro-Rate Portion to be prepaid.
On the date specified in such Standard Notice, the principal amounts specified
in such notice, together with interest thereon shall be due and payable.
2.7 Optional Prepayments. The Borrowers shall have the right
at their option from time to time to prepay their Loans in whole or in part in
amounts which are integral multiples of One Million Dollars ($1,000,000),
without premium or penalty with respect to any part of the Loans (subject,
however, to Section 2.12(b) hereof):
(a) At any time with respect to any part of the Prime
Rate Portion; or
(b) At the expiration of any Funding Period with
respect to prepayment of the Euro-Rate Portion corresponding
to such expiring Funding Period.
Any such prepayment shall be made in accordance with Section 2.6 hereof.
2.8 Mandatory Prepayments in connection with Mandatory
Reductions of Commitment. Any time there is a mandatory reduction in Commitment
pursuant to Section 2.2(b) hereof, the Borrowers shall immediately prepay the
outstanding principal amount of the Loans, any Reimbursement Obligations, and
any other Loan Obligations which are payable in an amount equal to the amount of
the Commitment reduction (to the extent there are then Loans outstanding,
accrued interest, Reimbursement Obligations or other Loan Obligations which are
then payable). In addition, if, at any time (whether by reason of a voluntary or
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mandatory reduction in the amount of the Commitment or otherwise), (x) the sum
of the aggregate outstanding principal amount of the Loans at such time plus the
Letter of Credit Usage at such time exceeds (y) the amount of the Commitment at
such time, the Borrowers shall immediately, prepay the Loans and Reimbursement
Obligations to the extent of such excess. Any prepayment pursuant to this
Section 2.8 shall be applied to Loan Obligations in the following order of
priority:
(i) first, if any Reimbursement Obligations are then
outstanding, pay such Reimbursement Obligations, together
with interest thereon to such date,
(ii) second, if any Loans are then outstanding, pay or
prepay such Loans, together with interest thereon to such
date, and
(iii) third, any other Loan Obligations.
Within the constraints set forth above, each prepayment shall
be applied first to any Loans to which the Prime Rate Option is applicable and
then to any Loans to which the Euro-Rate Option is applicable, in each case in
such order among such Loans as the Agent may, in its discretion, determine.
2.9 Interest Payment Dates. Interest on the Prime Rate Portion
shall be due and payable on each Regular Payment Date and on the Maturity Date.
Interest on each Euro-Rate Portion shall be due and payable on the last day of
the corresponding Euro-Rate Funding Period and, if such Euro-Rate Funding Period
is longer than three months, also every third month during such Funding Period.
After maturity of any part of the Loans (by acceleration or otherwise), interest
on such part of the Loans shall be due and payable on demand.
2.10 Fees.
(a) Commitment Fee. The Borrowers, jointly and severally,
shall pay to the Agent for the account of each Lender a commitment fee (the
"Commitment Fee") for each day from and including the Effective Date to but not
including the Maturity Date, calculated using a rate per annum (based on a year
of 360 days and actual days elapsed) equal to the Commitment Fee Factor for such
day, on the amount (not less than zero) equal to the amount by which
(i) the amount of such Lender's Commitment (after
taking into account any reductions pursuant to Section 2.2
hereof) on such day, exceeds
(ii) the sum of (x) the aggregate principal amount of
such Lender's Loans outstanding on such day plus (y) such
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Lender's Pro Rata Share of the aggregate Letter of Credit
Undrawn Availability for all Letters of Credit outstanding
on such day.
As used herein, the "Commitment Fee Factor" for a given day shall initially be
0.25% but commencing on the first day of the calendar month following the
calendar month in which the Agent shall have received from Genesis, on behalf of
the Borrowers, a Quarterly Compliance Certificate in accordance with Section
6.1(d) hereof, the "Commitment Fee Factor" shall mean the rate per annum set
forth below:
Applicable
Total Funded Debt/ Commitment
Cash Flow Fee Factor
- ----------------------------------------------------------------
less than 3.0 0.15%
equal to or greater
than 3.0 but less
than 3.5 0.20%
equal to or greater
than 3.5 but less
than 4.5 0.25%
equal to or greater
than 4.5 0.3125%
Notwithstanding the foregoing, at any time that Genesis shall fail to deliver on
the designated date a Quarterly Compliance Certificate pursuant to Section
6.1(d) below or at any time that there shall exist any other Event of Default or
Potential Default, the Applicable Commitment Fee Factor shall be (until such
certificate is delivered or until such Event of Default or Potential Default
shall have been duly waived or cured) 0.3125%.
The Commitment Fee shall be due and payable for the preceding period
for which such fee has not been paid: (x) on each Regular Payment Date, (y) on
the date of each reduction of the amount of the Commitment on the amount so
reduced and (z) on the Maturity Date.
(b) Letter of Credit Commission; Letter of Credit Facing Fee.
The Borrowers jointly and severally agree to pay to the Agent for the account of
each Lender a commission (the "Letter of Credit Commission") for each day
calculated on the aggregate Letter of Credit Undrawn Availability for all
Letters of Credit outstanding on such day using a per annum rate (based on a
year of 360 days and actual days elapsed) equal to the then- Applicable Margin
for the Euro-Rate Option. In addition, for
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each Letter of Credit issued hereunder, the Borrowers jointly and severally
agree to pay to the Agent for the sole account of the Issuer a Letter of Credit
facing fee (the "Letter of Credit Facing Fee") for each day calculated on the
aggregate Letter of Credit Undrawn Availability for all Letters of Credit
outstanding on such day using a per annum rate (based on a year of 360 days and
actual days elapsed) equal to 0.10% per annum. Such Letter of Credit Commission
and such Letter of Credit Facing Fee shall be due and payable in arrears
(x) on each Regular Payment Date with respect to each
Letter of Credit then outstanding, and
(y) on the date of expiration or other termination of
each Letter of Credit, with respect to such expiring or
otherwise terminating Letter of Credit,
in each case for the period for which such fees have not theretofore been paid.
2.11 Pro Rata Treatment; Joint and Several Liability;
Payments Generally; Interest on Overdue Amounts; Authorization of
Genesis by Other Borrowers.
(a) Pro Rata Treatment. Each borrowing and each conversion or
renewal of interest rate Options hereunder shall be made, and all payments and
prepayments made in respect of principal of and interest on Loans, Commitment
Fees and Letter of Credit Commission due from the Borrowers hereunder or under
the Notes shall be applied, with respect to each Lender, in proportion to such
Lender's Pro Rata Share except for (x) payments in respect of any Euro-Rate
Portions converted to Prime Rate Portions as provided in Section 2.4(d) hereof
and (y) payments to a Lender subject to a withholding deduction under Section
2.13(c) hereof. The failure of any Lender to make a Loan shall not relieve any
other Lender of its obligation to lend hereunder, but neither the Agent nor any
Lender shall be responsible for the failure of any other Lender to make a Loan.
(b) Joint and Several Liability. The Borrowers acknowledge
that the credit provided hereunder is on terms more favorable than any Borrower
acting alone would receive and that each Borrower benefits indirectly from all
Loans hereunder. Genesis and, subject only to the terms of Section 10.7 hereof,
each of the other Borrowers, shall be jointly and severally liable for all Loan
Obligations, regardless of, inter alia, which Borrower requested (or received
the proceeds of) a particular Loan or for which Borrower's account a particular
Letter of Credit was issued hereunder.
(c) Payments Generally. All payments and prepayments
to be made by any Borrower with respect to Loan Obligations shall
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be payable in Dollars at 12:00 o'clock Noon, Philadelphia, Pennsylvania time, on
the day when due without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, and an action therefor shall immediately
accrue, without set-off, counterclaim, withholding or other deduction of any
kind or nature (except for payments to a Lender subject to a withholding
deduction under Section 2.13(c) hereof). Except for payments under Section 2.12
or 10.6 hereof, such payments shall be made to the Agent at its Office in
Dollars in funds immediately available at such Office, and payments under
Section 2.12 or 10.6 hereof shall be made to the applicable Lender or Issuer at
such domestic account as it shall specify to Genesis, on behalf of the
Borrowers, from time to time in funds immediately available at such account. Any
payment or prepayment received by the Agent or such Lender or Issuer after 12:00
o'clock Noon, Philadelphia, Pennsylvania time, on any day shall be deemed to
have been received on the next succeeding Business Day. The Agent shall
distribute to the Lenders or the Issuer, as the case may be, all such payments
received by the Agent for their respective accounts as promptly as practicable
after receipt by the Agent.
(d) Interest on Overdue Amounts. Without limiting any other
rights or remedies of the Lenders hereunder, under any other Loan Document or
available at law or in equity, to the extent permitted by Law, after there shall
have become due (by acceleration or otherwise) any Loans hereunder or any other
Loan Obligations, such Loans shall bear interest for each day until paid (before
and after judgment), payable on demand, at a rate equal to 2.0% per annum in
excess of the rate otherwise in effect and in the case of any other Loan
Obligations, shall bear interest for each day until paid (before and after
judgment), payable on demand, at a rate equal to 2.00% above the then-current
Prime Rate Option.
(e) Irrevocable Authorization of Genesis by Borrowers. Each of
the Borrowers hereby irrevocably authorizes Genesis to give notices, make
requests, make payments, receive payments and notices, give receipts and execute
agreements, make agreements or take any other action whatever on behalf of such
Borrower under and with respect to any Loan Document and each Borrower shall be
bound thereby. This authorization shall be irrevocable and the Agent and each
Lender Party may rely on any notice, request, information supplied by Genesis
and every document executed by Genesis, agreement made by Genesis or other
action taken by Genesis in respect of the Borrowers or any thereof as if the
same were supplied by any or all Borrowers. Without limiting the generality of
the foregoing, the failure of one or more Borrowers to join in the execution of
any writing in connection herewith shall not, unless the context clearly
requires, relieve any such Borrower from obligations in respect of such writing.
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2.12 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc. If any Law or guideline
or interpretation or application thereof by any Governmental Authority charged
with the interpretation or administration thereof or compliance with any request
or directive of any Governmental Authority (whether or not having the force of
Law) now existing or hereafter adopted:
(i) subjects any Lender Party or any Notional Euro-Rate
Funding Office to any tax or changes the basis of taxation with respect
to this Agreement, the Notes, any Letter of Credit or any Letter of
Credit Participation, the Loans or payments by the Borrowers of
principal, interest, commitment fee or other amounts due from the
Borrowers hereunder or under the Notes (except for taxes on the overall
net income or overall gross receipts of such Lender Party or such
Notional Euro-Rate Funding Office),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments
to extend credit extended by, assets (funded or contingent) of,
deposits with or for the account of, or other acquisitions of funds by,
such Lender Party or any Notional Euro-Rate Funding Office (other than
requirements expressly included herein in the determination of the
Euro-Rate hereunder),
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by,
any Lender Party or any Notional Euro-Rate Funding Office, or (B)
otherwise applicable to the obligations of any Lender Party or any
Notional Euro-Rate Funding Office under this Agreement or any Letter of
Credit or any Letter of Credit Participation, or
(iv) imposes upon any Lender Party or any Notional Euro-Rate
Funding Office any other condition or expense with respect to this
Agreement, the Notes or its making, maintenance or funding of any Loan
or any Letter of Credit or any Letter of Credit Participation, or any
security therefor,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Lender Party, any Notional Euro-Rate Funding Office or, in the case of clause
(iii) hereof, any Person controlling a Lender Party, with respect to this
Agreement, the Notes, any Letter of Credit or any Letter of Credit Participation
or the issuance, making, maintenance or
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funding of any Loan or Letter of Credit or Letter of Credit Participation (or,
in the case of any capital adequacy or similar requirement, to have the effect
of reducing the rate of return on such Lender Party's or such controlling
Person's capital, taking into consideration such Lender Party's or such
controlling Person's policies with respect to capital adequacy) by an amount
which such Lender Party deems to be material (such Lender Party being deemed for
this purpose to have made, maintained or funded each Euro-Rate Portion through
transactions in the interbank eurodollar market whether or not such transactions
were actually carried on there), such Lender Party may from time to time notify
Genesis, on behalf of the Borrowers, of the amount determined in good faith
(using any averaging and attribution methods) by such Lender Party (which
determination shall be conclusive) to be necessary to compensate such Lender
Party or such Notional Euro-Rate Funding Office for such increase, reduction or
imposition. Such amount shall be due and payable by the Borrowers to such Lender
Party 30 days after such notice is given. A certificate by such Lender Party as
to the amount due and payable under this Section 2.12(a) from time to time and
the method of calculating such amount shall be conclusive.
(b) Funding Breakage. In addition to all other amounts payable
hereunder, if and to the extent for any reason any part of any Euro-Rate Portion
of the Loans becomes due (by acceleration or otherwise), or is paid, prepaid or
converted to another interest rate Option (whether or not such payment,
prepayment or conversion is mandatory or automatic and whether or not such
payment or prepayment is then due), on a day other than the last day of the
corresponding Funding Period, the Borrowers, jointly and severally, shall pay
each Lender an amount determined as provided below in this Section 2.12(b).
Furthermore, in addition to all other amounts payable
hereunder, if Standard Notice has been given for the conversion to or renewal of
the Euro-Rate Option or for the making of any Loan to which the Euro-Rate Option
shall be applicable in whole or in part and (x) a Borrower attempts to revoke
(expressly, by later inconsistent notices or otherwise) such Standard Notice or
(y) (A) an applicable condition precedent is not satisfied and (B) such
conversion or renewal does not take place as specified in such Standard Notice
or (z) (A) an applicable condition precedent is not satisfied and (B) the
Euro-Rate Portion of such Loan is not made as specified in such Standard Notice,
then in each case the Borrowers, jointly and severally, shall pay each Lender an
amount determined as provided below in this Section 2.12(b) if such Lender has
delivered to Genesis, on behalf of the Borrowers, and to the Agent a certificate
stating that such Lender has incurred costs as a result of the events described
in this sentence.
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"Funding Breakage Date" shall mean, in a case
described in the first sentence of this Section 2.12(b), the date that any part
of any Euro-Rate Portion becomes due, or is paid, prepaid or converted, as
described in such sentence, or in a case described in the second sentence of
this Section 2.12(b), the date for the conversion or renewal of the Euro-Rate
Option, or for the making of a Loan, specified in the Standard Notice described
in such sentence. In a case described in the first sentence of this Section
2.12(b), "Adjusted Contract Rate" for a particular principal amount of Loans
shall mean the rate of interest (including the Applicable Margin) applicable to
such principal amount on the Funding Breakage Date, less the Applicable Margin,
and in a case described in the second sentence of this Section 2.12(b),
"Adjusted Contract Rate" for a particular principal amount of to-be-made Loans
shall mean the rate of interest (including the Applicable Margin) which would
have applied to such principal amount on the Funding Breakage Date absent the
failure to renew, convert or borrow, less the Applicable Margin. "Redeployment
Rate" shall mean (x) so long as no determination described in Section 2.4(d)
hereof is then applicable, a rate per annum equal to the Euro-Rate (without the
Applicable Margin) determined by the Agent for the applicable principal amount
using as the Funding Period a period as equal as practicable to the Redeployment
Period (as hereinafter defined) or (y) if any determination described in Section
2.4(d) hereof is then applicable, a rate per annum equal to the Treasury Rate,
in each case as of or as soon as practicable after the Funding Breakage Date. In
each case, the amount determined as being payable pursuant to this Section
2.12(b) may be referred to as the "Funding Breakage Indemnity." The calculation
of the Adjusted Contract Rate and the Redeployment Rate shall be made on the
assumption that the Euro-Rate Reserve Percentage shall remain constant
throughout the applicable Funding Period; in the event that such assumption
proves to be inaccurate and the Lenders would have received greater
indemnification absent such assumption, then the Lenders shall be entitled to
receive such additional indemnification on demand.
The Agent shall calculate each Lender's Funding Breakage
Indemnity as follows:
a. For each portion of the Loans owing to such Lender which so
became due, or which was so paid, prepaid or converted, or as to which
the Euro-Rate Option was to have been renewed or converted to, or which
was to be borrowed (to the extent the Euro-Rate Option was to be
applicable to such to-be-borrowed Loans), the Agent shall calculate the
product (the "Future Value Amount") of
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(1) the principal amount of such portion of the
Loans
multiplied by
(2) the greater of
(x) zero or
(y) the Adjusted Contract Rate minus
the Redeployment Rate, in each case for
such principal amount,
multiplied by
(3) the number of days from and including the
Funding Breakage Date to but not including the last day of
such Funding Period (or scheduled Funding Period in the case
of a failure to renew, convert or borrow) (the "Redeployment
Period"), divided by 360.
b. The Agent shall then determine the present value as of the
Funding Breakage Date (discounted at the Treasury Rate as of such
Funding Breakage Date, and calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days in the
Redeployment Period) (each a "Present Value Amount") of each Future
Value Amount (assuming for this purpose that each Future Value Amount
is payable on the last day of the corresponding Funding Period (or
scheduled Funding Period in the case of a failure to renew, convert or
borrow)).
c. The Agent finally shall total such Lender's Present Value
Amounts for all of its affected portion of the Loans, and this total
shall be the amount of the Funding Breakage Indemnity to be paid by the
Borrowers to such Lender.
Such Funding Breakage Indemnity shall be due and payable on demand. In addition,
the Borrowers shall, on the due date for payment of any Funding Breakage
Indemnity, pay to such Lender an additional amount equal to interest on such
Funding Breakage Indemnity from the Funding Breakage Date to but not including
such due date at the Prime Rate Option (calculated on the basis of a year of 360
days and actual days elapsed). The amount payable to each Lender under this
Section 2.12(b) shall be determined in good faith by the Agent, and such
determination shall be conclusive.
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2.13 Taxes.
(a) Payments Net of Taxes. All payments made by the Borrowers
under this Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, and all liabilities with respect
thereto, excluding
(i) in the case of any Lender Party, income or franchise taxes
imposed on such Lender Party by the jurisdiction under the laws of
which such Lender Party is organized or any political subdivision or
taxing authority thereof or therein or as a result of a connection
between such Lender Party and any jurisdiction other than a connection
resulting solely from this Agreement and the transactions contemplated
hereby, and
(ii) in the case of each Lender, income or franchise taxes
imposed by any jurisdiction in which such Lender's lending offices
which make or book Loans are located or any political subdivision or
taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld or deducted from any amounts payable to any Lender Party under this
Agreement or any other Loan Document, the Borrowers, jointly and severally,
shall pay the relevant amount of such Taxes and the amounts so payable to such
Lender Party shall be increased to the extent necessary to yield to such Lender
Party (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
other Loan Documents. Whenever any Taxes are paid by the Borrowers with respect
to payments made in connection with this Agreement or any other Loan Document,
as promptly as possible thereafter, the Borrowers shall send to the Agent for
its own account or for the account of the Issuer or such Lender, as the case may
be, a certified copy of an original official receipt received by the Borrowers
showing payment thereof.
(b) Indemnity. Without limiting any other indemnity
obligations of the Borrowers, the Borrowers hereby jointly and severally
indemnify each Lender Party for the full amount of all Taxes attributable to
payments by or on behalf of the Borrowers hereunder or under any of the other
Loan Documents, any Taxes paid by such Lender Party, as the case may be, any
present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any Taxes (including any incremental
Taxes, interest or penalties that may become
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payable by such Lender Party as a result of any failure to pay such Taxes),
whether or not such Taxes were correctly or legally asserted.
(c) Withholding and Backup Withholding. 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 any
payment is due to be made to it hereunder or under any other Loan Document, it
will furnish to Genesis, on behalf of the Borrowers, and the Agent
(i) two valid, duly completed copies of United States Internal
Revenue Service Form 4224 or United States 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 and the other Loan Documents without deduction or withholding
of any United States 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 Genesis and the Agent a Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, agrees to deliver to Genesis, on
behalf of the Borrowers, and the Agent two further copies of the said Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, 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 Genesis, on behalf of the Borrowers, and the Agent, certifying in
the case of a Form 1001 or Form 4224 that such Lender is entitled to receive
payments under this Agreement or any other Loan Document without deduction or
withholding of any United States federal income taxes, unless in any such cases
an event (including any changes in 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 letter or form with respect to it and such Lender advises
Genesis, on behalf of the Borrowers, and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.
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2.14 [Intentionally Omitted]
2.15 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Lender shall have the right from
time to time, prospectively or retrospectively, without notice to the Borrowers,
to deem any branch, subsidiary or affiliate of such Lender to have made,
maintained or funded any part of the Euro-Rate Portion at any time. Any branch,
subsidiary or affiliate so deemed shall be known as a "Notional Euro-Rate
Funding Office." Such Lender shall deem any part of the Euro-Rate Portion of the
Loans or the funding therefor to have been transferred to a different Notional
Euro-Rate Funding Office if such transfer would avoid or cure an event or
condition described in Section 2.4(d) hereof or would lessen compensation
payable by the Borrower under Section 2.12(a) hereof, provided that such Lender
determines in its sole discretion that such transfer would be practicable and
would not have a material adverse effect on such part of the Loans, such Lender
or any Notional Euro-Rate Funding Office (it being assumed for purposes of such
determination that each part of the Euro-Rate Portion is actually made or
maintained by or funded through the corresponding Notional Euro-Rate Funding
Office). Notional Euro-Rate Funding Offices may be selected by such Lender
without regard to such Lender's actual methods of making, maintaining or funding
Loans or any sources of funding actually used by or available to such Lender.
(b) Actual Funding. Each Lender shall have the right from time
to time to make or maintain any part of the Euro-Rate Portion by arranging for a
branch, subsidiary or affiliate of such Lender to make or maintain such part of
the Euro-Rate Portion. Such Lender shall have the right to (i) hold any
applicable Note payable to its order for the benefit and account of such branch,
subsidiary or affiliate or (ii) request the Borrowers to issue one or more
replacement Notes payable to such branch, subsidiary or affiliate and with
appropriate changes reflecting that the holder thereof is not obligated to make
any additional Loans to the Borrowers. The Borrowers agree to comply promptly
with any request under subsection (ii) of this Section 2.15(b). If any Lender
causes a branch, subsidiary or affiliate to make or maintain any part of the
Euro-Rate Portion hereunder, all terms and conditions of this Agreement shall,
except where the context clearly requires otherwise, be applicable to such part
of the Euro-Rate Portion and to any note payable to the order of such branch,
subsidiary or affiliate to the same extent as if such part of the Euro-Rate
Portion were made or maintained and such note were a Note payable to such
Lender's order.
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2.16 Transitional Provisions.
(a) Generally. Until the Effective Date, the Original Credit
Agreement shall remain in full force and effect. From and after the Effective
Date the terms of this Agreement shall amend and restate the terms of the
Original Credit Agreement (except that any indemnification provisions therein
shall survive). From and after the Effective Date, the collateral securing the
Loan Obligations shall be the "Collateral" referred to in the Pledge Agreement
and any cash collateral required hereunder. Any Lien created in connection with
the Original Credit Agreement on other collateral (e.g., accounts, inventory and
general intangibles) which secured the obligations under the Original Credit
Agreement is, as of the Effective Date, terminated and the Agent shall direct
the Collateral Agent, upon the written request of the Borrowers, to execute such
releases (including the relevant releases or amendments to financing
statements), redeliver such collateral and take such other action at any time,
or from time to time (regardless of whether an Event of Default or Potential
Default shall then exist), on or after the Effective Date as the Agent or the
Collateral Agent shall deem necessary or desirable to carry out the terms
hereof.
ARTICLE 3 - LETTER OF CREDIT SUBFACILITY
3.1 The Letter of Credit Subfacility.
(a) General. Subject to the terms and conditions of this
Agreement, and relying upon the representations and warranties herein set forth
and upon the agreements of the Lenders set forth in Sections 3.3, 3.4 and 3.8
hereof, the Issuer may issue for the account of any Borrower letters of credit
(each, as amended, modified or supplemented from time to time, a "Letter of
Credit") at any time or from time to time on or after the Effective Date. No
Borrower shall request any Letter of Credit to be issued, nor shall the Issuer
be obligated to issue any Letter of Credit, except within the following
limitations: (i) no Letter of Credit shall be issued later than 90 days before
the Maturity Date, (ii) no Letter of Credit shall be issued if the Agent shall
have received the notice from the Required Lenders referred to in Section
3.2(c)(iii) hereof, and (iii) no Letter of Credit shall be issued if, after
giving effect to issuance of the requested Letter of Credit, the Letter of
Credit Availability would be less than zero at such time. Letters of Credit
shall be issued, extended, renewed or amended only out of the unused portion of
the Commitment.
(b) Terms of Letters of Credit. No Borrower shall
request any Letter of Credit to be issued, nor shall the Issuer
be obligated to issue any Letter of Credit, except within the
following limitations: each Letter of Credit (i) shall have an
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expiration date no later than the earlier of (A) 13 months after the date of
issuance thereof or (B) ten days before the Maturity Date, (ii) except with
respect to certain of the Carry-Over Letters of Credit, shall not have an
expiration date which is extendable under an "evergreen" or similar provision
(unless the Issuer expressly agrees to the same in its sole discretion in any
particular case), (iii) shall be denominated in Dollars, (iv) shall be payable
only against sight drafts (and not time drafts), and (v) unless otherwise
expressly agreed by the Issuer in its sole discretion, shall be in a minimum
stated amount of $100,000.
(c) Purposes of Letters of Credit. Each Letter of Credit shall
be satisfactory in form, substance and beneficiary to the Issuer in its sole
discretion. Each Letter of Credit shall be used by a Borrower as a standby
letter of credit used solely (x) to provide credit enhancement for obligations
of such Borrower or a Restricted Subsidiary of such Borrower in connection with
insurance programs in which such Borrower or Restricted Subsidiary participates,
contract performance guarantees, leasing arrangements and like bonding
requirements of such Borrower or Restricted Subsidiary, all in the ordinary
course of business of such Borrower or Restricted Subsidiary, and (y) for other
purposes approved by the Issuer in its discretion. Letters of Credit shall not
be used to provide credit support for any Indebtedness or other direct or
indirect financing arrangements of any Borrower or any other Person without the
written consent of the Required Lenders and the Issuer. No Borrower shall at any
time permit any Letter of Credit to be issued or to remain outstanding to
support, directly or indirectly, any obligations of any Person except such
Borrower or a Restricted Subsidiary of such Borrower. The provisions of this
Section 3.1(c) represent only an obligation of the Borrowers to the Issuer and
the Lenders; the Issuer shall not have any obligation to the Lenders to
ascertain the purpose of any Letter of Credit, and the rights and obligations of
the Lenders and the Issuer among themselves shall not be impaired or affected by
a breach of this Section 3.1(c).
(d) Documentary Fees, Etc. In addition to the fees payable
under Section 2.10 hereof, the Borrowers shall be obligated, jointly and
severally, to pay to the Agent, for the sole account of the Issuer, such
administration, maintenance, amendment, transfer, drawing and negotiation fees
as may be customarily charged by the Issuer from time to time in connection with
letters of credit issued by it.
(e) Certain Outstanding Letters of Credit. Each of the
"Letters of Credit" (as defined in the Original Credit Agreement, and including
without limitation each such "Letter of Credit" which is a "Carry-Over Letter of
Credit" as defined in the Original Credit Agreement) which are outstanding as of
the Effective Date (collectively, the "Carry-Over Letters of Credit")
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shall, as of the Effective Date, automatically be deemed to be Letters of Credit
issued hereunder and shall be subject to all of the terms and provisions of this
Agreement, provided that notwithstanding the restrictions contained in Sections
3.1(b) and 3.1(c) above, each of the Carry-Over Letters of Credit shall be
deemed to be permitted hereunder. Each Lender agrees that its obligations with
respect to Letters of Credit pursuant to this Agreement shall include such
Carry-Over Letters of Credit. With respect to each such Carry-Over Letter of
Credit, for the period commencing on the Effective Date the Borrowers shall
jointly and severally pay all Letter of Credit Commissions, Letter of Credit
Facing Fees and other amounts owing with respect thereto as set forth in this
Agreement at the times and in the manner herein set forth, and the Borrowers
shall jointly and severally pay or cause to be paid under the Original Credit
Agreement on the Effective Date all fees, commissions and other amounts owing
with respect to such Carry-Over Letters of Credit for the period before the
Effective Date.
3.2 Procedure for Issuance and Amendment of Letters
of Credit.
(a) Request for Issuance. Genesis, on behalf of any Borrower,
may from time to time request, upon at least five Business Days' notice, the
Issuer to issue a Letter of Credit by delivering to the Issuer and the Agent a
written request to such effect, specifying the date on which such Letter of
Credit is to be issued, the expiration date thereof, and the stated amount
thereof, together with such other certificates, documents and other papers and
information as the Issuer may request. If the Issuer desires to issue such
Letter of Credit, the Issuer shall promptly notify the Agent (by telephone or
otherwise), and furnish the Agent with the proposed form of Letter of Credit to
be issued. The Agent shall determine, as of the close of business on the day
before such proposed issuance, whether such proposed Letter of Credit complies
with the limitations set forth in Sections 3.1(a) and 3.1(b) hereof. Unless such
limitations are not satisfied, or unless the Required Lenders have given notice
to the Agent to cease issuing Letters of Credit pursuant to Section 3.2(c)(iii)
hereof, the Agent shall notify the Issuer (in writing or by telephone promptly
confirmed in writing) that the Issuer is authorized to issue such Letter of
Credit. If the Issuer issues a Letter of Credit, it shall deliver the original
of such Letter of Credit to the beneficiary thereof or as Genesis, on behalf of
the relevant Borrower, shall otherwise direct, and shall promptly notify the
Agent thereof and furnish a copy thereof to the Agent.
(b) Extension or Increase.
(i) Genesis, on behalf of any Borrower, may from time
to time request the Issuer (in writing with a copy sent
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concurrently to the Agent) to extend the expiration date of an outstanding
Letter of Credit issued by the Issuer for the account of such Borrower or
increase the amount of such Letter of Credit. Each such request shall for all
purposes hereunder (including but not limited to Section 5.2 hereof) be treated
as though Genesis (on behalf of such Borrower) had requested issuance of a
replacement Letter of Credit; provided, however, that if such extension or
increase is approved under the terms hereof, the Issuer may, if it elects, issue
an amendment to the particular Letter of Credit providing for such an extension
or increase in lieu of issuing a new Letter of Credit in substitution for the
outstanding Letter of Credit.
(ii) If any Letter of Credit contains an "evergreen"
expiration provision, the relevant Borrower may request the Issuer (in writing
with a copy sent concurrently to the Agent) to permit the extension of the
expiration date of such Letter of Credit for the renewal period provided for
therein (so long as such renewal period does not extend beyond the Maturity
Date), provided that such request is given not less than 30 days immediately
prior to the date as of which, absent contrary notice by the Issuer under such
Letter of Credit, such expiration date would automatically be extended
thereunder. Each such request shall for all purposes hereunder (including but
not limited to Section 5.2 hereof) be treated as though such Borrower had
requested issuance of a replacement Letter of Credit; provided, however, that if
the extension is approved under the terms hereof, the Issuer need not issue any
amendment of or replacement for the outstanding Letter of Credit. In the absence
of such request given within such period of time, the Issuer shall give such
notice as is required or permitted under such Letter of Credit in order to avoid
the extension of such Letter of Credit under such "evergreen" provision, but
failure of the Issuer to give such notice shall not impair the rights of the
Issuer or the obligations of the Borrowers or the other Lender Parties
hereunder. If at any time for any reason any Letter of Credit has an expiration
date which extends beyond the Maturity Date, the Borrowers, jointly and
severally, shall immediately upon demand by the Agent pay to the Agent, for
deposit to the credit of the Letter of Credit Collateral Account, an amount in
cash equal to the lesser of (A) the Letter of Credit Undrawn Availability with
respect to such Letter of Credit and (B) the excess of (1) the aggregate Letter
of Credit Undrawn Availability for all Letters of Credit outstanding at such
time over (2) the amount then on deposit with the Agent in the Letter of Credit
Collateral Account.
(c) Limitations on Issuance, Extension and Amendment.
(i) As between the Borrowers, on the one hand, and
the Lender Parties, on the other hand, the issuance or extension
of any Letter of Credit (including any deemed issuance arising
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from increase or extension of a Letter of Credit as provided in Section 3.2(b)
hereof) is within the discretion of the Issuer.
(ii) As between the Issuer, on the one hand, and the Agent and
the Lenders, on the other hand, the Issuer shall be justified and fully
protected in issuing any Letter of Credit (including any deemed issuance arising
from increase or extension of a Letter of Credit as provided in Section 3.2(b)
hereof) after receiving authorization from the Agent as provided in Section
3.2(a) hereof, notwithstanding any subsequent notices to the Issuer, any
knowledge of an Event of Default or Potential Default, any knowledge of failure
of any condition specified in Section 5.2 hereof to be satisfied, any other
knowledge of the Issuer, or any other event, condition or circumstance whatever.
(iii) As between the Agent, on the one hand, and the Lenders,
on the other hand, the Agent shall not authorize issuance of any Letter of
Credit pursuant to Section 3.2(a) hereof (including any deemed issuance arising
from increase or extension of a Letter of Credit as provided in Section 3.2(b)
hereof) if the Agent shall have received, at least two Business Days before
authorizing such issuance, from the Required Lenders an unrevoked written notice
that any condition precedent set forth in Section 5.2 will not be satisfied and
expressly requesting that the Agent direct the Issuer to cease to issue Letters
of Credit. Unless the Agent has received such notice or has determined that the
applicable limitations set forth in Sections 3.2(a) and 3.2(b) hereof are not
satisfied, the Agent shall be justified and fully protected, as against the
Lenders, in authorizing the Issuer to issue such Letter of Credit,
notwithstanding any subsequent notices to the Agent, any knowledge of an Event
of Default or Potential Default, any knowledge of failure of any condition
specified in Section 5.2 hereof to be satisfied, any other knowledge of the
Agent, or any other event, condition or circumstance whatever.
(d) Amendments. At the request of the relevant Borrower from
time to time, and subject to satisfaction of such conditions as the Issuer may
require, the Issuer may amend, modify or supplement Letters of Credit, or waive
compliance with any condition of issuance or payment, without the consent of,
and without liability to, the Agent or any Lender, provided that any such
amendment, modification or supplement that extends the expiration date or
increases the amount of an outstanding Letter of Credit shall be subject to
Section 3.2(b) hereof.
3.3 Letter of Credit Participating Interests.
(a) Generally. Concurrently with the issuance (or
deemed issuance) of each Letter of Credit, the Issuer
automatically shall be deemed, irrevocably and unconditionally,
to have sold, assigned, transferred and conveyed to each other
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Lender, and each other Lender automatically shall be deemed, irrevocably and
unconditionally, severally to have purchased, acquired, accepted and assumed
from the Issuer, without recourse to, or representation or warranty by, the
Issuer, an undivided interest, in a proportion equal to such Lender's Pro Rata
Share, in all of the Issuer's rights and obligations in, to or under such Letter
of Credit, the related Reimbursement Obligations, and all collateral, guarantees
and other rights from time to time directly or indirectly securing the foregoing
(such interest of each Lender being referred to herein as a "Letter of Credit
Participation"). Amounts other than Reimbursement Obligations and Letter of
Credit Commissions payable from time to time under or in connection with a
Letter of Credit shall be for the sole account of the Issuer. On the date that
any Purchasing Lender becomes a party to this Agreement in accordance with
Section 10.15 hereof, Letter of Credit Participations in any outstanding Letters
of Credit held by the Lender from which such Purchasing Lender acquired its
interest hereunder shall be proportionately reallotted between such Purchasing
Lender and such transferor Lender (and, to the extent such transferor Lender is
the Issuer, the Purchasing Lender shall be deemed to have acquired a Letter of
Credit Participation from such transferor Lender to such extent).
(b) Obligations Absolute. Notwithstanding any other provision
hereof, each Lender hereby agrees that its obligation to participate in each
Letter of Credit issued in accordance herewith, and its obligation to make the
payments specified in Section 3.4 hereof, are each absolute, irrevocable and
unconditional and shall not be affected by any event, condition or circumstance
whatever. The failure of any Lender to make any such payment shall not relieve
any other Lender of its funding obligation hereunder on the date due, but no
Lender shall be responsible for the failure of any other Lender to meet its
funding obligations hereunder.
3.4 Letter of Credit Drawings and Reimbursements.
(a) Borrowers' Reimbursement Obligation. If the
Issuer makes any Letter of Credit Disbursement under any Letter
of Credit, the Issuer shall notify Genesis (on behalf of the
Borrowers) and the Agent of the date and amount of such Letter of
Credit Disbursement (which notification may be by telephone).
The Borrowers hereby jointly and severally agree to reimburse the
Issuer for the amount of each Letter of Credit Disbursement, by
making payment of the amount of such Letter of Credit
Disbursement to the Agent for the account of the Issuer in
accordance with Section 2.11(c) hereof, not later than the first
Business Day next following the date on which the Issuer notifies
Genesis of such Letter of Credit Disbursement (such first
Business Day being referred to herein as the "Reimbursement
Obligation Due Date"). Such obligation of the Borrowers to make
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reimbursement of any such Letter of Credit Disbursement is herein referred to as
a "Reimbursement Obligation." The Borrowers hereby jointly and severally agree
to pay to the Agent, for the account of the Issuer, on demand, interest on the
amount of any Reimbursement Obligation for each day from and including the date
of the corresponding Letter of Credit Disbursement until the amount of such
Reimbursement Obligation is paid in full (before and after judgment), in
accordance with Section 2.11(d) hereof, at the rate per annum set forth in
Section 2.11(d) hereof. Notwithstanding the foregoing, at the option of the
Agent, if at any Reimbursement Obligation Due Date, there shall be any
Commitment available to make Loans hereunder, and if the Agent at that time
shall not have been advised in writing by any party hereto that an Event of
Default or Potential Default has occurred, the Agent, by notice to the parties
hereto, may require each Lender to make Loans bearing interest (unless otherwise
requested by the Borrowers pursuant to the terms of this Agreement) at the Prime
Rate Option, the proceeds of which shall be used to repay such Reimbursement
Obligations.
(b) Payment by Lenders on Account of Unreimbursed Draws. If
the Issuer makes a Letter of Credit Disbursement and is not reimbursed in full
therefor on the related Reimbursement Obligation Due Date in accordance with
Section 3.4(a) hereof, the Issuer will promptly notify the Agent thereof (which
notice may be by telephone), and the Agent shall forthwith notify each Lender
(which notice may be by telephone promptly confirmed in writing) thereof. Upon
receipt of such notice, each such Lender will pay to the Agent, for the account
of the Issuer, in immediately available funds, an amount equal to such Lender's
Pro Rata Share of the unreimbursed portion of such Letter of Credit
Disbursement, as follows: if such notice is received by such Lender at or prior
to 12:00 o'clock Noon, Philadelphia, Pennsylvania time on any Business Day, such
Lender shall make such payment to the Agent by 4:00 o'clock p.m., Philadelphia,
Pennsylvania time on the same Business Day, and if such notice is received by
such Lender after 12:00 o'clock Noon, Philadelphia, Pennsylvania time on any
Business Day, such Lender shall make such payment to the Agent no later than
12:00 o'clock Noon, Philadelphia, Pennsylvania time on the next succeeding
Business Day. If and to the extent that any Lender fails to make such payment to
the Agent for the account of the Issuer on such due date, such Lender shall pay
such amount on demand, together with interest, for the Issuer's own account, for
each day from and including such due date to and including the date of payment
to the Issuer (before and after judgment) at the following rates per annum: (x)
for each day from and including such due date to and including the second
Business Day thereafter, at the Federal Funds Effective Rate for such day, and
(y) for each day thereafter, at the rate applicable to Reimbursement Obligations
under Section 3.4(a) hereof for such day.
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(c) Distributions to Lenders. If, at any time, after the
Issuer has made a Letter of Credit Disbursement and has received from any Lender
such Lender's Pro Rata Share of such Letter of Credit Disbursement, the Issuer
receives any payment or makes any application of funds on account of the
Reimbursement Obligation arising from such Letter of Credit Disbursement, the
Issuer will pay to the Agent, for the account of such Lender, such Lender's Pro
Rata Share of such payment or application, provided, however, that any Lender's
Pro Rata Share of interest accrued on any Reimbursement Obligation prior to the
date of receipt by the Issuer of such Lender's Letter of Credit Participation
payment in respect of such Reimbursement Obligation may be retained by the
Issuer for its own account.
(d) Rescission. If any amount received by the Issuer on
account of any Reimbursement Obligation shall be avoided, rescinded or otherwise
returned or paid over by the Issuer for any reason at any time, whether before
or after the termination of this Agreement, each Lender will, promptly upon
notice from the Agent or the Issuer, pay over to the Agent for the account of
the Issuer its Pro Rata Share of such amount, together with its Pro Rata Share
of any interest or penalties payable with respect thereto.
(e) Equalization. If any Lender receives any payment or makes
any application on account of its Letter of Credit Participation, such Lender
shall forthwith pay over to the Issuer, in Dollars and in like kind of funds
received or applied by it the amount in excess of such Lender's ratable share of
the amount so received or applied, and, to the extent appropriate, equitable
adjustment will be made (by creation or reallotment of participation interests
or otherwise) by the Issuer and the Lenders so that, in effect, all such excess
amounts will be shared ratably among the Issuer and the Lenders in a manner
consistent with this Section 3.4.
3.5 Obligations Absolute. The payment obligations of the
Borrowers under Section 3.4 hereof shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following circumstances:
(a) any lack of validity or enforceability of this
Agreement, any Letter of Credit, any other Loan Document;
(b) any release of any other Borrower or Loan Parties
or any change of any Borrowers or Loan Parties;
(c) the existence of any claim, set-off, defense or other
right which any Borrower or any other Person may have at any time
against any beneficiary or transferee of any Letter of Credit (or any
Persons for whom any such
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beneficiary or transferee may be acting), any Lender Party, or any
other Person, whether in connection with this Agreement, the
transactions contemplated hereby or any unrelated transaction;
(d) any draft, certificate, statement or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(e) payment by the Issuer under any Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit, or payment by the Issuer under the
Letter of Credit in any other circumstances in which conditions to
payment are not met; or
(f) any other event, condition or circumstance
whatever, whether or not similar to any of the foregoing.
The Borrowers bear the risk of, and neither the Issuer, any of its directors,
officers, employees or agents, nor any other Lender Party, shall be liable or
responsible for any of, the foregoing matters, the use which may be made of any
Letter of Credit, or acts or omissions of the beneficiary or any transferee in
connection therewith.
3.6 Further Assurances. Each Borrower hereby agrees, from time
to time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuer more fully to effect the purposes
of this Agreement and the issuance of the Letters of Credit hereunder.
3.7 Cash Collateral for Letters of Credit.
(a) Cash Collateral for Letter of Credit Exposure in Certain
Circumstances. To the extent that this Agreement or any other Loan Document
requires a payment, prepayment or other application of funds to be made by the
Borrowers with respect to the Loans, such provision shall be construed as
follows: after payment in full of the outstanding Loans (whether or not such
payment would require any Borrower to pay any amount under Section 2.12(b)
hereof) and the payment in full of all outstanding Reimbursement Obligations,
then, to the extent of the excess, if any, of the aggregate Letter of Credit
Usage at such time over the balance of funds in the Letter of Credit Collateral
Account, an amount equal to the remainder of the amount so required to be paid
by the Borrowers shall immediately be paid by the Borrowers to the Agent for
deposit in the Letter of Credit Collateral Account. In addition, the Borrowers
agree that, without limitation of the foregoing or of any other provisions of
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this Agreement or the other Loan Documents requiring collateral for the Letters
of Credit or other Loan Obligations in whole or in part, and without limitation
of other rights and remedies under this Agreement or the other Loan Documents or
at law or in equity, if all of the Loans become due and payable pursuant to
Section 8.2 hereof, the Borrowers shall immediately pay to the Agent, for
deposit in the Letter of Credit Collateral Account, an amount equal to the
excess, if any, of the aggregate Letter of Credit Usage at such time over the
balance of funds in the Letter of Credit Collateral Account.
(b) Letter of Credit Collateral Account. The Agent
shall maintain in its own name at its Office a deposit account
(the "Letter of Credit Collateral Account"), which shall bear
interest (added to the deposit balance) in accordance with the
Agent's ordinary practices for deposit accounts of like size and
nature, over which the Agent shall have sole dominion and
control, and no Borrower shall have any right to withdraw any
funds deposited therein. The Agent shall deposit into the Letter
of Credit Collateral Account such funds as this Agreement or any
Loan Document requires to be paid therein. As security for the
payment of all Loan Obligations, the Borrowers hereby grant,
convey, assign, pledge and transfer to the Agent, and create in
the Agent's favor a continuing Lien on and security interest in,
the Letter of Credit Collateral Account, all amounts from time to
time on deposit therein, all proceeds of the conversion,
voluntary or involuntary, thereof into cash, instruments,
securities or other property, and all other proceeds thereof.
Each Borrower hereby represents, warrants, covenants and agrees
that such Lien shall at all times be valid and perfected, prior
to all other Liens, and each Borrower shall take or cause to be
taken such actions and execute and deliver such instruments and
documents as may be necessary or, in the Agent's reasonable
judgment, desirable to perfect or protect the such Lien. No
Borrower shall create or suffer to exist any Lien on any amounts
or investments held in the Letter of Credit Collateral Account
other than the Lien in favor of the Agent granted under this
Section 3.7.
(c) Application of Funds. The Agent shall apply funds in the
Letter of Credit Collateral Account: (i) on account of Reimbursement Obligations
as and when the same become due and payable if and to the extent that the
Borrowers fail directly to pay the same, and (ii) if no Reimbursement
Obligations are due and payable, no Letters of Credit are outstanding and the
balance of the Letter of Credit Collateral Account exceeds the aggregate Letter
of Credit Usage, the excess shall be applied on account of the other Loan
Obligations secured hereby. If all Loan Obligations (other than Loan Obligations
constituting contingent obligations under indemnification provisions which
survive indefinitely, so long as no unsatisfied claim has been made under any
such indemnification provision) have been indefeasibly paid
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in full in cash, all Commitments have terminated and all Letters of Credit have
expired, promptly following demand by Genesis on behalf of the Borrowers the
Agent shall release to the Borrowers all remaining funds in the Letter of Credit
Collateral Account.
3.8 Certain Provisions Relating to the Issuer.
(a) General. The Issuer shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents, and no implied duties or responsibilities on the part of
the Issuer shall be read into this Agreement or any other Loan Document or shall
otherwise exist. The duties and responsibilities of the Issuer to the other
Lender Parties under this Agreement and the other Loan Documents shall be
mechanical and administrative in nature, and the Issuer shall not have a
fiduciary relationship in respect of any Lender Party or any other Person. The
Issuer shall not be liable for any action taken or omitted to be taken by it
under or in connection with this Agreement or any other Loan Document, unless
caused by its own gross negligence or willful misconduct. The Issuer shall not
be under any obligation to ascertain, inquire or give any notice relating to (i)
the performance or observance of any of the terms or conditions of this
Agreement or any other Loan Document on the part of any Loan Party, (ii) the
business, operations, condition (financial or otherwise) or prospects of any
Loan Party or any other Person, or (iii) the existence of any Event of Default
or Potential Default. The Issuer shall not be under any obligation, either
initially or on a continuing basis, to provide the Agent or any Lender with any
notices, reports or information of any nature, whether in its possession
presently or hereafter, except for such notices, reports and other information
expressly required by this Agreement to be so furnished.
(b) Administration. The Issuer may rely upon any notice or
other communication of any nature (written or oral, including but not limited to
telephone conversations, whether or not such notice or other communication is
made in a manner permitted or required by this Agreement or any other Loan
Document) purportedly made by or on behalf of the proper party or parties, and
the Issuer shall not have any duty to verify the identity or authority of any
Person giving such notice or other communication. The Issuer may consult with
legal counsel (including in-house counsel for the Issuer or in-house or other
counsel for any Loan Party), independent public accountants and any other
experts selected by it from time to time, and the Issuer shall not be liable for
any action taken or omitted to be taken in good faith in accordance with the
advice of such counsel, accountants or experts. Whenever the Issuer shall deem
it necessary or desirable that a matter be proved or established with respect to
any Loan Party or Lender Party, such matter may be established by a certificate
of such Loan Party or Lender
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Party, as the case may be, and the Issuer may conclusively rely upon such
certificate.
(c) Indemnification of Issuer by Lenders. Each
Lender hereby agrees to reimburse and indemnify the Issuer and
each of its respective directors, officers, employees and agents
(to the extent not reimbursed by a Loan Party and without
limitation of the obligations of the Loan Parties to do so),
ratably in accordance with its Pro Rata Share, from and against
any and all amounts, losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements of any kind or nature (including the fees
and disbursements of counsel for the Issuer or such other Person
in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not the Issuer or
such other Person shall be designated a party thereto) that may
at any time be imposed on, incurred by or asserted against the
Issuer, in its capacity as such, or such other Person, as a
result of, or arising out of, or in any way related to or by
reason of, this Agreement, any other Loan Document, any "Loan
Document" referred to in the Original Credit Agreement, any
transaction from time to time contemplated hereby or thereby, or
any transaction secured or financed in whole or in part, directly
or indirectly, with any Letter of Credit or the proceeds thereof,
provided, that no Lender shall be liable for any portion of such
amounts, losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or
disbursements resulting from the gross negligence or willful
misconduct of the Issuer or such other Person, as finally
determined by a court of competent jurisdiction and, provided,
further that no Lender that was not a party to the Original
Credit Agreement shall be obligated to indemnify the Issuer or
its directors, officers, employees or agents from losses and
other liabilities referred to above to the extent that such
liabilities were solely the result of, arose solely out of, or
were related solely to the Original Credit Agreement or other
"Loan Documents" referred to therein and as to those liabilities
which are not subject to indemnification by the new Lenders by
reason of this proviso, the Pro Rata Shares of the other Lenders
shall be adjusted accordingly to fully indemnify the Issuer.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
The Borrowers hereby jointly and severally represent and
warrant to each Lender Party as follows:
4.1 Status. Each Borrower and each Subsidiary of each Borrower
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or is a partnership duly organized and
validly existing under the laws of its jurisdiction of organization. Each
Borrower and each Subsidiary of each Borrower has the power
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and authority to own its property and to transact the business in which it is
engaged or presently proposes to engage. Each Borrower and each Subsidiary of
each Borrower is duly qualified to do business as a foreign corporation or
foreign partnership and is in good standing in all jurisdictions in which the
ownership of its properties or the nature of its activities or both makes such
qualification necessary or advisable, except for matters that, individually or
in the aggregate, could not have a Material Adverse Effect. Schedule 4.1 hereto
states as of the date hereof the jurisdiction of incorporation or organization
of each Borrower and each Subsidiary of each Borrower, and the jurisdictions in
which each Borrower and each Subsidiary of each Borrower is qualified to do
business as a foreign corporation or a foreign partnership, as the case may be.
4.2 Power and Authorization. Each Borrower has power and
authority to execute, deliver, perform, and take all actions contemplated by,
each Loan Document to which it is a party, and all such action has been duly and
validly authorized by all necessary corporate or partnership proceedings on its
part. Without limitation of the foregoing, each Borrower has the power and
authority to borrow pursuant to the Loan Documents to the fullest extent
permitted hereby and thereby from time to time, and has taken all necessary
corporate or partnership action to authorize such borrowings.
4.3 Execution and Binding Effect. This Agreement and each
other Loan Document has been duly and validly executed and delivered by each
Borrower which is a party hereto or thereto, as the case may be. This Agreement
and each other Loan Document constitutes the legal, valid and binding obligation
of each Borrower which is a party hereto or thereto, as the case may be,
enforceable against such Borrower in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors' rights or by
general principles of equity limiting the availability of equitable remedies.
4.4 Governmental Approvals and Filings. No approval, order,
consent, authorization, certificate, license, permit or validation of, or
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority (collectively, "Governmental Action") is
or will be necessary or advisable in connection with execution and delivery of
any Loan Document by any Borrower, consummation by any Borrower of the
transactions herein or therein contemplated, performance of or compliance with
the terms and conditions hereof or thereof by any Borrower or to ensure the
legality, validity, binding effect, enforceability or admissibility in evidence
hereof or thereof.
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4.5 Absence of Conflicts. Neither the execution and delivery
of any Loan Document by any Borrower, nor consummation by any Borrower of the
transactions herein or therein contemplated, nor performance of or compliance
with the terms and conditions hereof or thereof by any Borrower does or will
(a) violate or conflict with any Law,
(b) violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or result in (or give
rise to any right, contingent or otherwise, of any Person to cause) any
termination, cancellation, prepayment or acceleration of performance
of, or result in the creation or imposition of (or give rise to any
obligation, contingent or otherwise, to create or impose) any Lien upon
any of property of any Borrower or any Subsidiary of any Borrower
(except for any Lien in favor of the Collateral Agent or Secured
Parties pursuant to the Security Documents pursuant to, or otherwise
result in (or give rise to any right, contingent or otherwise, of any
Person to cause) any change in any right, power, privilege, duty or
obligation of any Borrower or any Subsidiary of any Borrower under or
in connection with,
(i) the articles of incorporation or bylaws (or
other constituent documents) of any Borrower or any
Subsidiary of any Borrower,
(ii) any agreement or instrument creating,
evidencing or securing any Indebtedness to which any Borrower
or any Subsidiary of any Borrower is a party or by which any
of them or any of their respective properties (now owned or
hereafter acquired) may be subject or bound, or
(iii) any other agreement or instrument or
arrangement to which any Borrower or any Subsidiary of any
Borrower is a party or by which any of them or any of their
respective properties (now owned or hereafter acquired) may be
subject or bound,
except, in the case of the foregoing clause (iii), for matters that,
individually or in the aggregate, could not have a Material Adverse Effect, or
(c) result in the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, qualification,
authorization or approval applicable to the operations or properties of
any Borrower or other Restricted Subsidiary, or adversely affect the
ability of any Borrower or other Restricted Subsidiary to participate
in any public
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or private reimbursement program or to be a party to any
Blue Cross or similar provider agreement.
4.6 Audited Financial Statements. Genesis has heretofore
furnished to the Agent and each Lender consolidated balance sheets of Genesis
and its consolidated Subsidiaries as of September 30, 1995 and 1994 and the
related consolidated statements of income, cash flows and changes in
stockholders' equity for the fiscal years then ended, as examined and reported
on by KPMG Peat Marwick, independent certified public accountants for Genesis,
who delivered an unqualified opinion in respect thereof. Such financial
statements (including the notes thereto) present fairly the financial condition
of Genesis and its consolidated Subsidiaries as of the end of each such fiscal
year and the results of their operations and their cash flows for the fiscal
years then ended, all in conformity with GAAP.
4.7 Interim Financial Statements. Genesis has heretofore
furnished to the Agent and each Lender interim consolidated balance sheets of
Genesis and its consolidated Subsidiaries as of the first three fiscal quarters
of the fiscal year beginning October 1, 1995, together with the related
consolidated statements of income, cash flows and changes in stockholders'
equity for the applicable fiscal periods ending on each such date. Such
financial statements (including the notes thereto) present fairly the financial
condition of Genesis and its consolidated Subsidiaries as of the end of each
such fiscal quarter and the results of their operations and their cash flows for
the fiscal periods then ended, all in conformity with GAAP, subject to normal
and recurring year-end audit adjustments, and except that such financial
statements do not contain all of the footnote disclosures required by GAAP.
4.8 INTENTIONALLY OMITTED
4.9 Projections. Genesis has furnished to the Agent and each
Lender projections prepared by Genesis demonstrating the projected consolidated
financial condition and results of operations of Genesis and its Subsidiaries
for the period commencing on October 1, 1995 and ending on September 30, 2001,
which projections are accompanied by a written statement of the assumptions and
estimates underlying such projections. Such projections were prepared on the
basis of such assumptions and estimates. Such projections, assumptions and
estimates, as of the date of preparation thereof and as of the date hereof, are
reasonable, are made in good faith, are consistent with the Loan Documents and
represent Genesis' best judgment as to such matters. Nothing has come to the
attention of Genesis which would lead Genesis to believe that such projections
will not be attained or exceeded. Nothing contained in this Section 4.9 shall
constitute a representation or warranty that such future
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financial performance or results of operations will in fact be
achieved.
4.10 Solvency. On and as of the Effective Date and after
giving effect to all Loans, all Reimbursement Obligations and all other
obligations and liabilities being incurred on such date in connection therewith
or in connection with Letters of Credit (including but not limited to contingent
Reimbursement Obligations with respect to outstanding Letters of Credit), and on
the date of making or issuance of each subsequent Loan, Letter of Credit or
other extension of credit hereunder and after giving effect to application of
the proceeds thereof in accordance with the terms of the Loan Documents, the
Borrowers, treated as if they comprised a single consolidated entity, are and
will be Solvent.
4.11 Absence of Undisclosed Liabilities. No Borrower and no
Restricted Subsidiary of any Borrower has any liability or obligation of any
nature whatever (whether absolute, accrued, contingent or otherwise, whether or
not due), forward or long-term commitments or unrealized or anticipated losses
from unfavorable commitments, except (x) as disclosed in the financial
statements referred to in Sections 4.6 and 4.7 hereof, (y) matters that,
individually or in the aggregate, could not have a Material Adverse Effect and
(z) as disclosed in Schedule 4.11 hereto.
4.12 Absence of Material Adverse Changes. Since June 30, 1996
there has been no material adverse change in the business, operations, condition
(financial or otherwise), or prospects of the Borrowers and Restricted
Subsidiaries, taken as a whole.
4.13 Accurate and Complete Disclosure. All factual information
(taken as a whole) heretofore, contemporaneously or hereafter provided in
writing by or on behalf of any Borrower or any Subsidiary of any Borrower to any
Secured Party (or any other Person) pursuant to or in connection with this
Agreement or any other Loan Document or any transaction contemplated hereby or
thereby is or will be (as the case may be) true and accurate in all material
respects on the date as of which such information is dated (or, if not dated,
when received by such Secured Party or such other Person, as the case may be)
and does not or will not (as the case may be) omit to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances in which it was provided. Each Borrower has,
or prior to the Effective Date will have, disclosed to each Secured Party in
writing every fact or circumstance known to such Borrower which has, or which,
so far as such Borrower can now or then foresee is reasonably possible in the
future and could if it occurs have, a Material Adverse Effect.
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4.14 Margin Regulations. Except as provided in the following
sentence, no part of the proceeds of any Loan hereunder will be used for the
purpose of buying or carrying any "margin stock," as such term is used in
Regulations G and U of the Board of Governors of the Federal Reserve System, as
amended from time to time, or to extend credit to others for the purpose of
buying or carrying any "margin stock". It is understood, however, that proceeds
of certain Loans hereunder may be used in connection with the proposed
Acquisition of Geriatric & Medical Companies, Inc. and therefore such Loans may
be considered "purpose loans" within the meaning of said Regulation U; however,
no stock issued to any Borrower in connection with such Acquisition will be
"margin stock" and the Loans shall not be subject to regulation under said
Regulation U. No Borrower and no Subsidiary of any Borrower is or at any time
will be engaged in the business of extending credit to others for the purpose of
buying or carrying "margin stock". No Borrower and no Subsidiary of any Borrower
owns or will own any "margin stock". Neither the making of any Loan nor any use
of proceeds of any such Loan will violate or conflict with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System,
as amended from time to time.
4.15 Subsidiaries. Schedule 4.15 hereto states the authorized
capitalization of each Subsidiary (if a corporation) of each Borrower, the
number of shares of each class of capital stock issued and outstanding of each
such corporate Subsidiary, and the number and percentage of outstanding shares
of each such class of capital stock owned by each Borrower or Subsidiary and
whether such Subsidiary (whether or not a corporation) is (1) an Unrestricted
Entity, (2) a Material Restricted Subsidiary or (3) a Non-Material Restricted
Subsidiary. The outstanding shares of each Subsidiary (if a corporation) of each
Borrower have been duly authorized and validly issued and are fully paid and
nonassessable. Each Borrower and each Subsidiary of each Borrower owns
beneficially and of record and has good title to all of the shares it is listed
as owning in such Schedule 4.15, free and clear of any Lien, except for Liens in
favor of the Collateral Agent as contemplated by the Loan Documents. There are
no options, warrants, calls, subscriptions, conversion rights, exchange rights,
preemptive rights or other rights, agreements or arrangements (contingent or
otherwise) which may in any circumstances now or hereafter obligate any
Subsidiary of any Borrower to issue any shares of its capital stock or any other
securities except for matters set forth in Schedule 4.15 hereto. Every Material
Restricted Subsidiary (whether a corporation or a partnership) of Genesis is a
Borrower hereunder and is designated as such on the signature pages hereto (or,
after the Effective Date, on signature pages of a Joinder Supplement hereto).
4.16 Partnerships, Investments, Etc. No Borrower and
no Restricted Subsidiary of any Borrower is or will be a partner
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(general or limited) of any partnership, or is or will be a party to any joint
venture or will own (beneficially or of record) any equity or similar interest
in any Person (including but not limited to any interest pursuant to which such
Borrower or Restricted Subsidiary has or may in any circumstance have an
obligation to make capital contributions to, or be generally liable for or on
account of the liabilities, acts or omissions of such other Person), other than
(x) equity interests in other wholly-owned Borrowers, (y) equity interests in
wholly-owned Non-Material Restricted Subsidiaries and (z) Investments permitted
under Section 7.5 hereof. Each investment (other than Unrestricted Entities
which are Subsidiaries specified on Schedule 4.15 hereto) permitted under
Section 7.5(f) hereof is listed on Schedule 4.16 hereto.
4.17 Litigation. There is no pending or (to any Borrower's
knowledge after due inquiry) threatened action, suit, proceeding or
investigation by or before any Governmental Authority against or affecting any
Borrower or any Restricted Subsidiary of any Borrower, except for (x) matters
set forth in Schedule 4.17 hereto, (y) matters described in the financial
statements referred to in Section 4.6 hereof, and (z) matters that if adversely
decided, individually or in the aggregate, could not have a Material Adverse
Effect.
4.18 Absence of Events of Default. No event has
occurred and is continuing and no condition exists which
constitutes an Event of Default or Potential Default.
4.19 Absence of Other Conflicts. No Borrower and no
Subsidiary of any Borrower is in violation of or conflict with,
or is subject to any contingent liability on account of any
violation of or conflict with:
(a) any Law,
(b) its articles of incorporation or bylaws (or other
constituent documents), or
(c) any agreement or instrument or arrangement to
which it is party or by which it or any of its properties
(now owned or hereafter acquired) may be subject or bound,
except, with respect to clauses (a) or (c) above for matters that, individually
or in the aggregate, could not have a Material Adverse Effect.
4.20 Power To Carry On Business. Each Borrower and
each Restricted Subsidiary of each Borrower has all requisite
power and authority and all necessary licenses, permits,
approvals, consents, qualifications, authorizations and
accreditations to own and operate its respective properties and
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to carry on its respective business as now conducted and as presently planned to
be conducted, including, but not limited to, the ownership and operation of its
skilled and intermediate long-term care nursing facilities, pursuant to all
applicable Laws except where any failure to possess any such license, permit,
approval, consent, qualification, authorization or accreditation, either
individually or collectively with all other such failures, could not have a
Material Adverse Effect. No Borrower and no Subsidiary of any Borrower is in
default under any such license, permit, approval, consent, qualification,
authorization or accreditation, and no event has occurred, and no condition
exists, which, with the giving of notice, the passage of time or both, would
constitute a default thereunder, which default or condition, individually or
collectively with other such defaults or conditions, could have a Material
Adverse Effect. Where required by Law, the Borrowers have obtained valid
certificates of need and all other accreditations necessary to own and operate
all of their facilities. No condition exists, and no event has occurred, which,
with the giving of notice, the passage of time or both, would result in the
suspension, revocation, impairment, forfeiture or nonrenewal of any such
license, permit, approval, consent, qualification, authorization or
accreditation, and there is no claim challenging the validity of any of the
foregoing which condition, event or claim, individually or collectively with all
such conditions, events or claims, could have a Material Adverse Effect.
4.21 Insurance. Each Borrower and each Restricted Subsidiary
of each Borrower (x) maintains insurance with financially sound and reputable
insurers not related to or affiliated with any Borrower or (y) administers
state-approved self-insurance programs or (z) operates a licensed or chartered
captive insurance company which meets the qualifications of the domicile in
which it is located, with respect to its properties and business and against at
least such liabilities, casualties and contingencies and in at least such types
and amounts as is customary in the case of Persons engaged in the same or a
similar business or having similar properties similarly situated, including
insurance covering their respective properties, buildings, machinery, equipment,
tools, furniture, fixtures and operations, and medical malpractice, professional
liability and public liability. Schedule 4.21 hereto sets forth a list of all
insurance and self-insurance currently maintained by or in respect of each
Borrower and each Subsidiary of each Borrower, setting forth the identity of the
insurance carrier, the type of coverage, the amount of coverage and the
deductible. There are no claims, actions, suits, proceedings against, arising
under or based upon any of such insurance policies (that may exceed the amount
or scope of coverage) or self-insurance programs except as set forth in such
Schedule 4.21. Such Schedule 4.21 identifies each insurance policy providing for
a retrospective premium adjustment or other change in compensation payable to
the insurer
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on the basis of claims or loss experience, and describes any liability the
applicable Borrower or Subsidiary has with respect to such matters.
4.22 Third-Party Reimbursement Programs. Schedule 4.22 hereto
sets forth a list of the public or private payors in whose reimbursement
programs any facility operated by any Borrower or any Restricted Subsidiary of
any Borrower participates. Each Borrower and each Restricted Subsidiary of a
Borrower has timely filed, or caused to be timely filed, all cost reports or
other reports of every kind whatsoever required by Law or by contract (whether
oral or written) or otherwise to be made with respect to the purchase of or
reimbursement for services by third-party purchasers or payors, including, but
not limited to, Medicare and Medicaid programs and other insurance carriers
except where the failure to timely file, individually or collectively with all
other similar acts, could not have a Material Adverse Effect, and all such
reports are complete and accurate in all material respects. No Borrower or
Restricted Subsidiary of a Borrower has any liability for itself or any other
Person for any refund, discount or adjustment to any such Person, and, except as
may be disclosed in the financial statements referred to in Section 4.6 hereof,
no interest or penalties are accruing with respect thereto, except any such
refund, discount, adjustment, interest or penalty, which individually or
collectively with all such other refunds, discounts, adjustments, interest or
penalties, could not have a Material Adverse Effect.
4.23 Title to Property. Each Borrower and each Restricted
Subsidiary of each Borrower has good and marketable title in fee simple to all
real property owned or purported to be owned by it and good title to all other
property of whatever nature owned or purported to be owned by it, including but
not limited to all property reflected in the most recent audited balance sheets
referred to in Section 4.6 hereof or submitted pursuant to Section 6.1(a)
hereof, as the case may be (except as sold or otherwise disposed of in the
ordinary course of business after the date of such balance sheets or, after the
Effective Date, as otherwise permitted by Section 7.10 hereof) it being
understood that title to and interest in the Synthetic Lease Property is held
pursuant to the terms of the Synthetic Lease Facility.
4.24 Intellectual Property. Each Borrower and each Restricted
Subsidiary of each Borrower owns, or is licensed or otherwise has the right to
use, all the patents, trademarks, service marks, names (trade, service,
fictitious or otherwise), copyrights, technology (including but not limited to
computer programs and software), processes, data bases and other rights, free
from burdensome restrictions, necessary to own and operate its properties and to
carry on its business as presently
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conducted and presently planned to be conducted without conflict
with the rights of others.
4.25 Taxes. All tax and information returns required to be
filed by or on behalf of any Borrower or any Subsidiary of any Borrower, which
is included in a consolidated tax group with such Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon any Borrower or any Subsidiary of any Borrower, which
is included in a consolidated tax group with such Borrower or upon any of their
respective properties, incomes, sales or franchises which are due and payable
have been paid other than those not yet delinquent and payable without premium
or penalty, and except for those being diligently contested in good faith by
appropriate proceedings, and in each case adequate reserves and provisions for
taxes have been made on the books of each Borrower and each such Subsidiary of
each Borrower. The reserves and provisions for taxes on the books of each
Borrower and each such Subsidiary of each Borrower are adequate for all open
years and for its current fiscal period. No Borrower and no such Subsidiary of
any Borrower knows of any proposed additional assessment or basis for any
material assessment for additional taxes (whether or not reserved against). No
Borrower and no Restricted Subsidiary of any Borrower has at any time filed a
consolidated tax return with any Person other than Genesis and its Subsidiaries.
The Tax Sharing Agreement is, or within thirty (30) days after the Effective
Date and thereafter will be, in full force and effect. Schedule 4.25 hereto
describes all tax sharing arrangements or agreements to which any Borrower or
any Subsidiary of any Borrower is, or upon the Effective Date will be, subject
or bound other than the Tax Sharing Agreement.
4.26 Employee Benefits. A copy of the most recent Annual
Report (5500 Series Form) including all attachments thereto has been filed with
the Internal Revenue Service for each Plan (if any) relating to any Borrower
and, upon request, will be provided to the Agent and each Lender and fairly
presents the funding status of such Plan. There has been no material
deterioration in any Plan's funding status since the date of such Annual Report.
Schedule 4.26 hereto sets forth a list of all Plans and Multiemployer Plans
relating to the Borrowers, and all information available to any Borrower with
respect to the direct, indirect or potential withdrawal liability to any
Multiemployer Plan of any Borrower or any Controlled Group Member. Except as set
forth in such Schedule 4.26, no Borrower and no Subsidiary of any Borrower has
any liability (contingent or otherwise) in excess of $100,000 for or in
connection with, and none of their respective properties is subject to a Lien in
connection with, any Pension-Related Event. No Borrower and no Subsidiary of any
Borrower has any liability (contingent or otherwise) for or in connection with,
any Postretirement Benefits.
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4.27 Environmental Matters.
(a) Each Borrower and each Restricted Subsidiary of each
Borrower and each of their respective Environmental Affiliates is and has been,
in full compliance with all applicable Environmental Laws, except for (x)
matters set forth in Schedule 4.27 hereto and (y) matters which, individually or
in the aggregate, could not have a Material Adverse Effect. There are, to the
Borrowers' knowledge after due inquiry, no circumstances that may prevent or
interfere with such full compliance in the future.
(b) Each Borrower and each Subsidiary of each Borrower and
their respective Environmental Affiliates have all Environmental Approvals
necessary or desirable for the ownership and operation of their respective
properties, facilities and businesses as presently owned and operated and as
presently proposed to be owned and operated, except for (x) matters set forth in
Schedule 4.27 hereto and (y) matters which, individually or in the aggregate,
could not have a Material Adverse Effect.
(c) There is no Environmental Claim pending or, to the
knowledge of any Borrower after due inquiry, threatened, and there are no past
or present acts, omissions, events or circumstances (including but not limited
to any dumping, leaching, deposition, removal, abandonment, escape, emission,
discharge or release of any Environmental Concern Material at, on or under any
facility or property now or previously owned, operated or leased by any Borrower
or any Subsidiary of any Borrower or any of their respective Environmental
Affiliates) that could form the basis of any Environmental Claim, against any
Borrower or any Subsidiary of any Borrower or any of their respective
Environmental Affiliates, except for (x) matters set forth in Schedule 4.27
hereto, and (y) matters which, if adversely decided, individually or in the
aggregate, could not have a Material Adverse Effect.
(d) No facility or property now or previously owned, operated
or leased by any Borrower or any Subsidiary of any Borrower or any of their
respective Environmental Affiliates is an Environmental Cleanup Site. To the
best of the Borrowers' knowledge, no Borrower, no Subsidiary of any Borrower and
none of their respective Environmental Affiliates has directly transported or
directly arranged for the transportation of any Environmental Concern Materials
to any Environmental Cleanup Site. No Lien exists, and, to the Borrowers'
knowledge after due inquiry, no condition exists which could result in the
filing of a Lien, against any property of any Borrower or any Subsidiary of any
Borrower or any of their respective Environmental Affiliates, under any
Environmental Law.
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4.28 Proceeds of Loans; Obligations Secured By Letters of
Credit. The Borrowers will apply the proceeds of the Loans only (a) to refinance
Indebtedness and liabilities under the Original Credit Agreement, (b) to fund
Capital Expenditures, subject to the other limitations set forth in this
Agreement, (c) to fund Acquisitions, subject to the other limitations set forth
in this Agreement, (d) to fund seasonal fluctuations and growth in working
capital and (e) to pay all or a portion of the redemption price of the 1993
Subordinated Debentures, to the extent that a redemption of the 1993
Subordinated Debentures is permitted under this Agreement. Each Borrower will
request the issuance of Letters of Credit, and the Carry-Over Letters of Credit
are being and will be used, only for the purposes permitted under Section 3.1
hereof. All obligations of any Borrower or any Subsidiary of any Borrower to be
secured by a Letter of Credit issued or deemed issued hereunder will at all
times be legal, valid, binding and enforceable obligations of such Borrower or
Subsidiary.
4.29 Regulatory Restrictions. No Borrower, and no Subsidiary
of any Borrower, is (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended, (b) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, (c) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, or the Investment Company Act of 1940, as amended, or
(d) subject to any other Law which purports to restrict or regulate its ability
to borrow money or obtain credit as a consequence of the nature of the business
conducted by such Person.
4.30 Regulation O. No director, executive officer or principal
shareholder of any Borrower is a "director," "executive officer" or "principal
shareholder" of any Lender, as such terms are used in Regulation O of the Board
of Governors of the Federal Reserve System, as amended.
4.31 Security Documents. When executed and delivered (or
amended) on the Effective Date, the Security Documents will be effective to
create in favor of the Collateral Agent for the benefit of the Secured Parties a
legal, valid and enforceable Lien on and security interest in all right, title
and interest of each Borrower in the collateral described therein, and the
Collateral Agent will possess, for the benefit of the Secured Parties, a fully
perfected and continuing first priority Lien on and security interest in all
right, title and interest of each Borrower in the collateral described in the
Security Documents, subject to no Liens other than Permitted Liens. All equity
interests in each Borrower shall be included in the Collateral.
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4.32 1993 Subordinated Debentures, 1995 Subordinated
Notes, and the 1996 Subordinated Notes.
(a) All of the Loan Obligations constitute and will constitute
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning
ascribed to such terms in the 1993 Subordinated Debenture Indenture. The
subordination provisions of the 1993 Subordinated Debenture Indenture are
enforceable against Genesis and the holders from time to time of the 1993
Subordinated Debentures.
(b) Interest paid or incurred by Genesis with respect to the
1993 Subordinated Debentures is and shall be allowed to Genesis as a deduction
for purposes of computing taxable income of Genesis under the Code.
(c) All of the Loan Obligations constitute and will constitute
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning
ascribed to such terms in the 1995 Subordinated Note Indenture. The
subordination provisions of the 1995 Subordinated Note Indenture are enforceable
against Genesis and the holders from time to time of the 1995 Subordinated
Notes.
(d) From and after the execution and delivery of the 1996
Subordinated Note Indenture and the issuance of the 1996 Subordinated Notes, (i)
all of the Loan Obligations will constitute "Senior Indebtedness" and
"Designated Senior Indebtedness" within the meaning ascribed to such terms (or
similar terms) in the 1996 Subordinated Note Indenture and (ii) the
subordination provisions of the 1996 Subordinated Note Indenture will be
enforceable against Genesis and the holders from time to time of the 1996
Subordinated Notes.
ARTICLE 5 - CONDITIONS
5.1 Conditions to Effectiveness. The effectiveness of this
amendment and restatement of the Original Credit Agreement by this Agreement,
and the obligation of each Lender to make Loans hereunder and the obligation of
the Issuer to issue (or to be deemed to have issued) any Letter of Credit
hereunder is subject to the satisfaction, of the following conditions precedent
(in addition to the conditions precedent set forth in Section 5.2 hereof in the
case of the making of Loans or the issuance (or deemed issuance) of Letters of
Credit):
(a) Agreement. The Agent shall have received a counterpart of
this Agreement for each Lender, duly executed by each of the Borrowers,
by each of the Lenders, by the Issuer and by the Agent.
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(b) Notes. The Agent shall have received an executed Note for
each Lender conforming to the requirements hereof and duly executed on
behalf of each of the Borrowers.
(c) Security Documents. The Agent (or Collateral
Agent) shall have received the duly executed copies of the
Collateral Agency Agreement and the Pledge Agreement,
together with
(i) Certificates and instruments representing the
stock certificates and other instruments pledged
pursuant to such Security Documents, accompanied by
duly executed instruments of transfer or assignment
in blank, in form and substance satisfactory to the
Agent and Collateral Agent; and
(ii) Evidence of the completion of all recordings
and filings (including Uniform Commercial Code
financing statements) with respect to, and of all
other actions with respect to, the above Security
Documents as may be necessary or, in the opinion of
the Agent, desirable to create, perfect or protect
the Liens created or purported to be created
thereby.
(d) Lien Searches To the extent required by the Agent,
evidence of recent searches respecting Uniform Commercial Code and
judgment liens showing no filings or recordings, except for (x)
Permitted Liens and (y) such other filings and recordings as are
acceptable to the Agent (it being understood that such acceptance does
not limit any obligations of the Borrowers hereunder or under other
Loan Documents).
(e) Obligations Under Existing Credit Agreement. All
principal, interest, premiums, fees and other amounts outstanding or
otherwise due and payable with respect to the Original Credit Agreement
or the other "Loan Documents" referred to therein shall have been paid
in full or refinanced with Loans hereunder.
(f) Synthetic Lease Facility. The Synthetic Lease Facility and
other Synthetic Lease Facility Documents shall have been duly executed
and delivered and shall be in full force and effect and a Responsible
Officer of Genesis shall deliver to the Agent, with copies for each
Lender, a certificate to such effect together with a copy of such
documents.
(g) [INTENTIONALLY OMITTED]
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(h) Corporate or Partnership Proceedings. The Agent shall have
received, with a counterpart for each Lender Party, certificates by the
Secretary or Assistant Secretary of each Borrower dated as of the
Effective Date as to (i) true copies of the articles of incorporation
and bylaws or partnership agreement (or other constituent documents) of
such Borrower in effect on such date, (ii) true copies of all corporate
or partnership action taken by such Borrower relative to this Agreement
and the other Loan Documents and (iii) the incumbency and signature of
the respective officers of such Borrower executing this Agreement and
the other Loan Documents to which such Borrower is a party, together
with satisfactory evidence of the incumbency of such Secretary or
Assistant Secretary. The Agent shall have received, with a copy for
each Lender Party, copies of (x) certificates from the appropriate
Secretary of State or other applicable Governmental Authority dated not
more than 30 days before the Effective Date showing the good standing
of each Borrower in its state of incorporation or organization and (y)
certificates from the appropriate Secretaries of State or other
applicable Governmental Authorities dated not more than 30 days before
the Effective Date showing the good standing of Genesis in each state
in which Genesis does business.
(i) Insurance. If requested by the Agent, the Borrowers shall
have delivered evidence that the insurance policies required by this
Agreement and the other Loan Documents have been obtained and are in
effect.
(j) Litigation. There shall not be pending (or to the
knowledge of any Borrower after due inquiry, threatened) any action,
suit, proceeding or investigation by or before any Governmental
Authority seeking to challenge, prevent or declare illegal any of the
transactions contemplated by the Loan Documents.
(k) Other Conflicts. The Agent shall have received, with
copies for each Lender, true and correct copies of each consent,
waiver, amendment or agreement which has been obtained by or on behalf
of any Borrower or any Restricted Subsidiary of Borrower in respect of
any matter which would, absent such consent, waiver, amendment or
agreement, be within the scope of clause (b)(ii) of Section 4.5 hereof,
and such items shall be satisfactory in form and substance to the Agent
and shall be in full force and effect.
(l) Financial Statements, Projections, Etc. The Agent shall
have received, with a counterpart for each Lender Party, copies of such
of the financial statements, and projections referred to in Sections
4.6, 4.7 and 4.9 hereof as it shall request.
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(m) Legal Opinion of Counsel to the Borrowers. The Agent shall
have received, with an executed counterpart for each Lender Party, an
opinion addressed to each Lender Party, dated the Effective Date, of
Blank, Rome, Comisky & McCauley, counsel to each of the Borrowers, as
to such matters as may be requested by the Agent and in form and
substance satisfactory to the Agent.
(n) Fees, Expenses, Etc. All fees and other compensation
required to be paid to the Agent, the Issuer or the Lenders on or prior
to the Effective Date pursuant to the terms hereof or as otherwise
agreed by any of the parties hereto shall have been paid or received.
(o) No Material Adverse Change, Etc. There shall not have
occurred any material adverse change in the business, operations,
assets or condition (financial or otherwise) or prospects of Genesis
and its consolidated Subsidiaries from that reflected in the financial
statements referred to in Section 4.7 hereof. There shall not have
occurred any adverse change in the business lines or prospects of any
Borrower or any Restricted Subsidiary of any Borrower.
(p) Additional Matters. The Agent shall have received such
other certificates, opinions, documents (including licenses, permits
and accreditations and releases executed by entities, if any, which
were Borrowers under the Original Credit Agreement but are not
Borrowers hereunder) and instruments as may be reasonably requested by
the Agent.
5.2 Conditions to All Loans and to Issuance of All Letters of
Credit. The obligation of each Lender to make any Loan and the obligation of the
Issuer to issue any Letter of Credit is subject to (in addition to the
conditions specified in Section 5.1 hereof) satisfaction of the following
further conditions precedent:
(a) Notice. Appropriate notice for the making of such Loan or
the issuance of such Letter of Credit shall have been given by the
applicable Borrower as provided in Article 2 or Article 3 hereof.
(b) Representations and Warranties. Each of the
representations and warranties made by each Loan Party herein and in
each other Loan Document shall be true and correct in all material
respects on and as of such date as if made on and as of such date, both
before and after giving effect to any Loans requested to be made and
the issuance of any Letters of Credit requested to be issued on such
date. Without limiting the generality of the foregoing, both before and
after giving effect to the proposed Loan or
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Letter of Credit, Genesis shall be in compliance with the financial
tests set forth in Section 5.9 of the 1995 Subordinated Note Indenture
and any similar provisions in the 1996 Subordinated Note Indenture.
(c) No Defaults. No Event of Default or Potential Default
shall have occurred and be continuing or shall exist on such date or
after giving effect to any Loans requested to be made and any Letters
of Credit requested to be issued on such date.
(d) No Violations of Law. Neither the making nor use
of any Loans nor the issuance or use of the proceeds of any
Letters of Credit shall cause any Lender Party to violate or
conflict with any Law.
(e) No Material Adverse Effect. There shall not have
occurred, or be threatened, any event, act or condition
which could have a Material Adverse Effect.
Each request by a Borrower for the making of any Loan or the issuance of any
Letter of Credit shall constitute a representation and warranty by such Borrower
that the conditions set forth in this Section 5.2 have been satisfied as of the
date of such request. Failure of the Agent to receive notice from such Borrower
to the contrary before such Loan is made or such Letter of Credit is issued
shall constitute a further representation and warranty by such Borrower that the
conditions referred to in this Section 5.2 have been satisfied as of the date
such Loan is made or such Letter of Credit is issued.
ARTICLE 6 - AFFIRMATIVE COVENANTS
The Borrowers hereby covenant to each Lender Party as follows:
6.1 Reporting Requirements.
(a) Annual Audit Reports. As soon as practicable, and in any
event within 90 days after the close of each fiscal year of Genesis, Genesis, on
behalf of the Borrowers, shall furnish to the Agent, with a copy for the Issuer
and each Lender, consolidated statements of income, cash flows and changes in
stockholders' equity of Genesis and its consolidated Subsidiaries for such
fiscal year and a consolidated balance sheet of Genesis and its consolidated
Subsidiaries as of the close of such fiscal year, and notes to each, all in
reasonable detail, setting forth in comparative form the corresponding figures
for the preceding fiscal year. Such financial statements shall be accompanied by
an opinion of KPMG Peat Marwick or other independent certified public
accountants of recognized national standing selected by
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the Borrowers and satisfactory to the Required Lenders. Such opinion shall be
free of any exception or qualification which is of "going concern" or like
nature or which relates to a limited scope of examination. Such opinion in any
event shall contain a written statement of such accountants substantially to the
effect that (i) such accountants examined such financial statements in
accordance with generally accepted auditing standards and accordingly made such
tests of accounting records and such other auditing procedures as such
accountants considered necessary under the circumstances and (ii) in the opinion
of such accountants such financial statements present fairly the financial
position of Genesis and its consolidated Subsidiaries as of the end of such
fiscal year and the results of their operations and their cash flows and changes
in stockholders' equity for such fiscal year, in conformity with GAAP.
Concurrently with the delivery of the financial statements referred to above in
this paragraph (a) Genesis, on behalf of the Borrowers, shall furnish to the
Agent, with a copy for the Issuer and each Lender, (1) unaudited statements of
income, cash flows and changes in stockholders' equity for each of (x) Genesis
and the Restricted Subsidiaries on a consolidated basis and (y) the Unrestricted
Entities on a consolidated basis, for such fiscal year and (2) a balance sheet
of each of (x) Genesis and the Restricted Subsidiaries on a consolidated basis
and (y) the Unrestricted Entities on a consolidated basis, all in reasonable
detail, setting forth in comparative form the corresponding figures for the
preceding year. Such unaudited financial statements shall be certified by a
Responsible Officer of Genesis as presenting fairly the financial position of
the subject entities as of the end of such fiscal year and the results of their
operations and their cash flows and changes in stockholders' equity for such
fiscal year, in conformity with GAAP.
(b) Quarterly Consolidated Reports. As soon as practicable,
and in any event within 45 days after the close of each of the first three
fiscal quarters of each fiscal year of Genesis, Genesis, on behalf of the
Borrowers, shall furnish to the Agent, with a copy for the Issuer and each
Lender, (1) unaudited consolidated statements of income, cash flows and changes
in stockholders' equity for each of (x) Genesis and its consolidated
Subsidiaries, (y) Genesis and its Restricted Subsidiaries on a consolidated
basis and (z) the Unrestricted Entities on a consolidated basis as of the close
of such fiscal quarter and for the period from the beginning of such fiscal year
to the end of such fiscal quarter and (2) unaudited balance sheets of each of
such three groups of entities as of the close of such fiscal quarter, and notes
to each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the same periods or as of the same date during the
preceding fiscal year (except for the balance sheets, which shall set forth in
comparative form the corresponding balance sheets as
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of the prior fiscal year end). Such financial statements shall be certified by a
Responsible Officer of Genesis as presenting fairly the financial position of
the subject entities as of the end of such fiscal quarter and year-to-date
period, and the results of their operations and their cash flows and changes in
stockholders' equity for such fiscal quarter and year-to-date period, in
conformity with GAAP, subject to normal and recurring year-end audit
adjustments.
(c) INTENTIONALLY OMITTED
(d) Quarterly Compliance Certificates. Genesis, on behalf of
the Borrowers, shall deliver to the Agent, with a copy for the Issuer and each
Lender, an Officer's Compliance Certificate concurrently with the delivery of
the financial statements referred to in subsections (a) and (b) of this Section
6.1 (a "Quarterly Compliance Certificate"). Each Quarterly Compliance
Certificate shall include for informational purposes, in addition to the
information set forth in other Officer's Compliance Certificates, the
calculations necessary to confirm compliance with the financial covenants set
forth in Section 5.9 of the 1995 Subordinated Note Indenture and any similar
provisions in the 1996 Subordinated Note Indenture. The Quarterly Compliance
Certificate which is to be delivered concurrently with the annual audited
financial statements referred to in subsection (a) of this Section 6.1 shall
also be certified by the independent certified public accountants which provide
the opinion referred to in such subsection (a).
(e) Certain Other Reports and Information. Promptly upon their
becoming available to any Borrower, such Borrower shall deliver to the Agent,
with a copy for the Issuer and each Lender, a copy of (i) all regular or special
reports, registration statements and amendments to the foregoing which any
Borrower or any Restricted Subsidiary of any Borrower shall file with the
Securities and Exchange Commission (or any successor thereto) or any securities
exchange, (ii) all reports, proxy statements, financial statements and other
information distributed by any Borrower or any Restricted Subsidiary to its
stockholders, bondholders or the financial community generally, and (iii) all
accountants' management letters pertaining to, all other reports submitted by
accountants in connection with any audit of, and all other reports from outside
accountants with respect to, any Borrower or any Restricted Subsidiary of any
Borrower.
(f) INTENTIONALLY OMITTED
(g) Projections. As soon as practicable, and in any
event within 60 days of the beginning of each fiscal year of
Genesis, Genesis, on behalf of the Borrowers, shall furnish to
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the Agent, with a copy for the Issuer and each Lender, a copy of the projections
prepared by the Borrowers demonstrating the projected consolidated financial
condition and results of operations of the Borrowers and their Restricted
Subsidiaries, for the five-year period commencing on the first day of such
fiscal year, which projections shall be accompanied by a written statement of
the assumptions and estimates underlying such projections and on the basis of
which such projections shall have been prepared. Such projections, assumptions
and estimates shall be accompanied by a statement, certified by a Responsible
Officer of Genesis, to the effect that as of the date of preparation thereof and
as of the date of delivery thereof pursuant to this Section 6.1(g), such
projections, assumptions and estimates were reasonable, made in good faith,
consistent with the Loan Documents and represent the Borrowers' best judgment as
to such matters at such times.
(h) Age Florida Financial Statements. At any time that
indebtedness under the AGE Florida Financing Facility is in excess of Fifteen
Million Dollars ($15,000,000), the Borrowers shall promptly furnish, or cause to
be furnished, to the Agent, with a copy for each Lender Party, all financial
statements of Age Florida (or Age Florida and its Subsidiaries) which the Agent
may request.
(i) Modifications to Schedules. The Borrowers may, from time
to time, furnish to the Agent, with a copy for the Issuer and each Lender,
revisions to certain schedules hereto, necessary to reflect information
respecting transactions permitted hereunder in such form as the Agent may
reasonably request. Unless the Agent notifies Genesis to the contrary, such
revisions (if they reflect transactions and events permitted hereunder and under
the other Loan Documents (in all cases after taking account of all waivers and
amendments thereto)) shall be deemed to be amendments hereto.
(j) Notice of Certain Events. Promptly upon any Borrower
becoming aware of any of the following, the Borrowers shall give the Agent
notice thereof, together with a written statement of a Responsible Officer of
the Borrower which gives such notice setting forth the details thereof and any
action with respect thereto taken or proposed to be taken by any Borrower:
(i) Any Event of Default or Potential Default.
(ii) Any material adverse change in the business, operations
or condition (financial or otherwise) or prospects of any Borrower or
any Subsidiary of any Borrower.
(iii) Any pending or threatened action, suit, proceeding or
investigation by or before any Governmental Authority against or
affecting any Borrower or any
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Subsidiary of any Borrower, except for matters that if adversely
decided, individually or in the aggregate, could not have a Material
Adverse Effect.
(iv) Any material violation, breach or default by Genesis or
any Subsidiary thereof of or under the 1993 Subordinated Debentures,
the 1993 Subordinated Debenture Indenture, the 1995 Subordinated Notes,
the 1995 Subordinated Note Indenture, the 1996 Subordinated Note
Indenture, the First Mortgage Bond Documents, the AGE Florida
Documents, the Silver Lake Dover Documents, the Silver Lake Bristol
Documents, agreements respecting the investment in Doctors Health
System, Inc., any Assumed Indebtedness or any other agreement or
instrument material to the business, operations, condition (financial
or otherwise) or prospects of Genesis and its Restricted Subsidiaries
taken as a whole.
(v) (A) Any termination for default of any Management
Agreement, any lease by a Restricted Subsidiary of a nursing or other
healthcare facility or any other real property or any other agreement
or instrument material to the business, operations, condition
(financial or otherwise) or prospects of Genesis and its Restricted
Subsidiaries taken as a whole, (B) any termination for convenience or
other early termination or failure to exercise any option to renew by
the other party to any Management Agreement, any lease referred to in
clause (A) above or any other agreement or instrument material to the
business, operations, condition (financial or otherwise) or prospects
of Genesis and its Restricted Subsidiaries taken as a whole except,
with respect to this clause (B), for any termination or failure to
renew which, individually or in the aggregate with all other such
terminations or failures to renew, could not have a Material Adverse
Effect or (C) any actual or threatened suspension, debarment or
declaration of ineligibility of any Borrower or any Subsidiary by any
Governmental Authority, including but not limited to any actual or
threatened suspension, debarment or declaration of ineligibility with
respect to any Medicare or Medicaid program.
(vi) Any Pension-Related Event. Such notice shall be
accompanied by: (A) a copy of any notice, request, return, petition or
other document received by any Loan Party or any Controlled Group
Member from any Person, or which has been or is to be filed with or
provided to any Person (including without limitation the Internal
Revenue Service, PBGC or any Plan participant, beneficiary, alternate
payee or employer representative), in connection with such
Pension-Related Event, and (B) in the case of any Pension-Related Event
with respect to a Plan, the most recent Annual Report (5500
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Series), with attachments thereto, and the most recent actuarial
valuation report, for such Plan.
(vii) Any Environmental Claim pending or threatened against
any Borrower or any Subsidiary of any Borrower or any of their
respective Environmental Affiliates, or any past or present acts,
omissions, events or circumstances (including but not limited to any
dumping, leaching, deposition, removal, abandonment, escape, emission,
discharge or release of any Environmental Concern Material at, on or
under any facility or property now or previously owned, operated or
leased by any Borrower or any Subsidiary of any Borrower or any of
their respective Environmental Affiliates) that could form the basis of
such Environmental Claim, which Environmental Claim, if adversely
resolved, individually or in the aggregate, could have a Material
Adverse Effect.
(viii) Any material violation, breach or default by Genesis or
any Subsidiary of Genesis of the terms of the Synthetic Lease Facility
or other Synthetic Lease Facility Documents.
(k) Visitation; Verification. The Borrowers shall permit such
Persons as the Agent or any Lender may designate from time to time to visit and
inspect any of the properties of the Borrowers and of any Restricted Subsidiary,
to examine and verify their respective books and records and take copies and
extracts therefrom and to discuss their respective affairs with their respective
directors, officers, employees and independent accountants upon prior notice at
such times during regular business hours, and as often, as the Agent may
reasonably request. The Borrowers hereby authorize such officers, employees and
independent accountants to discuss with the Agent or any Lender the affairs of
the Borrowers and their Restricted Subsidiaries. The Borrowers shall cooperate,
and shall cause each of its Restricted Subsidiaries to cooperate, with the Agent
and the Lenders in such inspection and verification. Any examination and
verification of accounts and inventory shall be at the expense of the Lenders,
with each Lender to be responsible for its Pro Rata Share of such expense.
(l) Environmental Audit. The Agent shall have the right, at
the direction of the Required Lenders and at the expense of the Lenders in
proportion to their respective Pro Rata Shares, from time to time to designate
such Persons (the "Environmental Auditors") as the Agent may select to visit,
inspect and have access to any of the properties, products or wastes of each
Borrower and each Restricted Subsidiary and, to the extent possible, their
respective Environmental Affiliates, for the purpose of investigating whether
there may be a basis for any Environmental Claim or any condition which could
result in
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any liability, cost or expense to the Agent or any Lender. Such investigation
may include, among other things, above and below ground testing for the presence
of Environmental Concern Materials and such other tests as may be necessary or
advisable in the opinion of the Agent. The Borrowers will supply to the
Environmental Auditors such historical and operational information, including
the results of all samples sent for analysis, correspondence with Governmental
Authorities and environmental audits or reviews regarding properties, products
and wastes of any Borrower, any Restricted Subsidiary or any of their respective
Environmental Affiliates as are within its possession, custody or control, or
which are available to any of them, and will make available for meetings with
the Environmental Auditors appropriate personnel employed by or consultants
retained by the Borrowers and Restricted Subsidiaries having knowledge of such
matters.
(m) Annual Bank Meeting. The Borrowers shall
cooperate in the arrangement of, and shall cause appropriate
officers thereof to attend and participate in, an annual bank
meeting at the request of the Agent.
(n) Other Information. In addition, the Borrowers
will promptly furnish to the Agent such other information as the
Agent may reasonably request.
6.2 Insurance. Each of the Borrowers shall, and shall cause
each of its Restricted Subsidiaries to, maintain with financially sound and
reputable insurers insurance with respect to its properties and business and
against such liabilities, casualties and contingencies and of such types and in
such amounts as are customary in the case of Persons engaged in the same or
similar businesses or having similar properties similarly situated and as is
satisfactory from time to time to the Required Lenders, including insurance
covering its respective properties, buildings, machinery, equipment, tools,
furniture, fixtures and operations, and medical malpractice, professional
liability and public liability, as well as business interruption, all of which
insurance in any event shall not provide for a materially lower level of
coverage than the insurance referred to in Schedule 4.21 hereto. The Borrowers
shall, if so requested by the Collateral Agent or the Agent, deliver to the
Collateral Agent or the Agent original or duplicate policies of such insurance
and, as often as the Collateral Agent or the Agent may reasonably request, a
report of a reputable insurance broker, or an insurance company representative
if an insurance broker is not involved, with respect to such insurance.
6.3 Payment of Taxes and Other Potential Charges and
Priority Claims. Each of the Borrowers shall, and shall cause
each of its Restricted Subsidiaries to, pay or discharge
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(a) on or prior to the date on which penalties attach
thereto, all taxes, assessments and other governmental
charges imposed upon it or any of its properties; and
(b) on or prior to the date when due, all lawful claims of
materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons and all other lawful claims which, in each case if unpaid,
might result in the creation of a Lien upon any of its properties,
provided that unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, such Borrower or such Restricted
Subsidiary need not pay or discharge any such tax, assessment, charge or claim
so long as (x) the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted, (y) such reserves or other
appropriate provisions as may be required by GAAP shall have been made therefor
and (z) to the extent that the aggregate amount of such taxes, assessments,
charges or claims at any time exceeds $250,000, the Borrowers deposit and
maintain with the Agent a bond or other security satisfactory to the Required
Lenders in such amount as the Required Lenders shall require to assure the
discharge of such excess amount.
6.4 Preservation of Status. Each of the Borrowers shall, and
shall cause each of its Restricted Subsidiaries to, maintain its status as a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, or maintain its status as a partnership
duly organized and validly existing under the laws of its jurisdiction of
organization. Each of the Borrowers shall, and shall cause each of its
Restricted Subsidiaries to, continue to be duly qualified to do business as a
foreign corporation or partnership, as the case may be, and in good standing in
all jurisdictions in which the ownership of its properties or the nature of its
business or both make such qualification necessary or advisable, except for
matters that, individually or in the aggregate, could not have a Material
Adverse Effect.
6.5 Governmental Approvals and Filings. Each of the Borrowers
shall, and shall cause each of its Restricted Subsidiaries to, keep and maintain
in full force and effect all Governmental Actions necessary or advisable in
connection with execution and delivery of any Loan Document by any Borrower,
consummation by any Borrower of the transactions herein or therein contemplated,
performance of or compliance with the terms and conditions hereof or thereof by
any Borrower or to ensure the legality, validity, binding effect, enforceability
or admissibility in evidence hereof or thereof.
6.6 Power To Carry On Business. Each of the
Borrowers shall, and shall cause each of its Restricted
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Subsidiaries to, (a) maintain in effect all licenses, permits, approvals,
consents, qualifications, authorizations and accreditations necessary or
appropriate to own and operate all nursing or other facilities which it owns or
operates and (b) obtain all licenses, permits, approvals, consents,
qualifications, authorizations and accreditations necessary or appropriate to
own and operate all nursing or other facilities which it acquires.
6.7 Maintenance of Properties. Each of the Borrowers shall,
and shall cause each of its Restricted Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition the properties now or
hereafter owned, leased or otherwise possessed by it and shall make or cause to
be made all needful and proper repairs, renewals, replacements and improvements
thereto so that the business carried on in connection therewith may be properly
and advantageously conducted at all times.
6.8 Material Restricted Subsidiaries As Borrowers. The
Borrowers shall cause all of their Subsidiaries which are Material Restricted
Subsidiaries to be Borrowers hereunder (by signing Joinder Supplements hereto,
executing Notes or allonges thereto and taking such other action as the Agent
may reasonably request) and to cause all the capital stock or other equity
interests in such Material Restricted Subsidiaries to be pledged to the
Collateral Agent pursuant to the Security Documents.
6.9 Financial Accounting Practices. Each of the Borrowers
shall, and shall cause each of its Restricted Subsidiaries to, make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Each
of the Borrowers shall, and shall cause each of the Restricted Subsidiaries to,
have a fiscal year ending September 30.
6.10 Use of Proceeds. The Borrowers shall apply the proceeds
of the Loans only for, and shall request the issuance of Letters of Credit only
for, the respective purposes described in Section 4.28 hereof. The Borrower
shall not use the proceeds of any Loans hereunder, or request the issuance of
Letters of Credit hereunder, directly or indirectly in violation of Regulations
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U or G of the Board of Governors of the Federal Reserve System, as amended from
time to time, for any unlawful purpose or in any manner inconsistent with
Section 4.28 hereof or any other provision of any Loan Document.
6.11 Preservation of Status as Senior Indebtedness. Genesis
shall promptly take all action requested by the Agent or otherwise necessary at
any time to protect, preserve and give effect to (a) the status of the Lenders,
the Issuer and the Agent as the holders of "Senior Indebtedness" and "Designated
Senior Indebtedness" within the meaning of the 1993 Subordinated Debenture
Indenture and (b) the status of the Lenders, the Issuer and the Agent as the
holders of "Senior Indebtedness" and "Designated Senior Indebtedness" within the
meaning of the 1995 Subordinated Note Indenture and (c) the status of the
Lenders, the Issuer and the Agent as holders of "Senior Indebtedness" and
"Designated Senior Indebtedness" (or similar term used therein) within the
meaning of the 1996 Subordinated Note Indenture.
6.12 Interest Rate Hedging Agreements. Genesis shall, from
time to time, enter into one or more Qualifying Interest Rate Hedging Agreements
to the extent necessary to ensure that at all times at least 30% of the
Consolidated Funded Indebtedness of the Borrowers effectively bears, or is
capped at, a fixed interest rate.
6.13 Continuation of or Change in Business. Each of the
Borrowers and each Restricted Subsidiary of each Borrower shall continue to
engage in its business substantially as conducted and operated during the
present and preceding fiscal year, and no Borrower shall, and no Borrower shall
permit any of its Restricted Subsidiaries to, engage in any other business.
6.14 Corporate Separateness. Each of the Borrowers shall, and
shall cause each of its Restricted Subsidiaries to, conduct its business and
operations and the business and operations of each Restricted Subsidiary
separately from that of each Unrestricted Entity, and cause each Unrestricted
Entity to conduct its business and operations separately from that of such
Borrower and the Restricted Subsidiaries, including, without limitation, (i) not
commingling funds or other assets of an Unrestricted Entity with the funds or
other assets of the Borrower or a Restricted Subsidiary; (ii) maintaining
separate corporate and financial records and observing all corporate
formalities; (iii) causing each Unrestricted Entity to pay its liabilities from
its assets; provided that this clause shall not prohibit a Borrower or any
Restricted Subsidiary from making an Investment in an Unrestricted Entity that
is otherwise permitted under Section 7.10 of this Agreement; (iv) maintaining
capitalization adequate to meet the business needs of each Unrestricted Entity;
(v) causing all reports and filings of the Borrower to refer to each
Unrestricted Entity as a Subsidiary
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rather than as a division; and (vi) causing each Unrestricted Entity to conduct
its dealings with third parties in its own name and as a separate and
independent entity.
ARTICLE 7 - NEGATIVE COVENANTS
The Borrowers hereby covenant to each Lender Party as follows:
7.1 Financial Covenants.
(a) Fixed Charge Coverage. The Fixed Charge Coverage
Ratio shall be at least equal to the ratios set forth below
during the periods indicated below:
Period Ratio
------ -----
from the Effective Date
through June 30, 1997 2.15 to 1.00
from July 1, 1997 through
through September 30, 1999 2.25 to 1.00
from October 1, 1999
and thereafter 2.50 to 1.00.
(b) Senior Funded Debt/Cash Flow. The Senior Funded Debt/Cash
Flow Ratio shall be not greater than 4.0 to 1 at any time from the Effective
Date through September 30, 1999 and shall be not greater than 3.50 to 1 at any
time thereafter.
(c) Consolidated Net Worth. The total amount of stockholders'
equity of Genesis and its Restricted Subsidiaries on a consolidated basis at any
date of determination after the Effective Date shall be not less than the sum of
(i) Four Hundred and Fifty Million Dollars ($450,000,000) plus (ii) an amount
equal to the net proceeds of all equity offerings of Genesis on a cumulative
basis commencing with the Effective Date through such date of determination plus
(iii) 75% of the cumulative amount of Net Income (which shall not be reduced by
the amount of any net loss for any fiscal quarter) of Genesis and its Restricted
Subsidiaries on a consolidated basis for the period commencing on the first day
of the fiscal quarter in which the Effective Date occurs through the last day of
the fiscal quarter ending on, or most recently prior to, such date of
determination.
(d) Total Funded Debt/Cash Flow. The Total Funded Debt/Cash
Flow Ratio shall be not greater than 5.00 to 1 at any time from the Effective
Date through September 30, 1999 and shall be not greater than 4.50 to 1 at any
time thereafter.
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(e) Calculations of Financial Covenants. The
financial covenants set forth in this Section 7.1 shall be tested
at the end of each fiscal quarter and at such other times as may
be required by the terms of this Agreement. Following the
effective date of any Acquisition that is effected by Genesis or
any of its Restricted Subsidiaries and that is permitted under
Section 7.9(c) hereof, the financial covenants set forth in this
Section 7.1 shall be computed on a pro forma basis as if the
effective date of such Acquisition had been the first day of the
earliest of the four fiscal quarters ended on, or most recently
prior to, such actual date of the Acquisition. For purposes of
such computation, the Borrowers may elect to make pro forma
income statement adjustments at the time of the effective date of
such Acquisition under the following circumstances: (i)
adjustments to reflect the elimination of that portion of salary
and employee benefit expenses relating to owners, management and
board members of the Person so acquired that, as a consequence of
such Acquisition, will no longer be incurred by the Person so
acquired on an on-going basis following the Acquisition, to the
extent demonstrated by Genesis to the satisfaction of the Agent,
and (ii) adjustments to reflect any other savings in expenses
which will be realized by such Person so acquired as a
consequence of such Acquisition, to the extent demonstrated by
Genesis to the satisfaction of the Required Lenders. Following
the effective date of any disposition that is effected by Genesis
or any of its Restricted Subsidiaries and that is permitted under
Section 7.10 hereof, the financial covenants set forth in this
Section 7.1 shall be computed on a pro forma basis as if the
effective date of such disposition had been the first day of the
earliest of the four fiscal quarters ended on, or most recently
prior to, such actual date of disposition. Similarly, following
the effective date of any designation or redesignation of a
Subsidiary or Investment pursuant to the terms of Section 7.6
below, if the effect of such designation or redesignation is to
change the entities which constitute Restricted Subsidiaries, the
financial covenants set forth in this Section 7.1 shall be
computed on a pro forma basis as if the effective date of such
designation or redesignation had been the first day of the
earliest of the four fiscal quarters ended, or most recently
prior to, such actual date of the designation or redesignation as
the case may be.
7.2 Liens. No Borrower shall, and no Borrower shall permit any
of its Restricted Subsidiaries to, at any time create, incur, assume or suffer
to exist any Lien on any of its assets (now owned or hereafter acquired), or
agree, become or remain liable (contingently or otherwise) to do any of the
foregoing, except for the following ("Permitted Liens"):
(a) Liens pursuant to the Security Documents in favor
of the Collateral Agent for the benefit of the Secured
Parties;
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(b) Liens existing on the Effective Date securing obligations
existing on the Effective Date, as such Liens and obligations are
listed in Schedule 7.2 hereto (and extension, renewal and replacement
Liens upon the same property theretofore subject to a listed Lien,
provided that the amount secured by each Lien constituting such an
extension, renewal or replacement Lien shall not exceed the amount
secured by the corresponding Lien theretofore existing);
(c) Liens arising from taxes, assessments, charges or claims
described in Section 6.3 hereof that are not yet due or that remain
payable without penalty;
(d) Liens arising from taxes, assessments, charges or claims
described in Section 6.3 hereof to the extent determined to remain
unpaid under the proviso to such Section 6.3, provided that the
aggregate amount secured by all Liens described in this subsection (d)
shall not at any time exceed $500,000;
(e) INTENTIONALLY OMITTED
(f) Liens existing on real estate and equipment acquired by
any Borrower in an Acquisition permitted under Section 7.9 hereof so
long as any such Lien (i) secures only corresponding Assumed
Indebtedness permitted hereunder and (ii) is confined solely to such
property so acquired and proceeds thereof;
(g) Liens on Synthetic Lease Property which secure
obligations under the Synthetic Lease Facility and other
Synthetic Lease Facility Documents;
(h) Liens on stock and equity interests held in
Unrestricted Entities so long as such Liens do not secure
Indebtedness prohibited hereunder; and
(i) Other Liens securing Indebtedness permitted under Section
7.3 hereof in an amount not to exceed Twenty-Five Million Dollars
($25,000,000).
provided, however, no Lien permitted under clauses (f), (h) or (i) above shall
be created at any time, if there shall exist, either before or after giving
effect to such transaction, an Event of Default. "Permitted Lien" shall in no
event include any Lien imposed by, or required to be granted pursuant to, ERISA
or any Environmental Law. Nothing in this Section 7.2 shall be construed to
limit any other restriction on Liens imposed by the Security Documents or
otherwise in the Loan Documents.
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7.3 Indebtedness. No Borrower shall, and no Borrower shall
permit any of its Restricted Subsidiaries to, at any time create, incur, assume
or suffer to exist any Indebtedness (including Indebtedness of Unrestricted
Entities for which there is recourse (contingent or otherwise) to Genesis or a
Restricted Subsidiary), or agree, become or remain liable (contingently or
otherwise) to do any of the foregoing, except:
(a) Indebtedness to the Lender Parties pursuant to
this Agreement and the other Loan Documents;
(b) INTENTIONALLY OMITTED
(c) Indebtedness constituting intercompany loans and
advances permitted by clause (b) of Section 7.5 hereof;
(d) Indebtedness evidenced by the 1993 Subordinated
Debentures, Indebtedness evidenced by the 1995 Subordinated Notes and
(subject to receipt of an opinion of Borrowers' counsel as to the
"Senior Indebtedness" status of the Loan obligations under the 1996
Subordinated Note Indenture, which opinion shall be substantially the
same as the opinion delivered hereunder relative to the 1995
Subordinated Note Indenture) Indebtedness evidenced by the 1996
Subordinated Notes;
(e) Obligations of Genesis under any Qualifying
Interest Rate Hedging Agreement entered into pursuant to
Section 6.12 hereof;
(f) Indebtedness under the Synthetic Lease Facilities and
other Synthetic Lease Facility Documents in a principal amount not to
exceed One Hundred and Fifty Million Dollars ($150,000,000);
(g) Geri-Med Debt provided that such Indebtedness shall, at no
time, be in an aggregate principal amount exceeding One Hundred and
Thirty-Five Million Dollars ($135,000,000);
(h) INTENTIONALLY OMITTED
(i) Indemnities by a Borrower or a Subsidiary of a
Borrower of the liabilities of its directors or officers or
employees in their capacities as such as permitted by Law;
and
(j) Other Indebtedness incurred from time to time, provided
that the aggregate principal amount of all such other Indebtedness
shall not exceed One Hundred Million Dollars ($100,000,000) at any time
and it shall be incurred on terms which comply with the provisions of
Section 7.17
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and other terms hereof. All such Indebtedness as of the
date of this Agreement is listed on Schedule 7.3 hereto.
At the time any Indebtedness is incurred pursuant to clause (j) of this Section
7.3, Genesis shall notify the Agent and shall deliver to the Agent, with copies
for each Lender, an Officer's Compliance Certificate showing pro forma
compliance with the covenants referred to therein after giving effect to the
proposed Indebtedness. Any Indebtedness of a Borrower to an Affiliate of such
Borrower which is not itself a Borrower hereunder shall be evidenced by a
Subordinated Affiliate Note.
7.4 Avoidance of Other Conflicts. No Borrower shall,
and no Borrower shall permit any of its Subsidiaries to, violate
or conflict with, be in violation of or conflict with, or be or
remain subject to any liability (contingent or otherwise) on
account of any violation or conflict with
(a) any Law,
(b) its articles of incorporation of bylaws (or other
constituent documents), or
(c) any agreement or instrument to which it is party or by
which any of them or any of their respective Restricted Subsidiaries is
a party or by which any of them or any of their respective properties
(now owned or hereafter acquired) may be subject or bound,
except, with respect to (a) or (c), for matters that could not, individually or
in the aggregate, have a Material Adverse Effect.
7.5 Loans, Advances and Investments. No Borrower shall, and no
Borrower shall permit any of its Restricted Subsidiaries to, at any time (i)
make or suffer to exist or remain outstanding any loan or advance to, or (ii)
purchase, acquire or own (beneficially or of record) any stock, bonds, notes or
securities of, or any partnership interest (whether general or limited) in, or
any other interest in, or (iii) make any capital contribution to or other
investment in any other Person, or agree, become or remain liable (contingently
or otherwise) to do any of the foregoing (any and all of the foregoing are
collectively referred to as "Investments" or individually as an "Investment"),
except:
(a) Receivables owing to a Borrower or a Restricted Subsidiary
of a Borrower arising from provision of services or sales of inventory
under usual and customary terms in the ordinary course of business; and
loans and advances extended by a Borrower or a Restricted Subsidiary of
a Borrower to subcontractors or suppliers (excluding subcontractors or
suppliers which are non-Borrower Affiliates of that Borrower
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or Restricted Subsidiary) under usual and customary terms in
the ordinary course of business;
(b) Loans from a Borrower or Restricted Subsidiary to another
Borrower or Restricted Subsidiary provided, however, if such loan is
being made by a non-Borrower to a Borrower, it shall be evidenced by
one or more Subordinated Affiliate Notes;
(c) The capital stock or other ownership interests of
a Subsidiary permitted under Section 7.6 below.
(d) Cash Equivalent Investments;
(e) Loans to Age Florida existing on the date hereof pursuant
to the Age Financing Facility in an aggregate principal amount not to
exceed at any time Fifty Five Million Dollars ($55,000,000) provided,
that (i) the AGE Florida Management Agreement shall remain in effect so
long as any Indebtedness is outstanding under the AGE Florida Financing
Facility; and (ii) so long as the outstanding amount of loans and
advances made pursuant to this clause (e) shall be in excess of Ten
Million Dollars ($10,000,000), Genesis or its Subsidiaries shall have a
first priority Lien on substantially all of the assets of AGE Florida;
and
(f) Other Investments not covered by clauses (a)
through (e) of this Section 7.5 provided, that
(i) the aggregate amount of all such Investments
(which shall include all existing and new commitments for
Investments) together with (but without duplication) the
aggregate amount of all dispositions of Unrestricted Entities
pursuant to Section 7.10(f) shall not, at any date of
determination, exceed an amount equal to ten percent (10%) of
the Total Assets of Genesis and its Restricted Subsidiaries on
a consolidated basis as at the end of the fiscal quarter ended
on, or most recently prior to, such date of determination. The
foregoing ratio is to be tested at the time any Investment is
made pursuant to this clause (f), at the time of any
disposition of an Unrestricted Entity pursuant to Section
7.10(f) and at the end of each fiscal quarter of the
Borrowers; and
(ii) no Event of Default shall then exist either
before or after giving effect to such transaction and prior to
the making of any Investment in excess of $2,000,000, Genesis,
on behalf of the Borrowers, shall deliver to the Agent, with
copies for each Lender, a certificate of a Responsible Officer
of Genesis demonstrating pro forma compliance with the
foregoing
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covenant after giving effect to the proposed
Investment.
The "amount" of any Investment referred to in this Section 7.5 shall mean the
sum of the following (without duplication): the amount of cash paid for or
contributed to such Investment; the fair market value of any equity or assets
constituting consideration for or contributed to such Investment; and any
commitment to pay, contribute, incur, or become liable for any of the foregoing.
The "amount" of any Disposition referred to in this Section 7.5 shall mean the
fair market value of the asset (including equity) subject to such disposition.
7.6 Issuance of Subsidiary Stock or Other Ownership
Interests; Designation of "Unrestricted Entity", Etc.
(a) Subsidiaries. The Borrowers shall not, and shall not
permit any Restricted Subsidiary to, create, acquire, dispose of, or change any
interest in any Subsidiary except (subject to the restrictions set forth in
paragraphs (b), (c), (d) and (e) below) as follows:
(i) Subsidiaries (or any interest therein) may
be created or acquired in connection with an Acquisition to
the extent permitted under Section 7.9 below;
(ii) Subsidiaries (or any interest therein) may be
created or acquired in connection with an Investment to the extent
permitted under Section 7.5(f) above;
(iii) Subsidiaries may be created as wholly-
owned Restricted Subsidiaries of Genesis or other Restricted
Subsidiaries; and
(iv) Subsidiaries (or any interest therein) may be
disposed of pursuant to the provisions of Section 7.10 hereof.
(b) Unrestricted Entities. Interests in Subsidiaries and
Investments may (subject to the provisions of Sections 7.5(f) (Investments),
7.10 (Dispositions) and 7.6(e) below) from time to time be designated or
redesignated as Unrestricted Entities. All interests in Unrestricted Entities
shall be deemed Investments made pursuant to Section 7.5(f) and shall be subject
to the financial and other conditions set forth therein.
(c) Non-Material Restricted Subsidiaries. Each Non-
Material Restricted Subsidiary shall, as at any date of
determination,
(i) have Total Assets equal to or less than Two
Million Five Hundred Thousand Dollars ($2,500,000) and
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(ii) have Cash Flow for the four fiscal quarters
ending on, or most recently prior to, such date of determination less
than Two Million Five Hundred Thousand Dollars ($2,500,000)
provided, however, that at all times the aggregate consolidated amount of Total
Assets of all Non-Material Restricted Subsidiaries shall be less than ten
percent (10%) of the aggregate consolidated amount of Total Assets of Genesis
and its consolidated Subsidiaries and provided, further, that at all times, the
aggregate consolidated amount of Cash Flow of all Non-Material Restricted
Subsidiaries shall be less than ten percent (10%) of the aggregate consolidated
amount of Cash Flow of Genesis and its consolidated Subsidiaries in each case
for the four fiscal quarters ended on, or most recently prior to, such date. No
Restricted Subsidiary which has a Subsidiary that is a Material Restricted
Subsidiary shall, itself, be a Non-Material Restricted Subsidiary.
(d) Material Restricted Subsidiaries. Each Subsidiary of
Genesis that is neither a "Non-Material Restricted Subsidiary" nor an
"Unrestricted Entity" shall be a Material Restricted Subsidiary. At all times,
(i) the Cash Flow of the Material Restricted Subsidiaries on a consolidated
basis, for any fiscal quarter, must be equal to or greater than ninety per cent
(90%) the Cash Flow of Genesis and its Subsidiaries, on a consolidated basis,
for such fiscal quarter and (ii) the Total Assets of the Material Restricted
Subsidiaries on a consolidated basis must be equal to or greater than ninety per
cent (90%) of the Total Assets of Genesis and its Subsidiaries on a consolidated
basis. Each Material Restricted Subsidiary must, at all times, be a Borrower
hereunder and all ownership interests therein must be duly pledged to the
Collateral Agent pursuant to the Security Documents. The "Lessee" or any
"Subtenant" (as each such term is defined in the Synthetic Lease Facility) shall
be a Material Restricted Subsidiary.
(e) Designation. On the Effective Date, Schedule 4.15 hereto
shall specify the designation of each Subsidiary of Genesis and Schedule 4.16
hereto shall specify each Investment (that is not a Subsidiary and) that is an
"Unrestricted Entity". Thereafter, subject to the provisions of this Agreement
Genesis may, from time to time, designate (or with the consent of the Agent,
redesignate) a Subsidiary as a "Material Restricted Subsidiary", a "Non-Material
Restricted Subsidiary" or an "Unrestricted Entity" and may, from time to time,
designate an Investment as an "Unrestricted Entity" (or with the consent of the
Agent, redesignate such Investment so as not to be an "Unrestricted Entity")
subject to the following conditions:
(i) At any time a Subsidiary is formed or
acquired in accordance with the terms of this Agreement, at
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any time any other Investment is made in accordance with the terms of
this Agreement and at any time that Genesis shall desire to change the
designation of a Subsidiary or Investment in accordance with the terms
of this Agreement, Genesis shall deliver to the Agent:
1) a writing specifying,
(w) the Subsidiary or Investment
subject to such designation or
redesignation,
(x) whether the designation or
redesignation, as the case may be,
is a "Material Restricted
Subsidiary", a "Non-Material
Restricted Subsidiary" or an
"Unrestricted Entity" (and in the
case of a redesignation, the former
designation),
(y) a statement that such
designation or redesignation
complies with the terms of this
Section 7.6 and the basis for
such statement, and
(z) a statement that no Event of
Default or Potential Default then
exists or is caused thereby
(including any default under Section
7.3 (Indebtedness) or Section 6.14
(Corporate Separateness));
2) a revised Schedule 4.15 and/or Schedule
4.16 to this Agreement;
3) an Officer's Compliance Certificate
showing, for the two fiscal quarters immediately
preceding the fiscal quarter in which the
redesignation is proposed to occur and on a
projected basis for the fiscal quarter in which the
redesignation is proposed to occur compliance with
the financial covenants referred to therein after
giving effect to the redesignation; and
4) if applicable, such Joinder Supplements,
instruments and other documents as shall be
necessary to cause any Subsidiary to become a
Borrower hereunder and a "Grantor" under the
Security Documents.
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Any redesignation of a Restricted Subsidiary as an Unrestricted Entity shall be
deemed to be a transfer under Section 7.10(e) hereof and shall be subject to the
conditions specified therein.
7.7 Dividends and Related Distributions. Genesis
shall not declare or make any Stock Payment, or agree, become or
remain liable (contingently or otherwise) to declare or make any
Stock Payment, except as follows:
(a) Genesis may from time to time declare and make Stock
Payments if such Stock Payments are payable solely in shares of capital
stock (or options, warrants or rights therefor) of Genesis.
(b) Subject to the provisions of paragraph (d) below, Genesis
may from time to time declare and make cash Stock Payments on account
of dividends on, its capital stock, if on the date of such payment (or,
in the case of a dividend, on the date of declaration) the aggregate
amount of all Stock Payments declared or made or to be made under this
Section 7.7(b) in any fiscal year of Genesis including the amount of
the proposed Stock Payment, does not exceed 25% of the Net Income of
Genesis and its Restricted Subsidiaries on a consolidated basis for the
fiscal year ending on, or most recently prior to, such date of payment
or declaration.
(c) Subject to the provisions of paragraph (d) below, in
addition to the payments described above, Genesis may from time to time
declare and make cash Stock Payments on account of purchases,
redemptions, retirements or acquisitions of its capital stock (but not
cash dividends) if the aggregate amount of all such Stock Payments on a
cumulative basis commencing on the Effective Date does not exceed
Twenty Million Dollars ($20,000,000).
(d) Any Stock Payments pursuant to the preceding
paragraphs (b) and (c) shall be subject to the following
additional conditions:
(i) No Event of Default or Potential Default shall
exist either before or after giving effect to such proposed
declaration, payment, purchase, redemption, retirement or
acquisition; and
(ii) The Agent receives, with a copy for each
Lender Party, not later than the Business Day after the date
of the Stock Payment (or in the case of a dividend, the date
of declaration), a certificate signed by a Responsible Officer
of Genesis, dated such date of Stock Payment (or in the case
of a dividend, the of declaration), describing such Stock
Payment, certifying that such Stock Payment is in compliance
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with the provisions of this Section 7.7, and including a
statement in reasonable detail of the information and
calculations necessary to establish compliance with this
Section 7.7.
Genesis shall not declare any dividend payable later than 60 days after
declaration.
7.8 Leases. The Borrowers shall not, and shall not permit any
of their Restricted Subsidiaries to, at any time enter into or suffer to remain
in effect any lease, as lessee, of any property, or agree, become or remain
liable (contingently or otherwise) to do any of the foregoing, except:
(a) Leases which are not Capitalized Leases or Synthetic
Leases and which are in existence on the Effective Date and listed
(including a description of the Rental Expense with respect thereto) in
Schedule 7.8 hereto;
(b) Leases (including subleases) by a Borrower as
lessor (or sublessor) to another Borrower as lessee (or
sublessee);
(c) Capitalized Leases and Synthetic Leases permitted
under Section 7.3 hereof; and
(d) Other leases which are not Capitalized Leases or Synthetic
Leases and then only to the extent that the Rental Expense of the
Borrowers and their Restricted Subsidiaries with respect to such other
leases does not exceed $10,000,000 in any four consecutive fiscal
quarters of Genesis.
7.9 Acquisitions, Etc. No Borrower shall, and no Borrower
shall permit any of its Restricted Subsidiaries to engage in any Acquisition
(other than an acquisition of assets in the ordinary course of business) or
agree, become or remain liable (contingently or otherwise) to do the foregoing,
except:
(a) (i) A Restricted Subsidiary of Genesis (whether or not a
Borrower) may merge with or into or consolidate with (ii) any Borrower,
provided that a Borrower is the surviving entity and provided, further,
that no Event of Default or Potential Default shall occur and be
continuing before or after giving effect to such transaction;
(b) A Borrower or a Restricted Subsidiary of a
Borrower may engage in any other Acquisition not covered by
clause (a) of this Section 7.9, provided
(i) that such Borrower (for itself or on behalf
of its Restricted Subsidiary) delivers to the Lender
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Parties, not later than 15 Business Days before the
consummation of such Acquisition, a notice of the proposed
Acquisition, together with (1) copies of audited financial
statements of the relevant Person to be acquired for its last
three fiscal years most recently ended (to the extent that
such audited statements are required to be filed with the
Securities and Exchange Commission (or any successor hereto)
or are otherwise available to the Borrowers or, to the extent
such audited statements are not so available, unaudited
statements for as much of such period (as are so required to
be filed or otherwise are available to the Borrowers), (2)
copies of the interim financial statements of such Person to
be acquired for the latest fiscal quarter, (3) a pro forma
projected balance sheet of Genesis and its Restricted
Subsidiaries as of the date of and after giving effect to, the
proposed Acquisition and a pro forma income statement of
Genesis and its Restricted Subsidiaries for the four fiscal
quarters ended on, or most recently prior to, the date of such
proposed Acquisition after giving effect thereto, (4) an
Officer's Compliance Certificate showing pro forma compliance
with the covenants referred to therein after giving effect to
the proposed Acquisition (which certificate may be delivered
after the other items referred to in this paragraph (i) but no
later than five (5) Business Days prior to the date of the
proposed Acquisition), (5) revisions to the most recent
projections delivered by Genesis pursuant to Section 6.1(g)
hereof, which revisions shall take into account the projected
financial condition and results of operations of the acquired
Person for the period covered by such projections, (6) copies
of any agreements entered into or proposed to be entered into
by such Borrower or Restricted Subsidiary in connection with
such Acquisition, (7) if applicable, the documents required
under Section 7.6(e) above, and (8) such other information
about such Person to be acquired or such Acquisition as any
Lender Party may reasonably request,
(ii) that as part of such Acquisition, all or
substantially all of the ownership interests in or assets of
such Person will be acquired by such Borrower or Restricted
Subsidiary,
(iii) that the board of directors (or equivalent
governing body) of such Person has approved such
Acquisition,
(iv) that not less than 75% of such Person's
revenues during its most recently completed fiscal year were
derived from lines of business which are, at the
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time of such Acquisition, among the principal lines of
business of any of the Borrowers or Restricted
Subsidiaries,
(v) that no Event of Default or Potential
Default shall occur and be continuing before, or after
giving effect to, the consummation of such Acquisition,
(vi) that a Borrower (including an entity that
becomes a Borrower consistent with the provisions of this
Agreement or if no Borrower is a party thereto, a Restricted
Subsidiary) shall be the surviving entity in any merger
effected in connection with such Acquisition and no
Acquisition consisting of a consolidation shall be permitted
under this Section 7.9(c),
(vii) that the Borrowers shall cause any new
(direct or indirect) Material Restricted Subsidiary of Genesis
which is created or acquired as a direct or indirect result
of, or in connection with, such Acquisition, and any (direct
or indirect) Non-Material Restricted Subsidiary which becomes
a Material Restricted Subsidiary as a result of, or in
connection with, such Acquisition, to become a Borrower
hereunder pursuant to and in accordance with the terms of
Section 10.16 hereof at the time of such Acquisition and shall
cause the ownership interests therein to be pledged under the
Security Documents,
(viii) that the Acquisition Cost of such
Acquisition, when added to the aggregate Acquisition Cost of
all other Acquisitions made during the same fiscal year as the
proposed Acquisition, does not exceed Three Hundred Million
Dollars ($300,000,000), and
(ix) that the Acquisition Cost of such Acquisition
does not exceed Fifteen percent (15%) of the Total Assets of
Genesis and its Restricted Subsidiaries, on a consolidated
basis, determined as of the end of the fiscal quarter ended
on, or most recently prior to, the date of such Acquisition.
Notwithstanding the foregoing, the Acquisition of Geriatric & Medical Companies,
Inc. shall not be subject to the restrictions set forth in clauses (viii) or
(ix) above and the Acquisition Cost thereof shall be excluded from any future
computations thereunder. Within 20 days after the consummation of any
Acquisition made pursuant to clause (b) of this Section 7.9, Genesis, on behalf
of the Borrowers, shall deliver to the Agent, with copies for each Lender Party,
a certificate stating that the
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Acquisition has been consummated in accordance with the terms of this Section
7.9 and setting forth the date the Acquisition was consummated.
7.10 Dispositions of Properties. No Borrower shall, and no
Borrower shall permit any of its Restricted Subsidiaries to, sell, convey,
assign, lease as lessor (except to a Borrower as lessee, and then subject to
Section 7.11 hereof), transfer, abandon or otherwise dispose of (collectively,
for purposes of this Section 7.10, "transfer"), voluntarily or involuntarily,
any of its properties, or agree, become or remain liable (contingently or
otherwise) to do any of the foregoing, except:
(a) The Borrowers and Restricted Subsidiaries of the
Borrowers may sell inventory in the ordinary course of
business;
(b) The Borrowers and Restricted Subsidiaries of the Borrowers
may dispose of equipment which is obsolete or no longer useful in the
business of such Borrowers or such Restricted Subsidiaries;
(c) A Borrower may transfer its properties to another Borrower
which is a wholly-owned Subsidiary of Genesis so long as no Event of
Default or Potential Default shall exist either before or after giving
effect to such transfer;
(d) The Borrowers and Subsidiaries of the Borrowers
may sell or lease the Synthetic Lease Property pursuant to
the terms of the Synthetic Lease Facility; and
(e) So long as no Event of Default or Potential Default has
occurred or would exist after giving effect to such transfer and
subject to other restrictions contained herein, the Borrowers and
Restricted Subsidiaries of the Borrowers may transfer other properties
(including ownership interests of a Subsidiary,) subject to the
following conditions:
(i) Unless the Required Lenders consent in writing
to a transfer which does not satisfy either or both of the
following financial tests, both of the following financial
tests shall be satisfied:
(A) The sum of the aggregate fair market value
of the property subject to such proposed
transfer plus the aggregate fair market
value of all property previously transferred
(or deemed transferred through a
redesignation of a Restricted Subsidiary or
Investment as an Unrestricted Entity
pursuant to Section 7.6(e)) pursuant to this
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Section 7.10(e) at any time after the
Effective Date (in each case determined as
of the date of transfer or proposed
transfer, as the case may be) is less than
an amount equal to 10% of the Total Assets
of Genesis and its Restricted Subsidiaries,
on a consolidated basis, determined as of
the fiscal quarter ending on, or most
recently prior to, the date of the proposed
transfer; and
(B) The sum of the amount of Cash Flow
attributable to the property subject to such
proposed transfer plus the amount of Cash
Flow attributable to all property previously
transferred pursuant to this Section 7.10(e)
at any time after the Effective Date (in
each case for the four fiscal quarters ended
on, or most recently prior to, the date of
the transfer or proposed transfer, as the
case may be) is less than an amount equal to
10% of the Cash Flow of Genesis and its
Restricted Subsidiaries, on a consolidated
basis, for the four fiscal quarters ending
on, or most recently prior to, the date of
the proposed transfer.
For purposes of making the calculation required in the
preceding paragraph (B), if the property subject to transfer
is substantially all the assets or equity of a Person, the
"Cash Flow attributable to the property" shall mean the Cash
Flow of such Person. If the property subject to transfer is
less than substantially all the assets or equity of a Person,
then the "Cash Flow attributable to the property" shall mean
such amount of the Cash Flow of that Person as may be
specifically attributable to the property subject to transfer
if such amount is identifiable. If it is not identifiable,
then it shall be conclusively presumed to be such portion of
the Cash Flow of that Person as is equivalent to the portion
of the assets of such Person being transferred;
(ii) the Agent receives, with a copy for each
Lender Party, prior to such proposed transfer, an Officers
Compliance Certificate showing pro forma compliance with the
financial covenants referred to therein after giving effect to
such transfer;
(iii) such transfer is made in good faith in an
arm's-length transaction to a Person which is not an
Affiliate of any Borrower; and
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(iv) in the event that any shares of capital stock,
partnership interests or other ownership interests of a
Borrower are to be disposed of in such transaction each of the
following additional conditions shall be met:
(1) Such transfer is accomplished in a
single transaction;
(2) All Loans made to such Borrower and all
intercompany obligations of such Borrower shall
have been repaid in full and such Borrower shall
sign an acknowledgement that all obligations of the
Lender Parties to it are terminated; and
(3) The Agent shall have received such
replacement Notes, certificates, opinions,
documents and/or instruments it shall reasonably
request.
(f) The Borrowers and Restricted Subsidiaries may
dispose of interests in Unrestricted Entities.
Upon any transfer of property complying with the terms of this Section 7.10, the
Agent shall, at the request of the Borrower, direct the Collateral Agent to take
appropriate steps, at the cost of the Borrower, to release Liens necessary to
effect the purposes hereof.
7.11 Dealings with Affiliates. Without limitation of the
provisions of Section 6.14 hereof, no Borrower shall, and no Borrower shall
permit any of its Restricted Subsidiaries to, enter into or carry out any
transaction with (including purchase or lease property or services from, sell or
lease property or services to, loan or advance to, or enter into, suffer to
remain in existence or amend any contract, agreement or arrangement with) any
Affiliate of such Borrower, directly or indirectly, or agree, become or remain
liable (contingently or otherwise) to do any of the foregoing, except:
(a) Existence and performance of contracts, agreements and
arrangements in existence as of the Effective Date and set forth on
part A of Schedule 7.11 hereto or the Tax Sharing Agreement; and
(b) Other transactions with Affiliates in good faith and on
terms no less favorable to such Borrower or such Restricted Subsidiary
than those that could have been obtained in a comparable transaction on
an arm's-length basis from an unrelated Person.
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7.12 Consolidated Tax Return. No Borrower shall, and no
Borrower shall suffer any of its Restricted Subsidiaries to, file or consent to
the filing of any consolidated income tax return with any Person other than the
Borrowers and consolidated Subsidiaries of Genesis. From and after the effective
date of the Tax Sharing Agreement (which shall be no later than 30 days after
the Effective Date), each of the Borrowers shall cause the Tax Sharing Agreement
to remain in full force and effect, subject to no amendments or modifications
other than the Joinder of additional Subsidiaries of Genesis, from time to time,
such that at all times all Subsidiaries of Genesis shall be parties thereto.
7.13 Limitation on Payments, Prepayments and Other Action with
Respect to Certain Obligations. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, pay, prepay, purchase, redeem, retire,
defease or acquire, or otherwise make any payment (on account of principal,
interest, premium or otherwise) of, any obligation under or evidenced by any
Subordinated Affiliate Note, any of the First Mortgage Bond Documents, the 1993
Subordinated Debenture Indenture, the 1995 Subordinated Note Indenture and the
1996 Subordinated Note Indenture except a Borrower may make payments on the
aforesaid Indebtedness, as and when required to do so by the mandatory terms
thereof, all to the extent consistent with the subordination provisions, if any,
applicable thereto. Genesis shall not amend, modify or supplement the terms or
provisions contained in the aforementioned debt agreements or any agreement or
instrument evidencing or applicable thereto. Without limiting the generality of
the foregoing, the following specific provisions shall apply to the 1993
Subordinated Debenture Indenture, the 1995 Subordinated Note Indenture and the
1996 Subordinated Note Indenture:
(i) Genesis shall not take or omit to take any action under or
in connection with the 1993 Subordinated Debenture Indenture, the 1995
Subordinated Note Indenture or the 1996 Subordinated Note Indenture
which would violate or impair the subordination provisions of the 1993
Subordinated Debenture Indenture, the 1995 Subordinated Note Indenture
or the 1996 Subordinated Note Indenture. Without limiting the
generality of the foregoing, Genesis may, to the extent not in
violation of the subordination provisions of the 1993 Subordinated
Debenture Indenture, the 1995 Subordinated Note Indenture and the 1996
Subordinated Note Indenture,
(A) pay principal and interest on the 1993
Subordinated Debentures as and when expressly required to do
so by the mandatory terms of the 1993 Subordinated Debentures
(including without limitation any accrued interest required to
be paid to any holder of a 1993 Subordinated Debenture under
Section 5.2 of
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the 1993 Subordinated Debenture Indenture in the event that
such 1993 Subordinated Debenture is called for redemption on
November 30, 1996 and such holder surrenders such 1993
Subordinated Debenture for conversion into common stock of
Genesis within the ten business days prior to such redemption
date, as described in such Section 5.2 of the 1993
Subordinated Debenture Indenture),
(B) purchase 1993 Subordinated Debentures as and
when expressly required to do so by the mandatory terms of
Section 4.5 of the 1993 Subordinated Debenture Indenture (it
being understood that the foregoing may nevertheless give rise
to an Event of Default),
(C) so long as no Event of Default or Potential
Default then exists or has occurred and is then continuing or
would result from such redemption, redeem the 1993
Subordinated Debentures in whole, but only if there is
delivered to the Agent, on the date notice of such redemption
is given to the holders of the 1993 Subordinated Debentures, a
certificate signed by a Responsible Officer of Genesis, dated
such date and demonstrating and concluding that (1) the
average of the last reported sales prices on the New York
Stock Exchange of the common stock of Genesis into which the
1993 Subordinated Debentures are convertible, for the 30
consecutive days immediately prior to the date of such
certificate on which the New York Stock Exchange is open for
business, is not less than $27.1872 per share, and (2) that
the Senior Funded Debt/Cash Flow Ratio as of the last date of
the fiscal quarter ending on, or most recently prior to, such
date notice is given, as recalculated on a pro forma basis as
if such redemption of the 1993 Subordinated Debentures and any
anticipated borrowing under this Agreement in connection
therewith had been effected on the first day of the fiscal
quarter beginning one year before the first day of the fiscal
quarter in which such notice is given, is not greater than
2.50 to 1,
(D) pay principal and interest on the 1995
Subordinated Notes and 1996 Subordinated Notes as and when
expressly required to do so by the mandatory terms thereof,
and
(E) not later than November 30, 1996, pay an
aggregate amount not to exceed $6,000,000 to any holders of
1993 Subordinated Debentures in order to induce such holders
to exercise their right to convert 1993 Subordinated
Debentures into common stock of
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Genesis pursuant to the 1993 Subordinated Debenture Indenture.
(ii) Without limiting the generality of the foregoing, Genesis
shall not make or provide for the making of any deposit or other
payment which would result in the defeasance of, or have the effect of
defeasing, the 1995 Subordinated Notes or the 1996 Subordinated Notes.
7.14 Limitations on Modification of Certain Documents.
(a) No Borrower shall, or shall permit any of its Subsidiaries
to, amend, modify or supplement its articles of incorporation or similar
constituent documents if a Material Adverse Effect could result from such
amendment, modification or supplement.
(b) No Borrower shall, or shall permit any Restricted
Subsidiary to, amend, modify or supplement the AGE Florida Documents except (i)
immaterial amendments, (ii) amendments which permit additional advances to be
made under the AGE Florida Financing Facility so long as such advances are made
in accordance with the provisions of clause (f) of Section 7.5 hereof.
7.15 Limitation on Other Restrictions on Dividends by
Subsidiaries, Etc. No Borrower shall permit any of its Restricted Subsidiaries
to be or become subject to any restriction of any nature (whether arising by
operation of Law, by agreement, by the articles of incorporation, bylaws or
other constituent documents of such Subsidiary, or otherwise) on the right of
such Restricted Subsidiary from time to time to (x) declare and pay Stock
Payments with respect to capital stock owned by a Borrower or a Restricted
Subsidiary of a Borrower or (y) pay any indebtedness, obligations or liabilities
from time to time owed to a Borrower or a Restricted Subsidiary of a Borrower,
except:
(a) Restrictions pursuant to the Loan Documents or
pursuant to the Synthetic Lease Facility;
(b) Legal restrictions of general applicability; and
(c) Restrictions pursuant to the 1995 Subordinated
Note Indenture or the 1995 Subordinated Notes.
7.16 Limitation on Other Restrictions on Liens. No Borrower
shall, or shall permit any of its Restricted Subsidiaries to, enter into or
become subject to any agreement or instrument to which such Borrower or such
Restricted Subsidiary is a party or by which any of them or any of their
respective properties (now owned or hereafter acquired) may be subject or
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bound that would prohibit the grant of any Lien upon any of its properties (now
owned or hereafter acquired) to secure any Senior Funded Indebtedness, except:
(a) restrictions set forth in the Loan Documents or the Synthetic Lease Facility
Documents; (b) restrictions pursuant to non-assignment provisions of any
executory contract or lease by any Borrower or any Restricted Subsidiary in each
case as lessee; (c) restrictions on granting Liens on property subject to a
Permitted Lien described in clause (b) of Section 7.2 in existence on the
Effective Date which restrictions are described in Schedule 7.2 hereto; and (d)
restrictions on granting Liens on property subject to a Permitted Lien securing
the Geri-Med Debt which restrictions are disclosed on Schedule 1.1 hereto and
which do not prohibit the Liens contemplated under the Security Documents or the
rights of the Lenders in connection therewith.
7.17 Limitation on Other Restrictions in Agreements. No
Borrower shall, and no Borrower shall permit any of its Restricted Subsidiaries
to, enter into, become or remain subject to any agreement or instrument to which
such Borrower or such Restricted Subsidiary is a party or by which any of them
or any of their respective properties (now owned or hereafter acquired) may be
subject or bound that (a) would prohibit, or require the consent of any Person
to, any amendment, modification or supplement to any of the Loan Documents
(except for provisions currently contained in the Synthetic Lease Facility
Documents), or (b) (except financial covenants in agreements respecting Assumed
Indebtedness otherwise permitted hereunder) contains financial covenants which,
taken as a whole, are more restrictive on such Borrower or Restricted Subsidiary
than the financial covenants contained in Section 7.1 hereof taken as a whole.
7.18 Amendments to Synthetic Lease Facility Documents. No
Borrower shall, or shall permit any Restricted Subsidiary to, amend, modify or
supplement any Synthetic Lease Facility Document as in effect on the date hereof
if the effect of such amendment, modification or supplement is (1) to cause or
permit any Synthetic Lease Participant to be a Person that is not a Lender
hereunder or cause or permit a Lender hereunder to be a Person that is not a
Synthetic Lease Participant or (2) to cause the Synthetic Lease Participant's
pro rata share of its rights and obligations under the Synthetic Lease Facility
Documents to be a different percentage than such Person's pro rata share of its
rights and obligations hereunder and under the other Loan Documents.
7.19 Mergers, Etc. No Borrower shall, or shall permit
any Restricted Subsidiary to, merge or consolidate with or into
any Person, except as permitted under Section 7.9 (Acquisitions,
Etc.) above or as permitted under Section 7.10 (Dispositions of
Properties) above.
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ARTICLE 8 - DEFAULTS
8.1 Events of Default. An Event of Default shall mean the
occurrence or existence of one or more of the following events or conditions
(for any reason, whether voluntary, involuntary or effected or required by Law):
(a) Primary Loan Obligations. Any Borrower shall
fail to pay when due any Reimbursement Obligation, the
principal of any Loan, interest on any Loan Obligations, or
any required cash collateralization of Letters of Credit.
(b) Other Loan Obligations. Any Borrower or any other Loan
Party shall fail to pay when due any fees, indemnity or expenses, or
any other amount due hereunder or under any other Loan Document (other
than as referred to in Section 8.1(a) hereof) and such failure shall
have continued for a period of five Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed made by any Loan Party in or pursuant to or in connection with
any Loan Document, or any statement made by any Loan Party in any
financial statement, certificate, report, exhibit or document furnished
by any Loan Party to any Lender Party pursuant to or in connection with
any Loan Document, shall prove to have been false or misleading in any
material respect as of the time when made or deemed made (including by
omission of material information necessary to make such representation,
warranty or statement not misleading).
(d) Covenant Default. Any Borrower shall default in the
performance or observance of any covenant contained in Article 7 hereof
or any of the covenants contained in Section 6.1(j), 6.2, 6.10 or 6.14
hereof; or any Loan Party shall default in the performance or
observance of any other covenant, agreement or duty under this
Agreement or any other Loan Document and (i) in the case of a default
under Section 6.1 hereof (other than as referred to in subsection
(j)(i) thereof) such default shall have continued for a period of ten
days and (ii) in the case of any other default such default shall have
continued for a period of 30 days.
(e) Synthetic Lease Default. There shall have
occurred and be continuing any "Lease Event of Default" (as
defined in the Synthetic Lease Facility) or any successor
definitions therein or successor provisions thereto.
(f) Subordinated Debentures. Any "Event of Default"
(or similar term) as defined in the 1993 Subordinated
Debenture Indenture, in the 1995 Subordinated Note
Indenture, in the 1996 Subordinated Note Indenture or in any
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of the First Mortgage Bond Documents shall have occurred and be
continuing; or, any term or provision of the subordination provisions
contained in the 1993 Subordinated Debenture Indenture, the 1995
Subordinated Note Indenture or the 1996 Subordinated Note Indenture
shall cease to be in full force and effect in accordance with its
respective terms, or any Loan Party or any holder of any 1993
Subordinated Debenture or of any 1995 Subordinated Note or of any 1996
Subordinated Note (or any trustee or agent on behalf of such holder)
shall, or shall purport to, terminate, repudiate, declare voidable or
void or otherwise contest any term or provision of such subordination
provisions; or, Genesis shall make, or shall be required by the terms
of the 1993 Subordinated Debenture Indenture to make or to offer to
make, any purchase of 1993 Subordinated Debentures under Section 4.5 of
the 1993 Subordinated Debenture Indenture, or Genesis shall make, or
shall be required by the terms of the 1995 Subordinated Note Indenture
to make or to offer to make, any purchase of 1995 Subordinated Notes
under Section 4.5 of the 1995 Subordinated Note Indenture or Genesis
shall make or shall be required by the terms of the 1996 Subordinated
Note Indenture to make or to offer to make, any purchase of 1996
Subordinated Notes under provisions of the 1996 Subordinated Note
Indenture similar to those described above.
(g) Other Cross-Default. (i) Any Loan Party or any Restricted
Subsidiary shall fail to pay, in accordance with its terms and when due
and payable, any Indebtedness (other than the Loans or any other
Indebtedness referred in the preceding clauses (a), (b), (e) or (f))
having then outstanding principal amount in excess of Two Million
Dollars ($2,000,000), (ii) the maturity of any such Indebtedness shall,
in whole or in part, have been accelerated, or any such Indebtedness
shall, in whole or in part, have been required to be prepaid or
purchased prior to the stated maturity thereof, in accordance with the
provisions of any instrument evidencing or providing for the creation
of or concerning such Indebtedness or (iii) any event shall have
occurred and be continuing that permits any holder or holders of such
Indebtedness, any Trustee or Agent acting on behalf of such holder or
holders or any other Person to accelerate the maturity thereof or
require any prepayment or repurchase thereof; or, a default by any Loan
Party shall be continuing under any other instrument or agreement
binding upon such Person, except a default that, together with all
other such defaults, could not have a Material Adverse Effect.
(h) Judgments. One or more judgments for the payment
of money shall have been entered against any Loan Party or
any Restricted Subsidiary, which judgment or judgments, to
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the extent not paid or fully covered by insurance, exceed $500,000 in
the aggregate, and such judgment or judgments shall have remained
undischarged and unstayed for a period of 30 consecutive days.
(i) Execution. One or more writs or warrants of attachment,
garnishment, execution, distraint or similar process exceeding in value
the aggregate amount of $500,000 shall have been issued against any
Loan Party or any Restricted Subsidiary or any of its respective
properties and shall have remained undischarged and unstayed for a
period of 30 consecutive days.
(j) Security Documents. Any Security Document shall cease to
be in full force and effect in accordance with its terms; or any Lien
created or purported to be created in any Security Document shall fail
to be a valid, enforceable and perfected Lien in favor of the
Collateral Agent for the benefit of the Secured Parties prior to all
other Liens except Permitted Liens; or any Borrower or Governmental
Authority shall assert any of the foregoing.
(k) Loan Documents Generally. Any Loan Document or term or
provision thereof shall cease to be in full force and effect in
accordance with its terms, or any Loan Party shall, or shall purport
to, terminate, revoke, repudiate, declare voidable or void or otherwise
contest, any Loan Document or term or provision thereof or any
obligation or liability of any Loan Party thereunder; or, any
Governmental Action required in connection with any Loan Document is
not obtained or shall have ceased to be in full force and effect or
shall have been modified or amended in any manner which could have a
Material Adverse Effect.
(l) Material Adverse Effect. The Required Lenders
shall have determined in good faith (which determination
shall be conclusive) that an event or condition has occurred
which could have a Material Adverse Effect.
(m) ERISA. Any one or more Pension-Related Events referred to
in subsection (a)(ii), (b) or (e) of the definition of "Pension-Related
Event" shall have occurred; or any one or more other Pension-Related
Events shall have occurred and the Required Lenders shall determine in
good faith (which determination shall be conclusive) that such other
Pension-Related Events, individually or in the aggregate, could have a
Material Adverse Effect.
(n) Environmental. Any one or more of the events or
conditions set forth in the following clauses (i) or (ii)
shall have occurred with respect to any Restricted
Subsidiary or any Loan Party or any of their respective
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Environmental Affiliates, and the Required Lenders shall determine in
good faith (which determination shall be conclusive) that such events
or conditions, individually or in the aggregate, could have a Material
Adverse Effect: (i) any past or present violation of any Environmental
Law by such Person which has not been cured to the satisfaction of the
Required Lenders, or (ii) existence of any pending or threatened
Environmental Claim against any such Person, or existence of any past
or present acts, omissions, events or circumstances that could form the
basis of any Environmental Claim against any such Person.
(o) Change of Control. A Change of Control shall have
occurred; or a "Change in Control" (as defined in the 1993 Subordinated
Debenture Indenture) shall have occurred; or a "Change in Control" (as
defined in the 1995 Subordinated Note Indenture) shall have occurred;
or a "Change of Control" (or similar term used and as defined in the
1996 Subordinated Note Indenture) shall have occurred.
(p) Subsidiaries. Except as permitted under Section 7.10
hereof, any Borrower other than Genesis shall fail to be a Subsidiary
of Genesis, or any Material Restricted Subsidiary shall cease to be, or
fail to become, a Borrower hereunder or the equity of such Person shall
cease to be, or fail to be, pledged under the Security Documents.
(q) Bankruptcy, Etc. A proceeding shall have been
instituted with respect to any Loan Party or any Restricted
Subsidiary of a Loan Party,
(i) seeking to have an order for relief entered in
respect of such Person, or seeking a declaration or entailing
a finding that such Person is insolvent or a similar
declaration or finding, or seeking dissolution, winding-up,
charter revocation or forfeiture, liquidation, reorganization,
arrangement, adjustment, composition or other similar relief
with respect to such Person, its assets or its debts under any
Law relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, termination of legal entities or any
other similar Law now or hereafter in effect, or
(ii) seeking appointment of a receiver, trustee,
liquidator, assignee, sequestrator or other custodian for such
Person or for all or any substantial part of its property
and such proceeding shall result in the entry, making or grant of any
such order for relief, declaration, finding, relief or appointment, or
such proceeding shall remain
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undismissed and unstayed for a period of 30 consecutive days. Or, any
Loan Party or Restricted Subsidiary of a Loan Party shall become
insolvent; shall fail to pay, become unable to pay, or state that it is
or will be unable to pay, its debts as they become due; shall
voluntarily suspend transaction of its business; shall make a general
assignment for the benefit of creditors; shall institute (or fail to
controvert in a timely and appropriate manner) a proceeding described
in clause (i) above, or (whether or not any such proceeding has been
instituted) shall consent to or acquiesce in any such order for relief,
declaration, finding or relief described therein; shall institute (or
fail to controvert in a timely and appropriate manner) a proceeding
described in clause (ii) above, or (whether or not any such proceeding
has been instituted) shall consent to or acquiesce in any such
appointment or to the taking of possession by any such custodian of all
or any substantial part of its property; shall dissolve, wind-up,
revoke or forfeit its charter (or other constituent documents) or
liquidate itself or any substantial part of its property; or shall take
any action in furtherance of any of the foregoing.
(r) Interest Rate Hedging Cross-Default Any Borrower or any
Restricted Subsidiary shall default in the payment when due of any
amount under any Interest Rate Hedging Agreement providing for
termination or liquidation payments of at least $2,000,000; or any
event specified in any such Interest Rate Hedging Agreement shall occur
if the effect of such event is to cause such Interest Rate Hedging
Agreement to be terminated or to permit the non-defaulting party
thereunder to terminate such Interest Rate Hedging Agreement.
8.2 Consequences of an Event of Default.
(a) If an Event of Default (other than that specified in
subsection (q) of Section 8.1 hereof) shall occur and be continuing or shall
exist, then, in addition to all other rights and remedies which the Collateral
Agent or any Lender Party may have hereunder or under any other Loan Document,
at law, in equity or otherwise, the Lenders shall be under no further obligation
to make Loans, the Issuer shall be under no further obligation to issue Letters
of Credit hereunder, and the Agent may, and upon the written request of the
Required Lenders, shall, by notice to Genesis on behalf of the Borrowers, from
time to time do any or all of the following:
(i) Declare the Commitments terminated, whereupon the
Commitments will terminate and any fees hereunder shall be immediately
due and payable without presentment, demand, protest or further notice
of any kind, all of which are
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hereby waived, and an action therefor shall immediately
accrue.
(ii) Declare the unpaid principal amount of the Loans,
interest accrued thereon and all other Loan Obligations to be
immediately due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby waived, and an
action therefor shall immediately accrue.
(iii) Direct the Borrowers to pay (and the Borrowers jointly
and severally agree that upon receipt of such notice they will pay) to
the Agent cash for deposit to the credit of the Letter of Credit
Collateral Account in accordance with Section 3.7(a) hereof.
(iv) Take any and all actions permitted under the
Security Documents.
(v) Exercise such other remedies as may be available
to the Lender Parties under applicable Law.
(b) If an Event of Default specified in subsection (q) of
Section 8.1 hereof shall occur or exist, then, in addition to all other rights
and remedies which the Agent or any Lender may have hereunder or under any other
Loan Document, at law, in equity or otherwise, the Commitments shall
automatically terminate and the Lenders shall be under no further obligation to
make Loans and the Issuer shall be under no further obligation to issue Letters
of Credit hereunder, and the unpaid principal amount of the Loans, interest
accrued thereon and all other Loan Obligations, including without limitation
those referred to in clause (iii) in Section 8.2(a) hereof, shall become
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby waived, and an action therefor shall
immediately accrue, and in addition, the Agent may, and upon the written request
of the Required Lenders, shall, by notice to Genesis on behalf of the Borrowers,
do one or more of the following: (i) take any and all actions permitted under
the Security Documents or (ii) exercise such other remedies as may be available
to the Lender Parties under applicable Law.
8.3 Application of Proceeds. Subject to Section 3.7 hereof,
after the occurrence of an Event of Default and acceleration of the Loans, any
amounts received on account of Loan Obligations (whether received under Section
4.4 of the Collateral Agency Agreement or otherwise) shall be applied by the
Agent in the following order:
First, to payment of that portion of the Loan Obligations
constituting fees, indemnities and other amounts due to the Agent in
its capacity as such;
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Second, to payment of that portion of the Loan Obligations
constituting fees, indemnities and other amounts due to the Issuer in
its capacity as such, other than principal and interest on
Reimbursement Obligations and accrued and unpaid Letter of Credit
Commission;
Third, to payment of that portion of the Loan Obligations
constituting accrued and unpaid interest on Loans, accrued and unpaid
interest on Reimbursement Obligations, and accrued and unpaid Letter of
Credit Commission and Commitment Fees, ratably amongst the Lenders and
the Issuer in proportion to the respective amounts described in this
clause "Third" due to them;
Fourth, to payment of that portion of the Loan Obligations
constituting unpaid principal of the Loans ratably amongst the Lenders
in proportion to the respective amounts described in this clause
"Fourth" due to them;
Fifth, to payment of all other Loan Obligations, ratably
amongst the Lenders and the Issuer in proportion to the respective
amounts described in this clause "Sixth" due to them; and
Finally, the balance, if any, after all of the Loan
Obligations have been satisfied and all Letters of Credit shall have
terminated, to Genesis on behalf of the Borrowers or as otherwise
required by Law.
ARTICLE 9 - THE AGENT
9.1 Appointment. Each Lender Party hereby irrevocably appoints
Mellon to act as Agent for such Lender Party under this Agreement and the other
Loan Documents. Each Lender Party hereby irrevocably authorizes the Agent to
take such action on behalf of such Lender Party under the provisions of this
Agreement and the other Loan Documents, and to exercise such powers and to
perform such duties, as are expressly delegated to or required of the Agent by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto. Mellon hereby agrees to act as Agent on behalf of the Lender
Parties on the terms and conditions set forth in this Agreement and the other
Loan Documents, subject to its right to resign as provided in Section 9.10
hereof. Each Lender Party hereby irrevocably authorizes the Agent to execute and
deliver each of the Loan Documents and to accept delivery of such of the other
Loan Documents as may not require execution by the Agent. Each Lender Party
agrees that the rights and remedies granted to the Agent under the Loan
Documents shall be exercised exclusively by the Agent, and that no Lender shall
have any right individually to
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exercise any such right or remedy, except to the extent, if any, expressly
provided herein or therein.
9.2 General Nature of Agent's Duties.
Notwithstanding anything to the contrary elsewhere in this
Agreement or in any other Loan Document:
(a) The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan
Documents, and no implied duties or responsibilities on the part of the
Agent shall be read into this Agreement or any other Loan Document or
shall otherwise exist.
(b) The duties and responsibilities of the Agent under this
Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Agent shall not have a fiduciary
relationship with respect to any Lender Party.
(c) The Agent is and shall be solely the agent of the Lender
Parties. The Agent does not assume, and shall not at any time be deemed
to have, any relationship of agency or trust with or for, or any other
duty or responsibility to, any Loan Party or any other Person (except
only for its relationship as agent for, and its express duties and
responsibilities to, the Lender Parties as provided in this Agreement
and the other Loan Documents).
(d) The Agent shall be under no obligation to take any action
hereunder or under any other Loan Document if the Agent believes in
good faith that taking such action may conflict with any Law or any
provision of this Agreement or any other Loan Document, or may require
the Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
(e) The authority of the Agent to request information
from the Borrowers hereunder shall impose no duty of any
kind on the Agent to make such request.
9.3 Exercise of Powers. The Agent shall take any action of the
type specified in this Agreement or any other Loan Document as being within the
Agent's rights, powers or discretion in accordance with directions from the
Required Lenders (or as otherwise provided in the Loan Documents). In the
absence of such directions, the Agent shall have the authority (but under no
circumstances shall be obligated), in its sole discretion, to take any such
action, except to the extent this Agreement or such other Loan Document
expressly requires the direction or consent of the Required Lenders (or all of
the Lenders, or some other Person or group of Persons), in which case the Agent
shall not
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take such action absent such direction or consent. Any action or inaction
pursuant to such direction, discretion or consent shall be binding on all of the
Lender Parties. The Agent shall not have any liability to any Person as a result
of (x) the Agent acting or refraining from acting in accordance with the
directions of the Required Lenders (or all of the Lenders, or other specified
Person or group of Persons, if applicable), (y) the Agent refraining from acting
in the absence of instructions to act from the Required Lenders (or all of the
Lenders, or other specified Person or group of Persons, if applicable), whether
or not the Agent has discretionary power to take such action, or (z) the Agent
taking discretionary action it is authorized to take under this Section 9.3
(subject, in the case of this clause (z), to the provisions of Section 9.4(a)
hereof).
9.4 General Exculpatory Provisions. Notwithstanding
anything to the contrary elsewhere in this Agreement or any other
Loan Document:
(a) The Agent shall not be liable for any action taken or
omitted to be taken by it under or in connection with this Agreement or
any other Loan Document, except only for direct, as opposed to
consequential, damages suffered by a Person to the extent that such
Person proves such damages were caused by the Agent's own gross
negligence or willful misconduct.
(b) The Agent shall not be responsible for (i) the execution,
delivery, effectiveness, enforceability, genuineness, validity or
adequacy of this Agreement or any other Loan Document, (ii) any
recital, representation, warranty, document, certificate, report or
statement in, provided for in, or received under or in connection with,
this Agreement or any other Loan Document, (iii) any failure of any
Loan Party, any Lender or the Issuer to perform any of their respective
obligations under this Agreement or any other Loan Document, (iv) the
existence, validity, enforceability, perfection, recordation, priority,
adequacy or value, now or hereafter, of any Lien or other direct or
indirect security afforded or purported to be afforded by any of the
Loan Documents or otherwise from time to time, or (v) caring for,
protecting, insuring, or paying any taxes, charges or assessments with
respect to any Collateral.
(c) The Agent shall not be under any obligation to ascertain,
inquire or give any notice relating to (i) the performance or
observance of any of the terms or conditions of this Agreement, any
other Loan Document on the part of any Loan Party, (ii) the business,
operations, condition (financial or otherwise) or prospects of any Loan
Party or any other Person, or (iii) except to the extent set forth in
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Section 9.5(f) hereof, the existence of any Event of Default or
Potential Default.
(d) The Agent shall not be under any obligation, either
initially or on a continuing basis, to provide any Lender Party with
any notices, reports or information of any nature, whether in its
possession presently or hereafter, except for such notices, reports and
other information expressly required by this Agreement or any other
Loan Document to be furnished by the Agent to such Lender Party.
9.5 Administration by the Agent.
(a) The Agent may rely upon any notice or other communication
of any nature (written or oral, including but not limited to telephone
conversations, whether or not such notice or other communication is made in a
manner permitted or required by this Agreement or any other Loan Document)
purportedly made by or on behalf of the proper party or parties, and the Agent
shall not have any duty to verify the identity or authority of any Person giving
such notice or other communication.
(b) The Agent may consult with legal counsel (including
in-house counsel for the Agent or in-house or other counsel for any Loan Party),
independent public accountants and any other experts selected by it from time to
time, and the Agent shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts.
(c) The Agent may conclusively rely upon the truth of the
statements and the correctness of the opinions expressed in any certificates or
opinions furnished to the Agent in accordance with the requirements of this
Agreement or any other Loan Document. Whenever the Agent shall deem it necessary
or desirable that a matter be proved or established with respect to any Loan
Party or Lender Party, such matter may be established by a certificate of such
Loan Party or Lender Party, as the case may be, and the Agent may conclusively
rely upon such certificate (unless other evidence with respect to such matter is
specifically prescribed in this Agreement or another Loan Document).
(d) The Agent may fail or refuse to take any action unless it
shall be directed by the Required Lenders (or all of the Lenders, or some other
Person or group of Persons, if this Agreement or another Loan Document so
expressly requires) to take such action and it shall be indemnified to its
satisfaction from time to time against any and all amounts, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature
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which may be imposed on, incurred by or asserted against the Agent by reason of
taking or continuing to take any such action.
(e) The Agent may perform any of its duties under this
Agreement or any other Loan Document by or through agents or attorneys-in-fact.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
(f) The Agent shall not be deemed to have any knowledge or
notice of the occurrence of any Event of Default or Potential Default unless the
Agent has received notice from a Lender Party or a Borrower referring to this
Agreement, describing such Event of Default or Potential Default, and stating
that such notice is a "notice of default." If the Agent receives such a notice,
the Agent shall give prompt notice thereof to each Lender Party.
9.6 Lender Parties Not Relying on Agent or Other Lenders. Each
Lender Party acknowledges as follows: (a) neither the Agent nor any other Lender
Party has made any representations or warranties to it, and no act taken
hereafter by the Agent or any other Lender Party shall be deemed to constitute
any representation or warranty by the Agent or such other Lender Party to it;
(b) it has, independently and without reliance upon the Agent or any other
Lender Party, and based upon such documents and information as it has deemed
appropriate, made its own credit and legal analysis and decision to enter into
this Agreement and the other Loan Documents; and (c) it will, independently and
without reliance upon the Agent or any other Lender Party, and based upon such
documents and information as it shall deem appropriate at the time, make its own
decisions to take or not take action under or in connection with this Agreement
and the other Loan Documents.
9.7 Indemnification. Each Lender agrees to reimburse and
indemnify the Agent and its directors, officers, employees and agents (to the
extent not reimbursed by a Loan Party and without limitation of the obligations
of the Loan Parties to do so), in proportion to the Lenders' respective Pro Rata
Shares, from and against any and all amounts, losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature (including the fees and disbursements of
counsel for the Agent or such other Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
the Agent or such other Person shall be designated a party thereto) that may at
any time be imposed on, incurred by or asserted against the Agent or such other
Person as a result of, or arising out of, or in any way related to or by reason
of, this Agreement, any other Loan Document, the Original Credit Agreement or
any other "Loan Document" referred to therein, any
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Acquisition or any other transaction from time to time contemplated hereby or
thereby, or any transaction actually or proposed to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or Letter of Credit
or any loan or letter of credit under the Original Credit Agreement, provided
that no Lender shall be liable for any portion of such amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements resulting solely from the gross
negligence or willful misconduct of the Agent or such other Person, as finally
determined by a court of competent jurisdiction and, provided, further that no
Lender that was not a party to the Original Credit Agreement shall be obligated
to indemnify the Agent or its directors, officers, employees or agents from
losses and other liabilities referred to above to the extent that such
liabilities were solely the result of, arose solely out of, or were related
solely to the Original Credit Agreement or other "Loan Documents" referred to
therein and as to those liabilities which are not subject to indemnification by
the new Lenders by reason of this proviso, the Pro Rata Shares of the other
Lenders shall be adjusted accordingly to fully indemnify the Agent. Payments
under this Section 9.7 shall be due and payable on demand.
9.8 Agent in its Individual Capacity. With respect to its
Commitments and the Obligations owing to it, the Agent shall have the same
rights and powers under this Agreement and each other Loan Document as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender," "Issuer," "holders of Notes" and like terms shall include the Agent in
its individual capacity as such. The Agent and its affiliates may, without
liability to account, make loans to, accept deposits from, acquire debt or
equity interests in, act as trustee under indentures of, enter into Interest
Rate Hedging Agreements with, serve as "Agent" for other financing vehicles,
issue letters of credit on behalf of, and engage in any other business with, any
Loan Party and any stockholder, subsidiary or affiliate of any Loan Party, as
though the Agent were not the Agent hereunder.
9.9 Holders of Notes. The Agent may deem and treat the Lender
which is payee of a Note as the owner and holder of such Note for all purposes
hereof unless and until a Transfer Supplement with respect to the assignment or
transfer thereof shall have been filed with the Agent in accordance with Section
10.15 hereof.
9.10 Successor Agent. The Agent may resign at any time by
giving 30 days' prior written notice thereof to the other Lender Parties and
Genesis on behalf of the Borrowers. The Agent may be removed by the Required
Lenders at any time for cause by giving 30 days' prior written notice thereof to
the Agent, the other Lender Parties and Genesis on behalf of the Borrowers.
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Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
and consented to, and shall have accepted such appointment, within 30 days after
such notice of resignation or removal, then the retiring Agent may (but shall
not be required to) appoint a successor Agent. Each successor Agent shall be a
Lender if any Lender shall at the time be willing to become the successor Agent,
and if no Lender shall then be so willing, then such successor Agent shall be a
commercial bank or trust company organized under the laws of the United States
of America or any state thereof and having a combined capital and surplus of at
least $1,000,000,000. Upon the acceptance by a successor Agent of its
appointment as Agent hereunder, such successor Agent shall thereupon succeed to
and become vested with all the properties, rights, powers, privileges and duties
of the former Agent in its capacity as such, without further act, deed or
conveyance. Upon the effective date of resignation or removal of a retiring
Agent, such Agent shall be discharged from its duties under this Agreement and
the other Loan Documents, but the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted by it while it was Agent under
this Agreement. If and so long as no successor Agent shall have been appointed,
then any notice or other communication required or permitted to be given by the
Agent shall be sufficiently given if given by the Required Lenders, all notices
or other communications required or permitted to be given to the Agent shall be
given to each Lender, and all payments to be made to the Agent shall be made
directly to the Loan Party or Lender Party for whose account such payment is
made.
9.11 Additional Agents. If the Agent shall from time to time
deem it necessary or advisable, for its own protection in the performance of its
duties hereunder or in the interest of the Lender Parties, the Agent and the
Borrowers shall (and the Borrowers shall cause the other Loan Parties to)
execute and deliver a supplemental agreement and all other instruments and
agreements necessary or advisable, in the opinion of the Agent, to constitute
another commercial bank or trust company, or one or more other Persons approved
by the Agent, to act as co-Agent or agent with respect to any part of the
Collateral, with such powers of the Agent as may be provided in such
supplemental agreement, and to vest in such bank, trust company or other Person
as such co-Agent or separate agent, as the case may be, any properties, rights,
powers, privileges and duties of the Agent under this Agreement or any other
Loan Document.
9.12 Calculations. The Agent shall not be liable for any
calculation, apportionment or distribution of payments made by it in good faith
and without gross negligence or willful misconduct. If such calculation,
apportionment or distribution is subsequently determined to have been made in
error, the sole recourse of any Lender Party to whom payment was due but not
made
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shall be to recover from the other Lender Parties any payment in excess of the
amount to which they are determined to be entitled or, if the amount due was not
paid by the appropriate Loan Party, to recover such amount from the appropriate
Loan Party.
9.13 Agent's Fee. The Borrowers jointly and severally
agree to pay to the Agent, for its individual account, a
nonrefundable Agent's fee in an amount and at such time or times
as are agreed to by Genesis (on behalf of the Borrowers) and the
Agent.
9.14 Funding by Agent. Unless the Agent shall have been
notified in writing by any Lender not later than the close of business on the
Business Day before the Business Day on which Loans are requested by one or more
Borrowers to be made (and provided that such Lender shall have received notice
from the Agent of such Loan request not later than such close of business) that
such Lender will not make its Pro Rata Share of such Loans, the Agent may assume
that such Lender will make its Pro Rata Share of the Loans, and in reliance upon
such assumption the Agent may (but under no circumstances shall be required to)
make available to such Borrowers a corresponding amount. If and to the extent
that any Lender fails to make such payment to the Agent on such date, such
Lender shall pay such amount on demand (or, if such Lender fails to pay such
amount on demand, the Borrowers, jointly and severally, shall pay such amount on
demand), together with interest, for the Agent's own account, for each day from
and including the date of the Agent's payment to and including the date of
repayment to the Agent (before and after judgment) at the rate or rates per
annum applicable to such Loans. All payments to the Agent under this Section
9.14 shall be made to the Agent at its Office in Dollars in funds immediately
available at such Office, without set-off, withholding, counterclaim or other
deduction of any nature.
9.15 Co-Agent. The title Co-Agent given to Citibank,
N.A. in this Agreement is solely for identification purposes and
implies no responsibility of Citibank, N.A., as such Co-Agent, to
any other Lender Party or any other Person.
ARTICLE 10 - MISCELLANEOUS
10.1 Holidays. Whenever any payment or action to be made or
taken hereunder or under any other Loan Document shall be stated to be due on a
day which is not a Business Day, such payment or action shall be made or taken
on the next following Business Day and such extension of time shall be included
in computing interest or fees, if any, in connection with such payment or
action.
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10.2 Records. The amount of the Commitments and all Loan
Obligations shall at all times be ascertained from the records of the Agent,
which shall be conclusive absent manifest error except that the outstanding face
amounts of Letters of Credit, the unpaid Reimbursement Obligations, the unpaid
interest accrued thereon, and the interest rate or rates applicable thereto
shall at all times be ascertained from the records of the Issuer, which shall be
conclusive absent manifest error.
10.3 Amendments and Waivers. Neither this Agreement nor any
other Loan Document may be amended, modified or supplemented except in
accordance with the provisions of this Section. Subject to the terms of this
Section, the Agent (and the Collateral Agent acting at the direction of the
Agent) and each applicable Loan Party may from time to time amend, modify or
supplement the provisions of this Agreement or any other Loan Document for the
purpose of amending, adding to, or waiving any provisions, releasing any
Collateral, or changing in any manner the rights and duties of any Loan Party or
any Secured Party. The Agent shall (and shall direct the Collateral Agent to)
enter into such amendments, modifications, supplements or waivers from time to
time as directed by the Required Lenders, and only as so directed, provided that
no such amendment, modification, supplement or waiver may be made which will:
(a) Increase the amount of the Commitment of any
Lender or extend the Maturity Date, without the written
consent of each Lender affected thereby;
(b) Reduce the amount of principal or extend the time for any
scheduled payment of principal (including final maturity) of any Loan
or reduce the amount or rate of interest or extend the time for payment
of interest borne by any Loan or Reimbursement Obligation, or extend
the time for payment of or reduce the amount or rate of any Commitment
Fee or Letter of Credit Commission, without the written consent of each
Lender affected thereby;
(c) Change the definition of "Required Lenders" or
amend this Section 10.3 without the written consent of all
of the Lenders;
(d) Amend or waive any of the provisions of Article 9 hereof,
or impose additional duties upon the Agent or otherwise adversely
affect the rights, interests or obligations of the Agent, without the
written consent of the Agent;
(e) Amend or waive any of the provisions of Article 3
hereof, or impose additional duties upon the Issuer or
otherwise adversely affect the rights, interests or
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obligations of the Issuer, without the written consent of
the Issuer;
(f) Alter the priority of distributions set forth in Section
8.3 hereof or Section 4.4 of the Collateral Agency Agreement without
the written consent of the Agent and all Lender Parties affected
thereby; or
(g) Release all or any portion of the Collateral, or
subordinate the priority of the Liens in favor of the Collateral Agent
in favor of another Person with respect to all or any portion of the
Collateral, other than as specified in the applicable Security Document
(it being understood that any direction by the Agent as to a release of
collateral provided for in any Security Document shall be consistent
with the provisions of this paragraph (g)), without the written consent
of all of the Lenders, provided, however, that the direction of the
Required Lenders shall be sufficient for such a release or
subordination if the fair market value of the Collateral being released
or as to which the priority of the Lien thereon is being subordinated,
when added to the fair market value of all Collateral previously
released or as to which the priority of the Lien thereon was previously
subordinated pursuant to this proviso since the Effective Date
(measured in each case as of the time of the respective release or
subordination), does not exceed $20,000,000 (for purposes of the
foregoing proviso, fair market value shall be as determined by the
Agent, and the Agent, for this purpose, may choose to rely upon a
certificate from Genesis (in form and substance satisfactory to the
Agent) or may otherwise determine such value in good faith using any
reasonable valuation method selected by it); and provided, further, the
consent of neither any Lenders nor the Issuer shall be required for a
release of Collateral in connection with a disposition permitted under
clause (e) of Section 7.10.
and provided further that Transfer Supplements and Joinder Supplements may be
entered into in the manner provided in this Agreement; and provided further that
certain schedules hereto or to the other Loan Documents may be amended as
provided in Section 6.1 or 10.16 hereof; and provided further that the direction
of the Required Lenders shall not be necessary to permit the Agent to enter into
such amendments, modifications or supplements in order to cure any ambiguity or
to cure, correct or supplement any defective provision of this Agreement or the
other Loan Documents.
Any such amendment, modification or supplement must be in
writing and shall be effective only to the extent set forth in such writing.
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10.4 No Implied Waiver; Cumulative Remedies. No
course of dealing and no delay or failure of the Agent or any
Lender in exercising any right, power or privilege under this
Agreement or any other Loan Document shall affect any other or
future exercise thereof or exercise of any other right, power or
privilege; nor shall any single or partial exercise of any such
right, power or privilege or any abandonment or discontinuance of
steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or
privilege. The rights and remedies of the Agent and the other
Lender Parties under this Agreement and any other Loan Document
are cumulative and not exclusive of any rights or remedies which
the Agent or any other Lender Party would otherwise have
hereunder or thereunder, at law, in equity or otherwise. Any
waiver of a specific default made in accordance with Section 10.3
above shall be effective only as to such specific default and
shall not apply to any subsequent default.
10.5 Notices.
(a) Except to the extent otherwise expressly permitted
hereunder or thereunder, all notices, requests, demands, directions and other
communications (collectively "notices") under this Agreement or any other Loan
Document shall be in writing (including facsimile communication) and shall be
sent by first-class mail, return receipt requested, or by nationally-recognized
overnight courier, or by facsimile transmission (with confirmation in writing
mailed first-class or sent by such an overnight courier), or by personal
delivery. All notices shall be sent to the applicable party at its respective
address or facsimile number (or telephone number to the extent telephonic notice
is expressly provided hereunder) indicated on the signature pages hereof (or, in
the case of a Borrower other than Genesis, to Genesis at the address or
telephone or facsimile number (or telephone number to the extent telephonic
notice is expressly provided hereunder) for Genesis indicated on the signature
pages hereof) or in accordance with the last unrevoked written direction from
such party to the other parties hereto, in all cases with postage or other
charges prepaid. Any such properly given notice to the Agent or any other Lender
Party shall be effective when received. Any such properly given notice to any
Borrower shall be effective on the earliest to occur of receipt, facsimile
confirmation, one Business Day after delivery to a nationally-recognized
overnight courier, or three Business Days after deposit in the mail.
(b) Any Lender Party giving any notice to a Borrower or any
other party to a Loan Document shall simultaneously send a copy thereof to the
Agent, and the Agent shall promptly notify the other Lender Parties of the
receipt by it of any such notice.
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(c) Each Lender Party may rely on any notice (whether or not
such notice is made in a manner permitted or required by this Agreement or any
other Loan Document) purportedly made by or on behalf of any Loan Party, and no
Lender Party shall have any duty to verify the identity or authority of any
Person giving such notice.
10.6 Expenses; Taxes; Indemnity.
(a) The Borrowers agree, jointly and severally, to pay
promptly or cause to be paid promptly and to save each Lender Party harmless
against liability for the payment of all reasonable out-of-pocket costs and
expenses (including but not limited to reasonable fees and expenses of counsel,
including local counsel, auditors, consulting engineers, appraisers, and all
other professional, accounting, evaluation and consulting costs) incurred by any
Lender Party from time to time arising from or relating to (i) the negotiation,
preparation, execution, delivery, administration and performance of this
Agreement and the other Loan Documents and the Original Credit Agreement and the
other "Loan Documents" referred to therein, (ii) any requested amendments,
modifications, supplements, waivers or consents (whether or not ultimately
entered into or granted) to this Agreement or any other Loan Document, and (iii)
the enforcement or preservation of rights under this Agreement or any other Loan
Document (including but not limited to any such costs or expenses arising from
or relating to (A) the creation, perfection or protection of any Lien on any
Collateral, (B) the protection, collection, lease, sale, taking possession of,
preservation of, or realization on, any Collateral, including without limitation
advances for storage, insurance premiums, transportation charges, taxes, filing
fees and the like, (C) collection or enforcement of an outstanding Loan,
Obligation, and (D) any litigation, proceeding, dispute, work-out, restructuring
or rescheduling related in any way to this Agreement or the other Loan Documents
or the Original Credit Agreement or the other "Loan Documents" referred to
therein).
(b) The Borrowers hereby agree, jointly and severally, to pay
promptly all stamp, document, transfer, recording, filing, registration, search,
sales and excise fees and taxes and all similar impositions now or hereafter
determined by any Lender Party to be payable in connection with this Agreement
or any other Loan Documents or the Original Credit Agreement or the other "Loan
Documents" referred to therein or any other documents, instruments or
transactions pursuant to or in connection herewith or therewith, and the
Borrowers agree, jointly and severally, to save each Lender Party harmless from
and against any and all present or future claims, liabilities or losses with
respect to or resulting from any omission to pay or delay in paying any such
fees, taxes or impositions.
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(c) The Borrowers hereby agree, jointly and severally, to
reimburse and indemnify each of the Indemnified Parties from and against any and
all losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever (including the fees and disbursements of counsel for such Indemnified
Party in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnified Party shall
be designated a party thereto) that may at any time be imposed on, asserted
against or incurred by such Indemnified Party as a result of, or arising out of,
or in any way related to or by reason of, this Agreement or any other Loan
Document, the Original Credit Agreement or any "Loan Document" referred to
therein, any Acquisition or transaction from time to time contemplated hereby or
thereby, or any transaction actually or proposed to be financed in whole or in
part or directly or indirectly with the proceeds of any Loan or Letter of Credit
(and without in any way limiting the generality of the foregoing, including any
violation or breach of any Environmental Law or any other Law by any Borrower or
any Subsidiary of any Borrower or any Environmental Affiliate of any of them;
any Environmental Claim arising out of the management, use, control, ownership
or operation of property by any of such Persons, including all on-site and
off-site activities involving Environmental Concern Materials; any grant of
Collateral; or any exercise by the Collateral Agent or any Lender Party of any
of its rights or remedies under this Agreement or any other Loan Document); but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Party, as
finally determined by a court of competent jurisdiction. If and to the extent
that the foregoing obligations of the Borrowers under this subsection (c), or
any other indemnification obligation of the Borrowers hereunder or under any
other Loan Document, are unenforceable for any reason, the Borrowers hereby
agree, jointly and severally, to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible under applicable Law.
10.7 Severability; Modification to Conform to Law;
Maximum Amount of Joint and Several Liability.
(a) Severability; Modification to Conform to Law. It
is the intention of the parties that this Agreement be
enforceable to the fullest extent permissible under applicable
Law, but that the unenforceability (or modification to conform to
such Law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder hereof. If any provision
of this Agreement shall be held invalid or unenforceable in whole
or in part in any jurisdiction, this Agreement shall, as to such
jurisdiction, be deemed amended to modify or delete, as
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necessary, the offending provision or provisions and to alter the bounds thereof
in order to render it or them valid and enforceable to the maximum extent
permitted by applicable Law, without in any manner affecting the validity or
enforceability of such provision or provisions in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
(b) Maximum Amount of Joint and Several Liability. Without
limiting the preceding subsection (a), to the extent that applicable Law
otherwise would render the full amount of any Borrower's obligations hereunder
and under the other Loan Documents invalid or unenforceable, such Borrower's
obligations hereunder and under the other Loan Documents shall be limited to the
maximum amount which does not result in such invalidity or unenforceability.
(c) Limitation on Amount of Liability Presumed Not to Apply.
Notwithstanding anything to the contrary in this Section 10.7 or elsewhere in
this Agreement, this Agreement shall be presumptively valid and enforceable to
its full extent in accordance with its terms, as if this Section 10.7 were not a
part of this Agreement, and in any related litigation the burden of proof, by
clear and convincing evidence, shall be on the party asserting the invalidity or
unenforceability of any provision hereof or asserting any limitation on any
Borrower's obligations hereunder, as to each element of such assertion.
10.8 Obligations Absolute; Certain Waivers by
Borrowers.
(a) Obligations Absolute. Each Borrower agrees that the Loan
Obligations will be paid and performed strictly in accordance with the terms of
the Loan Documents and that obligations of each Borrower under the Loan
Documents are and shall be absolute, unconditional and irrevocable, irrespective
of any of the following: (i) Any lack of genuineness or enforceability of any
Loan Document or terms thereof; (ii) any change in the Lenders or Borrowers or
any party hereto or to any Loan Document; (iii) any amendment to or waiver of
any terms of any Loan Document; (iv) any taking, exchange, release or non-
perfection of any collateral, or release of guaranty; or (v) subject to
non-waivable provisions of applicable Law, any other circumstance (including any
statute of limitations) that might otherwise constitute a defense available to,
or a discharge of, any Borrower, guarantor, co-obligor or surety.
(b) Certain Waivers by Borrowers. Each Borrower hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Loan Obligations and any requirement that any Lender Party protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any other Borrower or any other
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Person or any collateral or other direct or indirect security for any of the
Loan Obligations.
10.9 Prior Understandings. This Agreement and the other Loan
Documents supersede all prior and contemporaneous understandings and agreements,
whether written or oral, among the parties hereto relating to the transactions
provided for herein and therein.
10.10 Duration; Survival. All representations and warranties
of each Loan Party contained herein or in any other Loan Document or made in
connection herewith or therewith shall survive the making of, and shall not be
waived by the execution and delivery, of this Agreement, any other Loan Document
any investigation by or knowledge of any Secured Party, the making of any Loan,
the issuance of any Letter of Credit, or any other event or condition
whatsoever. All obligations of the Borrowers hereunder or under any other Loan
Document to make payments to or indemnify any Indemnified Party and all
obligations of each Lender hereunder or under the other Loan Documents to make
payments to or indemnify the Agent or the Issuer and all obligations respecting
costs and expenses pursuant to Section 10.6(a) shall survive the payment in full
by the Borrowers of all other Loan Obligations, termination of the Borrowers'
right to borrow or have Letters of Credit issued hereunder, and all other events
or conditions whatever.
10.11 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. A faxed
signature shall be sufficient for all purposes.
10.12 Limitation on Payments. Notwithstanding any provision
contained in this Agreement or the Notes, the total liability of the Borrowers
for payment of interest pursuant to this Agreement and the Notes shall not
exceed the maximum amount of such interest permitted by Law to be charged,
collected, or received from the Borrowers, and if any payments by the Borrowers
include interest in excess of such a maximum amount, each Lender shall apply
such excess to the reduction of unpaid Loan Obligations which are due, or if
none is due, such excess shall be refunded to the Borrowers.
10.13 Set-Off. The Borrowers hereby agree that, to the fullest
extent permitted by law, if any Loan Obligation of a Borrower shall be due and
payable (by acceleration or otherwise), each Lender Party shall have the right,
without notice to any Borrower, to set-off against and to appropriate and apply
to such Loan Obligation any indebtedness, liability or obligation of any nature
owing to any Borrower by such Lender Party, including but
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not limited to all deposits now or hereafter maintained by any Borrower with
such Lender Party. Such right shall exist whether or not such Lender Party or
any other Person shall have given notice or made any demand to any Borrower or
any other Person. The Borrowers hereby agree that, to the fullest extent
permitted by Law, any Participant and any Affiliate of any Lender Party or any
Participant shall have the same rights of set-off as a Lender Party as provided
in this Section 10.13. The rights provided by this Section 10.13 are in addition
to all other rights of set-off and banker's lien and all other rights and
remedies which any Lender Party (or any such Participant, or Affiliate) may
otherwise have under this Agreement, any other Loan Document, at law or in
equity, or otherwise.
10.14 Sharing of Collections. The Lenders hereby agree among
themselves that if any Lender shall receive (by voluntary payment, realization
upon security, set-off or from any other source) any amount on account of the
Loans, interest thereon, or any other Loan Obligation contemplated by this
Agreement or the other Loan Documents to be made by any Loan Party ratably to
all Lenders in greater proportion than any such amount received by any other
Lender, then the Lender receiving such proportionately greater payment shall
notify each other Lender and the Agent of such receipt, and equitable adjustment
will be made in the manner stated in this Section 10.14 so that, in effect, all
such excess amounts will be shared ratably among all of the Lenders. The Lender
receiving such excess amount shall purchase (which it shall be deemed to have
done simultaneously upon the receipt of such excess amount) for cash from the
other Lenders a participation in the applicable Loan Obligations owed to such
other Lenders in such amount as shall result in a ratable sharing by all Lenders
of such excess amount (and to such extent the receiving Lender shall be a
Participant). If all or any portion of such excess amount is thereafter
recovered from the Lender making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by Law to be paid by the Lender
making such purchase. The Borrowers hereby consent to and confirm the foregoing
arrangements. Each Participant shall be bound by this Section 10.14 as fully as
if it were a Lender hereunder.
10.15 Successors and Assigns; Participations;
Assignments; Etc.
(a) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrowers, the Lender Parties, all future
holders of the Notes, and their respective successors and assigns, except that
no Borrower may assign or transfer (except for a transfer resulting from a
merger or consolidation permitted pursuant to Section 7.9 and the other terms
hereof) any of its rights hereunder or interests herein,
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without the prior written consent of all of the Lender Parties, and any
purported assignment without such consent shall be void, and except that, to the
fullest extent permitted by Law, a Lender may not voluntarily assign or transfer
any of its rights hereunder except in accordance with the other provisions of
this Section 10.15, and any other purported voluntary assignment or transfer
shall be void; provided, that this Agreement shall inure to the benefit of
successors of Lenders by operation of Law.
(b) Participations. Any Lender may, at any time sell
participations to one or more commercial banks or other Persons (each a
"Revolver Participant") in all or a portion of its rights and obligations under
this Agreement and the other Loan Documents provided that
(i) any such Lender's obligations under this
Agreement and the other Loan Documents shall remain
unchanged,
(ii) any such Lender shall also sell a proportional
participation in its corresponding rights and obligations under the
Synthetic Lease Facility and other Synthetic Lease Facility Documents
(if then in effect) to such Participant on comparable terms,
(iii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such
obligations,
(iv) the parties hereto shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents,
(v) such Revolver Participant shall, by accepting
such participation, be bound by the provisions of Section
10.14 hereof, and
(vi) no Revolver Participant (unless such Revolver Participant
is an affiliate of such Lender, or is itself a Lender) shall be
entitled to require such Lender to take or refrain from taking action
under this Agreement or under any other Loan Document, except that such
Lender may agree with such Revolver Participant that such Lender will
not, without such Revolver Participant's consent, take action of the
type described in subsections (a) and (b) of Section 10.3 hereof.
The Borrowers agree that any such Revolver Participant shall be entitled to the
benefits of Sections 2.12, 2.13, 10.6 and 10.13 with respect to its
participation.
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(c) Assignments. Any Lender may, at any time assign all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents to any Lender, any Affiliate of a Lender or to one or more additional
commercial banks or other Persons (each a "Purchasing Lender"); provided, that
(i) any such assignment to a Purchasing Lender which is not
already a Lender or an Affiliate of a Lender shall be made only with
the consent of Genesis (which shall not be unreasonably withheld), the
Agent and the Issuer (each of which may be granted or withheld in its
absolute discretion) provided, however, if an Event of Default or
Potential Default shall have occurred and be continuing, the consent of
Genesis shall not be required;
(ii) any such Lender shall also make a proportional assignment
of its corresponding rights and obligations under the Synthetic Lease
Facility and Synthetic Lease Facility Documents (if then in effect) to
such Purchasing Lender on comparable terms;
(iii) each such assignment (which shall be in a minimum amount
of $10,000,000 except to a Purchasing Lender which is already a Lender
or to a Purchasing Lender which is an Affiliate of the assigning
Lender) shall be of a constant, and not a varying, percentage of the
Commitments, of the transferor Lender, and of all of the transferor
Lender's related rights and obligations under this Agreement and the
Synthetic Lease Documents and the other Loan Documents;
(iv) except with respect to an assignment to an Affiliate or
except with the consent of the Agent, after giving effect to such
assignment, the sum of the amount of the assigning Lender's remaining
Commitment hereunder plus the amount of the assigning Lender's face
amount of the "Notes" as such term is defined in the Synthetic Lease
Facility Documents shall be either (a) greater than or equal to
$10,000,000 or (b) zero; and
(v) each such assignment shall be made pursuant to a Transfer
Supplement in substantially the form attached hereto as Exhibit D, duly
completed (a "Transfer Supplement").
In order to effect any such assignment, the transferor Lender and the Purchasing
Lender shall execute and deliver to the Agent a duly completed Transfer
Supplement (including any consents required by clause (i) of the preceding
sentence) with respect to such assignment, together with any Note or Notes or
Allonges subject to such assignment, evidence of the completion of the
assignments contemplated by clause (c)(ii) above and a processing
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and recording fee of $3,000; and, upon receipt thereof, the Agent shall accept
such Transfer Supplement.
Thereafter (x) the Purchasing Lender shall be a "Lender" hereunder, to the
extent provided in such Transfer Supplement and (y) the transferor Lender
thereunder shall be released from its obligations under this Agreement to the
extent so transferred.
(d) Register. The Agent shall maintain at its office a copy of
each Transfer Supplement delivered to it and a register for the recordation of
the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
register shall be conclusive absent manifest error and the Borrowers and each
Lender Party may treat each person whose name is recorded in the register as a
Lender hereunder for all purposes of the Agreement. The register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Financial and Other Information. Subject to Section
10.15(f) hereof, each Borrower authorizes the Agent and each Lender to disclose
to any Participant or Purchasing Lender, or prospective Participant or
Purchasing Lender, any and all financial and other information in such Person's
possession concerning any Loan Party and their respective Subsidiaries and
affiliates which has been or may be delivered to such Person by or on behalf of
any Loan Party in connection with this Agreement, any other Loan Document.
(f) Confidentiality. Each Lender Party agrees to take
reasonable precautions to maintain the confidentiality of information designated
in writing as confidential and provided to it by any Borrower or any Subsidiary
in connection with this Agreement; provided, however, that any Lender Party may
disclose such information (i) at the request of any bank regulatory authority or
other Governmental Authority or in connection with an examination of such Lender
Party by any such Governmental Authority, (ii) pursuant to subpoena or other
court process, (iii) to the extent such Lender Party is required (or believes in
good faith that it is required) to do so in accordance with any applicable Law,
(iv) to such Lender Party's independent auditors and other professional
advisors, (v) in connection with the enforcement of any of its rights under or
in connection with any Loan Document, and (vi) to any actual or potential
Participant or Purchasing Lender, so long as, in the case of this clause (vi),
such actual or potential Participant or Purchasing Lender agrees to comply with
the provisions of this Section 10.15(f).
(g) Assignments to Federal Reserve Bank. Any Lender
may at any time assign all or any portion of its rights under
this Agreement, including without limitation any Loans and
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Reimbursement Obligations owing to it and any Note held by it, to a Federal
Reserve Bank, provided that (to the extent possible) it also assigns its
corresponding rights under the Synthetic Lease Facility (if then in effect) to
the same Federal Reserve Bank. No such assignment shall relieve the transferor
Lender from any of its obligations hereunder.
10.16 Addition of Subsidiary Borrowers. When the Borrowers are
required, in connection with an Acquisition or otherwise, to cause one or more
(direct or indirect) Subsidiaries of Genesis (each, a "Joining Subsidiary") to
become Borrowers hereunder, then the Borrowers and each such Joining Subsidiary
shall take the following steps no later than the date of the consummation of the
relevant Acquisition:
(a) Joinder Supplement. Genesis and each Joining Subsidiary
shall execute and deliver to the Agent, with an executed counterpart
for each Lender Party, an agreement in the form attached hereto as
Exhibit E (a "Joinder Supplement") as to becoming a party hereto and to
the relevant Loan Documents.
(b) Notes. Each Joining Subsidiary and each Borrower
shall execute and deliver to the Agent a replacement Note or
Allonges for each Lender as necessary.
(c) Collateral. Each applicable Borrower and each applicable
Joining Subsidiary shall deliver to the Agent (1) certificates and
instruments representing the stock certificates and other instruments
to be pledged pursuant to the Security Documents accompanied by duly
executed instruments of transfer or assignment in blank to the extent
required by the Security Documents and (2) evidence of the completion
of all recordings and filings (including Uniform Commercial Code
financing statements) as may be necessary or, in the opinion of the
Agent or the Collateral Agent, desirable to create or perfect the Liens
granted and created or purported to be granted and created by each
Joining Subsidiary under and pursuant to the Security Documents.
(d) Lien Searches. The Borrowers and each Joining Subsidiary
collectively shall deliver to the Agent such evidence of
contemporaneous searches of Uniform Commercial Code, tax, judgment and
litigation dockets and records and other appropriate registers as the
Agent shall request.
(e) Joinder Under Synthetic Lease Facility Documents. The
Borrowers and each Joining Subsidiary shall take all action required to
make each Joining Subsidiary a "Guarantor" or similar obligor under the
Synthetic Lease Facility and Synthetic Lease Facility Documents.
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(f) Corporate or Partnership Proceedings. Each Joining
Subsidiary shall deliver to the Agent, with an executed counterpart for
each Lender Party, certificates by the Secretary or Assistant Secretary
of each Joining Subsidiary dated as of the Joinder Effective Date for
such Joining Subsidiary as to (i) true copies of the articles of
incorporation and bylaws or partnership agreement (or other constituent
documents) of such Joining Subsidiary in effect on such date, (ii) true
copies of all corporate or partnership action taken by such Joining
Subsidiary relative to this Agreement, the Joinder Supplement and the
other Loan Documents and (iii) the incumbency and signature of the
respective officers of such Joining Subsidiary executing such Joinder
Supplement and the other Loan Documents, together with satisfactory
evidence of the incumbency of such Secretary or Assistant Secretary.
Each Joining Subsidiary shall also deliver certificates from the
appropriate Secretaries of State or other applicable Governmental
Authorities dated not more than 30 days before the relevant Joinder
Effective Date showing the good standing of such Joining Subsidiary in
its state of incorporation or organization and each state in which such
Joining Subsidiary does business.
(g) Legal Opinion of Counsel. The Borrowers and each Joining
Subsidiary collectively shall cause to be delivered to the Agent, with
an executed counterpart for each Lender Party, an opinion addressed to
each Lender Party, dated the relevant Joinder Effective Date, of
counsel to such Joining Subsidiary, Genesis and each of the other
Borrowers as to matters comparable to those addressed by the opinion
delivered pursuant to Section 5.1 hereof and such other matters
(including compliance with Regulations U and G of the Board of
Governors of the Federal Reserve System, as amended) as may be
requested by the Agent, all in form and substance satisfactory to the
Agent.
(h) Fees, Expenses, Etc. The Borrowers and each Joining
Subsidiary shall pay or cause to be paid all fees and other
compensation required to be paid to the Lender Parties pursuant hereto
or pursuant to any other written agreement on or prior to the Joinder
Effective Date.
(i) Additional Matters. The Borrowers and each Joining
Subsidiary shall deliver, or cause to be delivered, to the Agent such
other certificates, opinions, documents (including those relating to
licensing) and instruments as may be requested by the Agent. All
corporate and other proceedings, and all documents, instruments and
other matters in connection with such Joining Subsidiary's becoming a
Subsidiary Borrower shall be satisfactory in form and substance to the
Agent.
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Once all of the steps described in this Section 10.16 have been completed each
of the relevant Joining Subsidiaries shall become a party to this Agreement and
the other Loan Documents and shall constitute a Borrower hereunder and a grantor
under the Security Documents. The date on which a Joining Subsidiary so becomes
a Subsidiary Borrower hereunder shall be the "Joinder Effective Date" for such
Joining Subsidiary. Prior to the Joinder Effective Date, Genesis, on behalf of
the Borrowers, shall deliver such revised schedules to this Agreement and other
Loan Documents as shall be necessary to make them accurate in light of the
transactions contemplated by this Section 10.16 which transactions shall be
consistent with the transactions explicitly permitted hereunder and under the
other Loan Documents.
10.17 Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial; Limitation of Liability.
(a) Governing Law. This Agreement and all other Loan Documents
(except to the extent, if any, otherwise expressly stated in such other Loan
Documents) shall be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to choice of law
principles.
(b) Certain Borrower Waivers. EACH OF THE BORROWERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY OR PHILADELPHIA COUNTY,
PENNSYLVANIA, SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE
FULLEST EXTENT PERMITTED BY LAW AGREES THAT, TO THE EXTENT THAT ANY
SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL JURISDICTION OVER THE
PARTY AGAINST WHICH SUCH BORROWER IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER PARTY TO BRING
ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM);
(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT,
WAIVES ANY CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO
ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES
NOT HAVE JURISDICTION OVER SUCH BORROWER;
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(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR
CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO SUCH BORROWER AT THE ADDRESS
FOR NOTICES DESCRIBED IN SECTION 10.5 HEREOF, AND CONSENTS AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE
SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS
OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW); AND
(iv) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
(c) Certain Lender Party Waivers. EACH OF THE LENDER
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT
TO TRIAL BY JURY IN ANY RELATED LITIGATION.
(d) Limitation of Liability. TO THE FULLEST EXTENT PERMITTED
BY LAW, NO CLAIM MAY BE MADE BY ANY BORROWER AGAINST ANY LENDER PARTY OR ANY
AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY OF THEM FOR ANY
SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF
ANY CLAIM ARISING FROM OR RELATING TO ANY ACQUISITION OR TRANSACTION, THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, THE ORIGINAL CREDIT AGREEMENT OR ANY "LOAN
DOCUMENT" REFERRED TO THEREIN OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION
OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY). EACH OF THE BORROWERS HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES,
WHETHER SUCH CLAIM PRESENTLY EXISTS OR ARISES
<PAGE>
HEREAFTER AND WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By_________________________________
Title: Associate General
Counsel and Secretary
Address for notices:
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice
President and Chief Financial
Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
BREVARD MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
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EDELLA STREET ASSOCIATES, a
Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS PROPERTIES LIMITED
PARTNERSHIP, a
Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HAMMONDS LANE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
MERIDIAN/CONSTELLATION LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
general partner
MERIDIAN EDGEWOOD LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN PERRING LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
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MILLVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc.,
its sole general partner
SEMINOLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation, its
sole general partner
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: State Street Associates, Inc.
its sole general partner
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Genesis Eldercare
Rehabilitation Services, Inc.
its sole general partner
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware Corporation,
a general partner
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McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
and Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its general partners
By:
-----------------------------------
On behalf of each of the foregoing
as Associate General Counsel and
Secretary of the general partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
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GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE
SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICIAN
SERVICES, INC.,
a Pennsylvania corporation
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
GENESIS ELDERCARE STAFFING SERVICES
INC.
a Pennsylvania corporation
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION
SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
WYNCOTE HEALTHCARE CORP.
a Pennsylvania corporation
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ASCO HEALTHCARE, INC.,
a Maryland corporation
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS, INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
PROFESSIONAL PHARMACY SERVICES,
INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
-138-
<PAGE>
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
DERBY NURSING CENTER CORPORATION,
a Connecticut Corporation
GENESIS ELDERCARE NATIONAL CENTERS,
INC.,
a Florida Corporation
GENESIS ELDERCARE NETWORK SERVICES,
INC.,
a Pennsylvania Corporation
GENESIS ELDERCARE PROPERTIES, INC.,
a Pennsylvania Corporation
OAK HILL HEALTH CARE CENTER, INC.,
a Virginia Corporation
VERSALINK, INC.,
a Delaware Corporation
By:
-----------------------------------
On behalf of each of the foregoing
as Associate General Counsel and
Secretary
-139-
<PAGE>
Agents and Lenders:
-------------------
MELLON BANK, N.A., as a Lender,
as Issuer, as Agent and as Co-Syndication
Agent
By________________________________
Title: Vice President
Initial Commitment: $26,767,676.77
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, PA 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, PA 19101-7899
Attention: Linda Sigler,
Loan Administration
Telephone: 215-553-4583
Facsimile: 215-553-4789
With a copy to
Plymouth Meeting Executive Campus
610 W. Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: 610-941-8409
Facsimile: 610-941-4136
-140-
<PAGE>
CITIBANK, N.A., as a Lender and as
Co-Syndication Agent
By________________________________
Title:
Initial Commitment: $26,767,676.77
Address for notices:
399 Park Avenue
8th Floor
New York, NY 10043
Attention: Margaret A. Brown
Telephone: 212-559-0501
Facsimile: 212-793-3053
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
as a Lender and as a Co-Agent
By________________________________
Title:
Initial Commitment: $22,222,222.22
Address for notices:
One First Union Center TW-5
Charlotte, NC 28288-0735
Attention: Mr. Joseph H. Towell
Telephone: 704-383-3844
Facsimile: 704-374-4092
-141-
<PAGE>
NATIONSBANK, N.A., as a Lender and as a
Co-Agent
By_______________________________
Title:
Initial Commitment: $22,222,222.22
Address for notices:
1 Nationsbank Plaza
5th Floor
Nashville, TN 37239
Attention: S. Walker Choppin
Telephone: 615-749-3023
Facsimile: 615-749-4640
FLEET NATIONAL BANK
By_______________________________
Title:
Initial Commitment: $19,528,619.53
Address for notices:
75 State Street
Mail Stop: MA-BO-F04A
Boston, MA 02109-1810
Attention: Ginger Stolzenthaler
Telephone: 617-346-1647
Facsimile: 617-346-1634
-142-
<PAGE>
CORESTATES BANK, N.A.
By______________________________
Title:
Initial Commitment: $19,528,619.53
Address for notices:
1339 Chestnut Street
FC 1-8-3-22
P.O. Box 7618
Philadelphia, PA 19101-7816
Attention: Lawrence W. Dessen
Telephone: 215-786-2166
Facsimile: 215-973-2738
PNC BANK, NATIONAL ASSOCIATION
By____________________________
Title:
Initial Commitment: $19,528,619.53
Address for notices:
1600 Market Street
Philadelphia, PA 19103
Attention: Mark D. Lavelle
Telephone: 215-585-6506
Facsimile: 215-585-6987
-143-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By_______________________________
Title:
Initial Commitment: $19,528,619.53
Address for notices:
555 South Flower Street
Los Angeles, CA 90071
Attention: Wyatt Ritchie
Telephone: 213-228-9734
Facsimile: 213-228-2756
CREDIT LYONNAIS NEW YORK BRANCH
By_______________________________
Title:
Initial Commitment: $19,528,619.53
Address for notices:
1301 Avenue of the Americas
New York, NY 10019
Attention: Evan S. Wasser
Telephone: 212-261-7685
Facsimile: 212-261-3440
-144-
<PAGE>
CREDIT SUISSE
By_______________________________
Title:
By_______________________________
Title:
Initial Commitment: $16,835,016.84
Address for notices:
Tower 49
12 East 49th Street, 44th Floor
New York, NY 10017
Attention: Chris Horgan
Telephone: 212-238-5448
Facsimile: 212-238-5439
AMSOUTH BANK OF ALABAMA
By_______________________________
Title:
Initial Commitment: $16,835,016.84
Address for notices:
1900 Fifth Avenue North
AST-7th Floor
Birmingham, AL 35203
Attention: Laine Little
Telephone: 205-801-0103
Facsimile: 205-326-4790
-145-
<PAGE>
BANQUE PARIBAS
By_______________________________
Title:
By_______________________________
Title:
Initial Commitment: $16,835,016.84
Address for notices:
The Equitable Tower
787 Seventh Avenue
New York, NY 10019
Attention: David Laffey
Telephone: 214-969-0380
Facsimile: 214-969-0260
CREDITANSTALT CORPORATE FINANCE, INC.
By____________________________
Title:
By____________________________
Title:
Initial Commitment: $13,468,013.47
Address for notices:
2 Greenwich Plaza
Greenwich, CT 06830
Attention: Stacy Harmon
Gregory F. Mathis
Telephone: 203-861-6581
Facsimile: 203-861-6594
-146-
<PAGE>
SIGNET BANK
By____________________________
Title:
Initial Commitment: $13,468,013.47
Address for notices:
7799 Leesburg Pike
Falls Church, VA 22043
Attention: Thomas M. Gilmore
Telephone: 703-714-5030
Facsimile: 703-506-9712
THE SUMITOMO BANK, LIMITED
By_________________________________
Title:
By_________________________________
Title:
Initial Commitment: $13,468,013.47
Address for notices:
One Liberty Place
1650 Market Street, Suite 2860
Philadelphia, PA 19103
Attention: J. Wade Bell
Michael J. Fox
Telephone: 215-636-4440
Facsimile: 215-636-4446
-147-
<PAGE>
THE FIRST NATIONAL BANK OF MARYLAND
By_________________________________
Title:
Initial Commitment: $13,468,013.47
Address for notices:
25 South Charles Street
Mail Code: 101-570
Baltimore, MD 21201
Attention: Robert H. Hauver
Telephone: 410-244-4246
Facsimile: 410-244-4746
-148-
<PAGE>
DRAFT 9/27/96
EXHIBIT A
GENESIS HEALTH VENTURES, INC.
and certain Subsidiaries thereof named below
Revolving Credit Note
$____________________ Philadelphia,
Pennsylvania
[Date of Issuance]
FOR VALUE RECEIVED, the undersigned (collectively, the
"Borrowers"), jointly and severally, subject to the terms of Section _______ of
the Agreement (as defined below), promise to pay to the order of [NAME OF
LENDER] (the "Payee"), on or before the Maturity Date (as such term is defined
in the Agreement), and at such earlier dates as may be required by the
Agreement, the lesser of (i) the principal sum of ____________________ DOLLARS
($__________) or (ii) the aggregate unpaid principal amount of all Revolving
Credit Loans made by the Payee to any of the Borrowers from time to time
pursuant to the Agreement. The Borrowers, jointly and severally, subject to the
terms of Section 10.07 of the Agreement, further promise to pay to the order of
the Payee interest on the unpaid principal amount hereof from time to time
outstanding at the rate or rates per annum determined pursuant to the Agreement,
payable on the dates set forth in the Agreement.
This Revolving Credit Note is one of the "Notes" as referred
to in, and is entitled to the benefits of, the Second Amended and Restated
Credit Agreement, dated as of ____________________, by and among the Borrowers
parties thereto from time to time, the Lenders parties thereto from time to
time, Mellon Bank, N.A., a national banking association, as Issuer of Letters of
Credit thereunder, Mellon Bank, N.A., a national banking association, as Agent
for such Lenders and Issuer, and Citibank, N.A. as Co-Syndication Agent and the
other Co-Agents named therein (as the same may be amended, modified or
supplemented from time to time, the "Agreement"), which among other things
provides for the acceleration of the maturity hereof upon the occurrence of
certain events and for prepayments in certain circumstances and upon certain
terms and conditions. Terms defined in the Agreement have the same meanings
herein.
This Revolving Credit Note is secured by and is entitled to
the benefits of the Liens granted pursuant to the Security Documents and the
other Loan Documents.
<PAGE>
Each of the Borrowers hereby expressly waives presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Revolving
Credit Note and the Agreement, and an action for amounts due hereunder or
thereunder shall immediately accrue.
This Revolving Credit Note shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of choice of law.
ATTEST: GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By:___________________________ By_________________________________
Title: Secretary Title: Senior Vice President
and Chief Financial Officer
[Corporate Seal] Address for notices:
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice
President and Chief Financial
Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
BREVARD MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
[signatures continued on the following pages]
2
Form of Revolving Credit Note
<PAGE>
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
EDELLA STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS PROPERTIES LIMITED
PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HAMMONDS LANE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
MERIDIAN/CONSTELLATION LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN EDGEWOOD LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN PERRING LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
[signatures continued on the following pages]
3
Form of Revolving Credit Note
<PAGE>
a general partner
MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MILLVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, its
sole general partner
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its sole general
partner
SEMINOLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation, its
sole general partner
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: State Street Associates, Inc. its
sole general partner
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Genesis Eldercare Rehabilitation
Services, Inc. its sole general partner
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a Pennsylvania
corporation, its sole
[signatures continued on the following pages]
4
Form of Revolving Credit Note
<PAGE>
general partner
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, and
Meridian Healthcare, Inc., a
Pennsylvania corporation, its
general partners
ATTEST:
________________________ By:_______________________________
On behalf of each of the foregoing
as Senior Vice President and Chief
Financial Officer of the general partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
[signatures continued on the following pages]
5
Form of Revolving Credit Note
<PAGE>
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE
SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICIAN
SERVICES, INC.,
a Pennsylvania corporation
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
GENESIS ELDERCARE STAFFING SERVICES
INC.
a Pennsylvania corporation
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
[signatures continued on the following pages]
6
Form of Revolving Credit Note
<PAGE>
GENESIS ELDERCARE REHABILITATION
SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
WYNCOTE HEALTHCARE CORP.
a Pennsylvania corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS, INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
[signatures continued on the following pages]
7
Form of Revolving Credit Note
<PAGE>
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
PROFESSIONAL PHARMACY SERVICES,
INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
DERBY NURSING CENTER CORPORATION,
a Connecticut Corporation
GENESIS ELDERCARE NATIONAL CENTERS,
INC.,
a Florida Corporation
GENESIS ELDERCARE NETWORK SERVICES,
INC.,
a Pennsylvania Corporation
GENESIS ELDERCARE PROPERTIES, INC.,
a Pennsylvania Corporation
OAK HILL HEALTH CARE CENTER, INC.,
a Virginia Corporation
VERSALINK, INC.,
a Delaware Corporation
ATTEST:
________________________ By:____________________________________
On behalf of each of the foregoing
as Senior Vice President and Chief
Financial Officer
[signatures continued on the following pages]
8
Form of Revolving Credit Note
<PAGE>
Exhibit B
SECOND AMENDED AND
RESTATED COLLATERAL AGENCY AGREEMENT
THIS SECOND AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT,
dated as of October 7, 1996 by and among
GENESIS HEALTH VENTURES, INC., a Pennsylvania corporation
("Genesis") and the SUBSIDIARIES OF GENESIS listed on the signature pages
hereof, in each of the following capacities: (i) as a Borrower under the Credit
Agreement referred to below, (ii) as a Lease Guarantor or Lessee (as each such
term is defined below), and (iii) as a "Grantor" (or similar term) under the
Security Documents (defined below) (together with each other Person which may
hereafter become a "Grantor" in accordance with Section 1.3(b) hereof, the
"Grantors"),
MELLON BANK, N.A., as "Administrative Agent and Co-Syndication
Agent" under the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "Revolver Agent" as further defined
below), for itself and on behalf of the "Lenders" from time to time parties to
such Credit Agreement (the "RCA Lenders") and the "Issuer" under such Credit
Agreement (the "Issuer") (the RCA Lenders, the Issuer and the Revolver Agent
being referred to collectively as the "RCA Lender Parties"),
MELLON BANK, N.A., as "Agent" under the SLF Loan Agreement and
SLF Participation Agreement referred to below (in such capacity, together with
its successors in such capacity, the "Synthetic Lease Facility Agent") for
itself and on behalf of the Synthetic Lease Participants (as defined below) (the
Synthetic Lease Participants and the Synthetic Lease Facility Agent being
referred to collectively as the "SLF Parties"),
Each Person which may hereafter become a party hereto as a
SWAP PARTY in accordance with Section 2.3 hereof (each, a "Swap Party"), it
being understood that as of the date hereof, there are no Swap Parties, and
MELLON BANK, N A., as agent for the Secured Parties (as
hereinafter defined) (in such capacity, together with its successors, the
"Collateral Agent").
Recitals:
A. Genesis, certain of its Subsidiaries, certain of the RCA
Lender Parties and Citibank, N.A. as Co-Agent entered into a certain Amended and
Restated Credit Agreement dated as of September 29, 1995 (as heretofore amended,
the "Original Credit Agreement").
<PAGE>
The Original Credit Agreement is being amended and restated in its entirety
pursuant to a Second Amended and Restated Credit Agreement dated as of even date
herewith among Genesis, the other Grantors, the RCA Lender Parties, Citibank,
N.A. as Co-Syndication Agent and certain other Co-Agents referred to therein
(the Original Credit Agreement, as amended and restated by said Second Amended
and Restated Credit Agreement and as it may be further amended, supplemented or
otherwise modified from time to time, being referred to herein as the "Credit
Agreement"). Pursuant to the Credit Agreement, Genesis and the other Grantors
are required to pledge all stock and other equity interests, together with all
proceeds thereof, in the Lessee, any Borrower or Lease Guarantor owned by them
from time to time to secure their respective obligations from time to time to
the RCA Lender Parties in connection with the Credit Agreement and the other RCA
Loan Documents (as such term is defined below).
B. In connection with the Synthetic Lease Facility, Genesis,
the other Grantors and the SLF Parties have entered into the SLF Documents (as
defined below). Pursuant to the SLF Documents and as more fully set forth
therein, Genesis and the other Grantors are required to pledge all stock and
other equity interests, together with all proceeds thereof, in the Lessee, any
Borrower or Lease Guarantor owned by them from time to time to secure the SLF
Obligations (as defined below).
C. In connection with the Original Credit Agreement, Genesis,
certain of the Grantors, the Revolver Agent and the Collateral Agent entered
into a certain Collateral Agency Agreement dated as of September 29, 1995 (as
heretofore amended, the "Original Collateral Agency Agreement"). In connection
with the Credit Agreement and the Synthetic Lease Facility, the parties hereto
desire to amend and restate the Original Collateral Agency Agreement in its
entirety.
D. Pursuant to the Credit Agreement, Genesis in certain
circumstances may be required or permitted to enter into one or more Qualifying
Interest Rate Hedging Agreements (as such term is defined in the Credit
Agreement) on or after the date hereof.
E. Pursuant to the Credit Agreement, the RCA Lender Parties in
certain circumstances may permit the Liens granted and made by Genesis and the
other Grantors under the Security Documents to be spread to secure the
obligations of Genesis to the counterparty under such Qualifying Interest Rate
Hedging Agreement in accordance with the terms and conditions hereof. Any
Qualifying Interest Rate Hedging Agreement so entitled to the benefits of such
Liens in accordance with the terms and conditions hereof is referred to herein
as a "Swap Agreement," and the counterparty to such Swap Agreement is referred
to herein as a "Swap Party," as such terms are further defined below.
F. The Grantors, the RCA Lender Parties, the SLF Parties and
the Swap Parties hereby agree that the Collateral Agent will serve as agent for
the RCA Lender Parties, the Swap Parties and the SLF Parties with respect to the
Joint Stock Collateral, and
<PAGE>
the Collateral Agent is willing to serve as the Collateral Agent, all on the
terms and conditions stated herein.
G. It is a condition precedent to the extension of credit
under the Credit Agreement and the SLF Documents that the Grantors execute and
deliver this Agreement. This Agreement is made by each Grantor, among other
things, to induce the RCA Lender Parties to enter into the Credit Agreement and
the other RCA Loan Documents, and to induce the RCA Lenders to make "Loans" and
to induce the Issuer to issue "Letters of Credit" pursuant to the Credit
Agreement. This Agreement is also made to induce the Synthetic Lease
Participants to make advances under the SLF Participation Agreement and the
Lessor to enter into the Synthetic Lease Facility.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows, with the intent that effective on the Effective
Date, the Original Collateral Agency Agreement, including all recitals, exhibits
or schedules thereto, shall, without further action or notice, be amended and
restated in its entirety to read in the form of this Agreement, including all
recitals, exhibits and schedules hereto.
ARTICLE 1 - DEFINITIONS; CONSTRUCTION
1.1 Certain Definitions. All capitalized terms used herein and
not otherwise defined herein shall have the meanings specified in the Credit
Agreement. In addition to other words and terms defined elsewhere in this
Agreement, as used herein, the following words and terms shall have the
following meanings, respectively, unless the context hereof otherwise clearly
requires:
"Agreement" shall mean this Amended and Restated Collateral
Agency Agreement, as amended, modified or supplemented from time to
time.
"Collateral Agent Indemnified Parties" shall have the meaning
set forth in Section 5.14 hereof.
"Collateral Agent Obligations" shall mean all obligations,
from time to time, of any Grantor to the Collateral Agent in its
capacity as such (whether or not referred to herein or in any Security
Document as constituting Collateral Agent Obligations), including but
not limited to amounts payable pursuant to Sections 3.9, 5.12, 5.13 and
5.14 hereof, in each case whether such obligations are direct or
indirect, otherwise secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising (specifically including but not
limited to obligations arising or accruing after the commencement of
any bankruptcy, insolvency or similar proceedings with respect to any
Grantor, or which would have arisen or accrued but for the commencement
of such proceeding,
<PAGE>
even if the claim for such obligation is not allowed in such proceeding
under applicable Law).
"Directing Party" shall mean the Revolver Agent, provided that
"Directing Party" shall mean the Synthetic Lease Facility Agent if all
RCA Loan Obligations have been paid in full, all commitments to extend
credit under the Credit Agreement have terminated, and all Letters of
Credit have expired, and provided further that "Directing Party" shall
mean the Swap Parties if all RCA Loan Obligations have been paid in
full, all commitments to extend credit under the Credit Agreement have
terminated, all Letters of Credit have expired, the SLF Obligations
have been paid in full, and any remaining commitments to extend credit
(whether denominated as debt or equity) under the Synthetic Lease
Facility, the SLF Loan Agreement and the SLF Participation Agreement
have terminated.
"Financing Documents" shall mean all RCA Loan Documents and
all SLF Documents.
"Joint Stock Collateral" shall mean all "Collateral" under the
Pledge Agreement.
"Lease Guarantor" shall mean each guarantor party to the SLF
Guaranty from time to time.
"Lessee" shall mean, collectively, the lessee under the
Synthetic Lease Facility and any sublessees of such lessee, together
with their respective successors and assigns.
"Lessor" shall mean Mellon Financial Services Corporation #4
as lessor under the Synthetic Lease Facility, together with its
successors and assigns.
"Obligations" shall mean all RCA Loan Obligations, all Swap
Obligations, all Collateral Agent Obligations and all SLF Obligations.
"Office" of the Collateral Agent shall mean its office located
at One Mellon Bank Center, Pittsburgh, Pennsylvania, or at such other
domestic office or offices of the Collateral Agent as may be designated
in writing from time to time by the Collateral Agent to Genesis and the
Responsible Parties.
"Pledge Agreement" shall mean that certain Pledge Agreement,
dated as of even date herewith, among the Collateral Agent, Genesis and
the other Grantors, as the same may be amended, modified and
supplemented from time to time.
"Pro Rata Share" of an RCA Lender, an Issuer, a Swap Party or
a Synthetic Lease Participant at any time shall mean the proportion by
which the sum of the
<PAGE>
outstanding loans, other outstanding extensions of credit and remaining
commitments to extend credit of such Person under the Credit Agreement
or the outstanding extensions of credit (whether denominated as debt or
equity) and remaining commitments to extend credit of such Person under
the Synthetic Lease Facility or the SLF Loan Agreement, or both, as the
case may be, at such time bears to the sum, at such time, of (a) the
outstanding loans, other outstanding extensions of credit (including
letters of credit) and remaining commitments to extend credit of all
such Persons under the Credit Agreement, and (b) the outstanding
extensions of credit (whether denominated as debt or equity) and
remaining commitments to extend credit of all such Persons under the
Synthetic Lease Facility and the SLF Loan Agreement.
"RCA Loan Documents" shall mean all "Loan Documents" as such
term is defined in the Credit Agreement.
"RCA Loan Obligations" shall mean all "Loan Obligations" as
such term is defined in the Credit Agreement (specifically including
but not limited to obligations arising or accruing after the
commencement of any bankruptcy, insolvency or similar proceedings with
respect to any obligor, or which would have arisen or accrued but for
the commencement of such proceeding, even if the claim for such
obligation is not allowed in such proceeding under applicable Law). RCA
Loan Obligations shall remain such notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the RCA
Loan Obligations or any interest therein.
"Responsible Parties" shall mean the Revolver Agent, each Swap
Party and the Synthetic Lease Facility Agent.
"Revolver Agent" at any time shall mean the "Agent" under the
Credit Agreement at such time. If there is no Agent under the Credit
Agreement at such time, then any notice, demand, or other communication
required or permitted to be given by the Revolver Agent hereunder or
under any Security Document shall be sufficiently given or made if
given by the Required Lenders (as defined in the Credit Agreement), and
any notification, demand, consent, document, payment or other
communication or item required to be given or made to the Revolver
Agent shall be sufficiently given or made if given directly to each RCA
Lender entitled thereto.
"Secured Parties" shall have the meaning ascribed to such term
in the Pledge Agreement.
"Secured Party Documents" shall have the meaning ascribed to
such term in the Pledge Agreement.
"Security Documents" shall mean this Agreement, the Pledge
Agreement, the Intercreditor Agreements, any "Joinder Supplement" under
and as defined in the Credit Agreement, and any other agreements or
instruments from time to time
<PAGE>
granting or purporting to grant the Collateral Agent a Lien in any
property for the benefit of the Secured Parties to secure the
Obligations, or subordinating any obligation to the Obligations, in
each case pursuant to Section 1.3(a) hereof or otherwise.
"Senior Credit Documents" shall mean the Financing Documents
and the Swap Documents.
"Shared Collateral Account" shall have the meaning set forth
in Section 4.1 hereof.
"SLF Documents" shall mean the Synthetic Lease Facility, the
SLF Loan Agreement, the SLF Participation Agreement, the SLF Guaranty
and any other Operative Document (as defined in the SLF Participation
Agreement) that evidences any SLF Obligation, as the same may be
amended, modified, or supplemented from time to time.
"SLF Guaranty" shall mean the SLF Guaranty Agreements of even
date herewith executed by Genesis and other Grantors to guarantee
obligations under the Synthetic Lease Facility, or the SLF Loan
Agreement, or both, as the same may be amended, modified, or
supplemented from time to time.
"SLF Loan Agreement" means the Amended and Restated Loan
Agreement of even date herewith among Lessor, the other Synthetic Lease
Participants and Mellon Bank, N.A. as Agent, as such agreement may be
amended, modified or supplemented from time to time.
"SLF Obligations" shall mean all obligations from time to time
of a Lessee, Genesis, any other Grantor or any other Person to any
Synthetic Lease Participant (including but not limited to obligations
to the Collateral Agent or the Synthetic Lease Facility Agent on their
behalf) or the Synthetic Lease Facility Agent, from time to time
arising under or in connection with, related to, evidenced by or
secured by the Synthetic Lease Facility, the SLF Loan Agreement, the
SLF Guaranty, or any other SLF Document, and all extensions, renewals
or refinancings thereof, whether such obligations are direct or
indirect, otherwise secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising (specifically including but not
limited to obligations arising or accruing after the commencement of
any bankruptcy, insolvency or similar proceedings with respect to any
such Grantor, or which would have arisen or accrued but for the
commencement of such proceeding, even if the claim for such obligation
is not allowed in such proceeding under applicable Law), but only to
the extent such obligations are required to be secured by any Joint
Stock Collateral under the terms of the SLF Documents as constituted on
the date hereof. Without limitation of the foregoing, such obligations
include principal amounts, interest, and fees, indemnities
<PAGE>
or expenses under or in connection with this Agreement or any other SLF
Document, and all extensions, renewals and refinancings thereof.
"SLF Participation Agreement" shall mean the Amended and
Restated Participation Agreement of even date herewith among the
Lessee, the Lessor, the Lenders named therein and Mellon Bank, N.A. as
Agent, as such agreement may be amended, modified or supplemented from
time to time.
"Swap Documents" shall mean the Swap Agreements and the
Security Documents.
"Swap Obligations" shall mean all obligations from time to
time of Genesis to the Swap Parties under or in connection with the
Swap Agreements, whether such obligations are direct or indirect,
otherwise secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising (specifically including but not
limited to obligations arising or accruing after the commencement of
any bankruptcy, insolvency or similar proceedings with respect to
Genesis, or which would have arisen or accrued but for the commencement
of such proceeding, even if the claim for such obligation is not
allowed in such proceeding under applicable Law).
"Synthetic Lease Facility" shall mean the Amended and Restated
Lease and Agreement dated of even date herewith, and any subleases
thereunder, between Lessor and Lessee, as the same may be amended,
modified or supplemented from time to time.
"Synthetic Lease Facility Agent" at any time shall mean the
"Agent" under the SLF Participation Agreement and the SLF Loan
Agreement at such time. If there is no Agent under the SLF
Participation Agreement and the SLF Loan Agreement at such time, then
any notice, demand, or other communication required or permitted to be
given by the Synthetic Lease Facility Agent hereunder or under any
Security Document shall be sufficiently given or made if given by the
Required Participants (as defined in the SLF Participation Agreement),
and any notification, demand, consent, document, payment or other
communication or item required to be given or made to the Synthetic
Lease Facility Agent shall be sufficiently given or made if given
directly to each Participant entitled thereto.
"Synthetic Lease Participants" shall mean collectively the
Lessor and the Lenders under the SLF Loan Agreement from time to time.
1.2 Construction. In this Agreement and each other Security
Document, unless the context otherwise clearly requires, references to the
plural include the singular, the singular the plural and the part the whole;
"or" has the inclusive meaning represented by the
<PAGE>
phrase "and/or;" and the terms "property" and "assets" each include all
properties and assets of any kind or nature, tangible or intangible, real,
personal or mixed, now existing or hereafter acquired. The words "hereof,"
"herein" and "hereunder" (and similar terms) in this Agreement or any other
Security Document refer to this Agreement or such other Security Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Security Document. The words "includes" and "including"
(and similar terms) in this Agreement or any other Security Document mean
"includes without limitation" and "including without limitation," respectively
(and similarly for similar terms). References in this Agreement or any other
Security Document to "determination" (and similar terms) by the Collateral Agent
or by any Secured Party include good faith estimates by the Collateral Agent or
such Secured Party (in the case of quantitative determinations) and good faith
beliefs by the Collateral Agent or such Secured Party (in the case of
qualitative determinations). No doctrine of construction of ambiguities in
agreements or instruments against the interests of the party controlling the
drafting thereof shall apply to this Agreement or any other Security Document.
The section and other headings contained in this Agreement and in each other
Security Document, and any tables of contents contained herein or therein, are
for reference purposes only and shall not affect the construction or
interpretation of this Agreement or such other Security Document in any respect.
1.3 Additional Security Documents; Additional Grantors.
(a) A Grantor, or another Person, may from time to time
execute and deliver agreements, instruments or documents in form and substance
satisfactory to the Collateral Agent from time to time granting or purporting to
grant to the Collateral Agent a Lien in any property for the benefit of the
Secured Parties to secure the Obligations, or constituting a SLF Guaranty for
the Obligations, or subordinating any obligation to the Obligations. Each such
agreement, instrument or document shall constitute a "Security Document" for
purposes of this Agreement.
(b) With the consent of the Collateral Agent, acting at the
direction of the Directing Party, any Person may at any time become an
additional Grantor hereunder by executing and delivering to the Collateral Agent
an instrument in form and substance satisfactory to the Collateral Agent whereby
such Person agrees to be bound by the provisions of this Agreement. Upon
execution and delivery of such instrument, such Person shall be and become a
"Grantor" for purposes of this Agreement.
ARTICLE 2 - THE COLLATERAL AGENCY
2.1 Appointment. The RCA Lender Parties, the SLF Parties and
the Swap Parties each hereby irrevocably appoint Mellon Bank, N.A. to act as
Collateral Agent for each Secured Party under this Agreement and the other
Security Documents. The RCA Lender Parties, the SLF Parties and the Swap Parties
each hereby irrevocably authorize the Collateral Agent to take such action on
behalf of each Secured Party under the provisions of
<PAGE>
this Agreement and the other Security Documents, and to exercise such powers and
to perform such duties, as are specifically delegated to or required of the
Collateral Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto. Mellon Bank, N.A. hereby agrees to act as the
Collateral Agent on the terms and conditions set forth in this Agreement and the
other Security Documents, subject to its right to resign as provided herein.
Each Secured Party hereby irrevocably authorizes the Collateral Agent to execute
and deliver each of the Security Documents and to accept delivery of such of the
Security Documents as may not require execution by the Collateral Agent. Each
Secured Party hereby agrees that the rights and remedies given to the Collateral
Agent under the Security Documents shall be exercised exclusively by the
Collateral Agent, and that no Secured Party shall have any right individually to
exercise any such right or remedy, except to the extent, if any, otherwise
expressly provided herein or therein.
2.2 Exercise of Powers. Subject to the other provisions of
this Agreement, the Collateral Agent shall take any action of the type specified
herein or in any other Security Documents as being within the Collateral Agent's
rights, powers or discretion in accordance with directions from the Directing
Party (or, to the extent this Agreement or such Security Document specifically
requires the consent or direction of some other Person or set of Persons, then
instead in accordance with the directions of such other Person or set of
Persons). In the absence of any such instructions, the Collateral Agent shall
have the authority (but under no circumstances shall be obligated), in its sole
discretion, to take such action, to the extent not inconsistent with directions
by the Directing Party, unless this Agreement or such Security Document
specifically requires the consent or direction of the Directing Party (or some
other Person or set of Persons), in which case the Collateral Agent shall not
take such action absent such direction or consent. Any action or inaction
pursuant to such direction, discretion or consent shall be binding on all of the
Secured Parties. The Collateral Agent shall not have any liability to any Person
as a result of (a) the Collateral Agent acting or refraining from acting in
accordance with the directions of the Directing Party (or other applicable
Person or set of Persons), (b) the Collateral Agent refraining from acting in
the absence of instructions to act from the Directing Party (or other applicable
Person or set of Persons), whether or not the Collateral Agent has discretionary
power to take such action, or (c) the Collateral Agent taking discretionary
action it is authorized to take under this Section (subject, in the case of this
clause (c) to the provisions of Section 5.2 hereof).
2.3 Swap Agreements and Swap Parties. A Qualifying Interest
Rate Hedging Agreement shall constitute a "Swap Agreement" entitled to the
benefit of this Agreement, and the counterparty to such agreement shall
constitute a "Swap Party," if and only if: (a) such counterparty is an RCA
Lender and executes a Joinder Supplement in substantially the form of Exhibit A
hereto (each, a "Joinder Supplement"), pursuant to which such counterparty shall
agree to become a party hereto and bound hereby as a "Swap Party," and pursuant
to which a particular Qualifying Interest Rate Hedging Agreement is designated
as a "Swap Agreement," (b) the Synthetic Lease Facility Agent and the Revolver
Agent each consent thereto, and (c) Genesis consents thereto.
<PAGE>
2.4 Amendments to Financing Documents.
The provisions of this Agreement shall remain in full force
and effect in accordance with its terms regardless of any amendment,
modification or supplement to any Senior Credit Document. Without limitation of
the foregoing, this Agreement shall apply in accordance with its terms
notwithstanding any increase, decrease, addition or change in the amount,
nature, type or purpose of any of the Obligations.
2.5 Certain Intercreditor Matters.
(a) The provisions of Article 4 hereof apply solely to
priorities of distributions resulting from realization on the Security
Documents, and not to the priorities of the Obligations. Nothing contained in
this Agreement or in any other Security Document is intended to effect a
subordination of any Obligation to any other Obligation.
(b) The priority of distribution specified in Article 4 of
this Agreement is based upon the assumptions that (i) the Liens in the Joint
Stock Collateral in favor of the Collateral Agent on behalf of each of the
Secured Parties will be equally valid, perfected and nonavoidable as to each
such Secured Party and (ii) the Liens in the Joint Stock Collateral in favor of
the Collateral Agent on behalf of each of the Secured Parties will be deemed of
equal priority as against all Persons other than Secured Parties in their
capacities as such. If and to the extent any such assumption proves to be
incorrect as to a particular Secured Party or particular set of Secured Parties,
any resulting loss shall be borne solely by such Secured Party or set of Secured
Parties, and the distributions referred to in Article 4 hereof shall be adjusted
accordingly.
(c) The Secured Parties hereby agree that, upon any
realization on the Security Documents (including but not limited to realization
on any of the Joint Stock Collateral or any collection or application of funds,
by set-off or otherwise, on account of any Obligations owed under any direct or
indirect guaranty which is a Security Document), the Secured Parties shall share
in the proceeds of such realization in the manner provided in this Agreement,
and if any Secured Party shall realize any funds on the Security Documents
otherwise than pursuant to this Agreement, such Secured Party shall remit the
same to the Collateral Agent, which shall apply the same as provided herein.
(d) This Agreement applies to realization on the Security
Documents, and nothing in this Agreement or in any other Security Document,
express or implied, shall be construed to require any Secured Party to share
with any other Secured Party any collections received on account of Obligations
other than on account of the Security Documents. Without limitation of the
foregoing: (i) each SLF Party and Swap Party acknowledges that the RCA Lender
Parties may be granted cash collateral for outstanding Letters of Credit from
time to time as provided in the Credit Agreement, and realization on the
foregoing by the RCA Lender Parties is not subject to this Agreement (and hence
need not be shared with the SLF Parties or Swap Parties), (ii) collections on
account of setoff against the Grantors
<PAGE>
(except to the extent the funds setoff constitute Joint Stock Collateral) or
exercise of any right of bankers' lien against the Grantors are not subject to
this Agreement, and (iii) the RCA Lender Parties' and Swap Parties' agreement
that they have no rights, as RCA Lender Parties or Swap Parties, respectively,
in any Collateral (as defined in the SLF Participation Agreement) other than the
Joint Stock Collateral, including, without limitation, rights to share in
collections from such other Collateral or rights to dictate whether, or in what
order, rights and remedies are exercised against such other Collateral under any
theory of marshalling of assets, or otherwise, and all such rights that might
otherwise exist are hereby waived. The Swap Parties, the Grantors and the
Collateral Agent hereby (x) waive all rights to demand or to have any
marshalling of the Joint Stock Collateral or other guaranties, collateral
security or other direct or indirect security for some or all of the
Obligations, and (y) consent and agree that the RCA Lender Parties and SLF
Parties may exercise their rights and remedies hereunder, under other Security
Documents and under such other guaranties, collateral security or other direct
or indirect security, in any order, and that the RCA Lender Parties and SLF
Parties need not exercise any right or remedy under such other guaranties,
collateral or other indirect security before exercising any rights or remedies
hereunder or under other Security Documents.
(e) The Swap Parties shall not have any right to require or
contest the taking of or failure to take any action by the Collateral Agent, or
to direct the Collateral Agent to exercise any right or remedy under this
Agreement or any other Security Document, unless the Swap Parties are then the
Directing Party. The Swap Parties shall have no right at any time to require the
RCA Lender Parties or the SLF Parties to exercise any right or remedy under this
Agreement or any other Security Document, or any other right or remedy available
to any RCA Lender Party or SLF Party.
(f) Any action taken to exercise any remedy against the Joint
Stock Collateral shall be taken only at the joint direction of the Directing
Party and the Synthetic Lease Facility Agent (unless the Swap Parties are the
then Directing Party, in which case only the direction of the Swap Parties, as
Directing Party, shall be necessary).
ARTICLE 3 - SECURITY DOCUMENTS
3.1 General Relation to Security Documents.
(a) All of the powers, remedies and rights of the Collateral
Agent as set forth in this Agreement may be exercised by the Collateral Agent in
respect of any other Security Document as though set forth in full therein and
all of the powers, remedies and rights of the Collateral Agent as set forth in
any other Security Document may be exercised from time to time as herein and
therein provided.
(b) This Agreement is intended to be supplemental to, and not
in limitation of, the other Security Documents, and the rights and remedies of
the Collateral Agent contained herein and therein are intended to be cumulative.
However, in the event of actual
<PAGE>
and irreconcilable conflict between the provisions hereof and the provisions of
the other Security Documents, the provisions of this Agreement shall be
controlling except as expressly set forth in the other Security Documents.
3.2 Power of Attorney. Each Grantor hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full power and authority in the name of such Grantor or in the name of such
attorney-in-fact, from time to time in the Collateral Agent's discretion, for
the purpose of signing documents and taking other action as the Collateral Agent
may deem necessary or appropriate to perfect and protect the Liens of the
Collateral Agent in the Joint Stock Collateral or otherwise to accomplish the
purposes hereof. This power of attorney is a power coupled with an interest,
shall be irrevocable and shall not be subject to the limitations of Section 3.3
hereof. Without limiting the generality of the foregoing, so long as the
Collateral Agent shall be entitled under this Agreement or any other Security
Document to make collections in respect of the Joint Stock Collateral, the
Collateral Agent shall have the right and power to receive, endorse and collect
all checks made payable to the order of such Grantor representing any dividend,
payment or other distribution in respect of the Joint Stock Collateral and to
give full discharge for the same.
3.3 Certain Rights After Event of Default. Each Grantor hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of such Grantor or
otherwise, from time to time in the Collateral Agent's discretion, so long as
any Event of Default has occurred and is continuing, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Agreement or any
other Security Document and to accomplish the purposes hereof and thereof and,
without limiting the generality of the foregoing, such Grantor hereby gives the
Collateral Agent the power and right on behalf of such Grantor, without notice
to or further assent by such Grantor, to do the following:
(a) to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due upon, or in
connection with, the Joint Stock Collateral;
(b) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
non-negotiable instruments taken or received by the Collateral Agent
as, or in connection with, the Joint Stock Collateral;
(c) to commence, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding respect to, or in
connection with, the Joint Stock Collateral;
<PAGE>
(d) to sell, transfer, assign or otherwise deal in or with the
Joint Stock Collateral or any part thereof as fully and effectively as
if the Collateral Agent were the absolute owner thereof; and
(e) to do, at its option and at the expense and for the
account of such Grantor, at any time or from time to time, all acts and
things which the Collateral Agent deems necessary to protect or
preserve the Joint Stock Collateral and to realize upon the Joint Stock
Collateral.
3.4 Right to Initiate Judicial Proceedings. If an Event of
Default has occurred and is continuing, the Collateral Agent (a) shall have the
right and power to institute and maintain such suits and proceedings as it may
deem appropriate to protect and enforce the rights vested in it by this
Agreement and each other Security Document and (b) may either after entry, or
without entry, proceed by suit or suits at law or in equity to enforce such
rights and to foreclose upon the Joint Stock Collateral and to sell all or, from
time to time, any of the Joint Stock Collateral under the judgment or decree of
a court of competent jurisdiction. This Section shall not be construed to limit
any right or remedy otherwise available to the Collateral Agent under this
Agreement, any other Security Document or otherwise by Law to act without
judicial proceedings.
3.5 Right to Appoint a Receiver. If an Event of Default has
occurred and is continuing, upon the filing of a bill in equity or other
commencement of judicial proceedings or other applicable action set forth in any
Security Document to enforce the rights of the Collateral Agent under this
Agreement or any other Security Document, the Collateral Agent shall, to the
extent permitted by Law and except to the extent (if any) expressly forbidden by
a Security Document, without notice to any Grantor or any party claiming through
any Grantor, without regard to the solvency or insolvency at the time of any
Grantor or any other Person then liable for the payment of any of the
Obligations, without regard to the then value of the Joint Stock Collateral, and
without requiring any bond from any complainant in such proceedings, be entitled
as a matter of right to the appointment of a receiver or receivers (who may be
the Collateral Agent) of the Joint Stock Collateral, or any part thereof, and of
the rents, issues, tolls, profits, royalties, revenues and other income thereof,
pending such proceedings, with such powers as the court making such appointment
or as the applicable Security Document, as the case may be, shall confer, and to
the entry of an order directing that the rents, issues, tolls, profits,
royalties, revenues and other income of the property constituting the whole or
any part of the Joint Stock Collateral be segregated, sequestered and impounded
for the benefit of the Collateral Agent, and each Grantor irrevocably consents
to the appointments of such receiver or receivers and to the entry of such
order; provided, that notwithstanding the appointment of any receiver, the
Collateral Agent shall be entitled to retain possession and control of all cash
held by or deposited with it pursuant to this Agreement or any other Security
Document.
<PAGE>
3.6 Remedies Not Exclusive, Etc.
(a) No remedy conferred upon or reserved to the Collateral
Agent or any other Secured Party herein or in any other Security Document or the
Senior Credit Documents is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred herein or any other Security Document or any Senior
Credit Document or now or hereafter existing at law or in equity or otherwise.
(b) No delay or omission by the Collateral Agent or any other
Person to exercise any right, remedy or power hereunder or under any other
Security Document or any other Senior Credit Document shall impair any such
right, remedy or power or shall be construed to be a waiver thereof, and every
right, power and remedy given by this Agreement, any other Security Document or
any other Senior Credit Document to the Collateral Agent or any other Person may
be exercised from time to time and as often as may be deemed expedient by the
Collateral Agent or such other Person, as the case may be.
(c) If the Collateral Agent or any other Person shall have
proceeded to enforce any right, remedy or power under this Agreement or any
other Security Document or any other Senior Credit Document and the proceeding
for the enforcement thereof shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Collateral Agent, then
each Grantor, the Collateral Agent and the Secured Parties shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder or thereunder in all respects and,
subject to any determination in such proceeding, thereafter all rights, remedies
and powers of the Collateral Agent and every other Person shall continue as
though no such proceeding had been taken.
(d) All rights of action and of asserting claims upon or under
this Agreement and the other Security Documents may be enforced by the
Collateral Agent without the possession of any original or executed instrument
evidencing or governing any Obligation and without the production thereof at any
trial or other proceeding relative to such claims, and any suit or proceeding
instituted by the Collateral Agent shall be, subject to the provisions of this
Agreement, brought in its name as Collateral Agent, and any recovery of judgment
shall be held as part of the Shared Collateral Account.
3.7 Certain Waivers. Following an Event of Default under any
Senior Credit Document:
(a) Each Grantor agrees, to the extent it may lawfully do so,
that it will not at any time in any manner whatsoever claim or take the benefit
or advantage of, any appraisement, valuation, stay, extension, moratorium,
turnover or redemption Law, or any Law permitting it to direct the order in
which the Joint Stock Collateral shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance or
enforcement of this Agreement or any other Security Document, hereby waives all
benefit
<PAGE>
or advantage of all such Laws, and covenants that it will not hinder, delay or
impede under color of any such Law the execution of any power granted to the
Collateral Agent in this Agreement or any other Security Document but will
suffer and permit the execution of every such power as though no such Law were
in force.
(b) Each Grantor, to the extent it may lawfully do so, on
behalf of itself and all who may claim through or under it, including without
limitation any and all subsequent creditors, vendees, assignees and lienors,
waives and releases all rights to demand or to have any marshalling of the Joint
Stock Collateral upon any sale, whether made under any power of sale granted
herein or in any other Security Document or pursuant to judicial proceedings or
upon any foreclosure or any enforcement of this Agreement or any other Security
Document, and consents and agrees that all the Joint Stock Collateral may, at
any such sale, be offered and sold as an entirety. Each Grantor hereby waives
any and all rights it may at any time have to require the Collateral Agent or
any other Secured Party to exercise or exhaust its rights and remedies under
this Agreement, any other Security Document, any other Senior Credit Document,
any other agreement or instrument, at law or in equity, as between different
Persons or against any single Person, or as between different items of direct or
indirect security for any of the Obligations or against any single item of such
security, in any particular order, method or manner.
(c) Each Grantor waives, to the extent permitted by applicable
Law, presentment, demand, protest and any notice of any kind (except notices
expressly required hereunder or under any other Security Document) in connection
with this Agreement and the other Security Documents and any action taken by the
Collateral Agent with respect to the Joint Stock Collateral.
3.8 Limitation on Collateral Agent's Duty in Respect of Joint
Stock Collateral. Beyond its duties expressly provided herein or in any other
Security Document and its duty to account to the applicable Grantor or Secured
Parties for moneys and other property received by it hereunder or under any
other Security Document, the Collateral Agent shall not have any duty to any
Grantor as to any other Joint Stock Collateral in its possession or control or
in the possession or control of any of its agents or nominees, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.
3.9 Fees, Taxes, Etc. Genesis and the other Grantors jointly
and severally agree to pay any and all Lien search, stamp, document, transfer,
filing, recording, registration, excise or sales fees and taxes and all similar
impositions now or hereafter payable or determined in good faith by the
Collateral Agent to be payable in connection with this Agreement, the other
Security Documents, or any other documents, instruments or transactions pursuant
to or in connection herewith or therewith and agree to hold the Collateral Agent
and each other Secured Party harmless from and against any and all present or
future claims or liabilities with respect to, or resulting from any delay in
paying or omission to pay, any such fees, taxes or impositions. Such agreement
extends, without
<PAGE>
limitation, to any and all taxes or other state documentary stamp or intangible
tax with respect to the filing or recording of any financing statements or
mortgages in connection herewith or in connection with any other Security
Document, regardless of whom such taxes are levied or assessed against. The
obligations of Genesis and the Grantors under this Section shall survive the
termination of this Agreement and the termination of any other Security
Document.
3.10 Maintenance of Liens. Each Grantor at its expense will
cause financing statements (and continuation statements with respect to such
financing statements) and any other appropriate instruments from time to time
constituting Security Documents, to be recorded, published, registered and filed
in such manner, at such times and in such places, and will pay all such
recording, publishing, registration, filing or other taxes, fees and charges,
and will do such other acts and things as may be required from time to time to
establish, perfect, maintain, preserve, and protect the Liens of the Security
Documents as valid and perfected Liens on the Joint Stock Collateral covered
thereby, prior to all other Liens except Permitted Liens.
3.11 Further Assurances. At any time and from time to time,
upon the request of the Collateral Agent, and at the expense of the Grantor,
each Grantor will promptly execute and deliver any and all such further
instruments and documents and take such further actions as are necessary or
requested to establish, confirm, maintain and continue and to perfect, or to
protect the perfection of, the Liens created and intended to be created
hereunder and under the other Security Documents, and all assignments made or
intended to be made pursuant thereto, or to obtain the full benefits of this
Agreement and the other Security Documents and of the rights and powers herein
and therein granted, including, without limitation, the execution and delivery
of any further assignments, security agreements, pledges and further assurances
and the filing of any financing or continuation statements. Each Grantor also
hereby authorizes the Collateral Agent to sign and file financing statements and
continuation statements at any time with respect to any Joint Stock Collateral
without the signature of such Grantor (where permitted by applicable law) and
appoints the Collateral Agent as its attorney-in-fact to do all other acts and
things which the Collateral Agent may deem necessary or advisable to preserve,
perfect and continue perfected the Collateral Agent's Liens in the Joint Stock
Collateral.
ARTICLE 4 - DISTRIBUTIONS
4.1 Shared Collateral Account. For purposes of collecting cash
proceeds of the Joint Stock Collateral, the Collateral Agent shall establish one
or more deposit accounts at its Office, titled in its own name as Collateral
Agent hereunder (collectively, the "Shared Collateral Account"). The Collateral
Agent shall maintain the Shared Collateral Account as agent hereunder, and the
assets therein shall be segregated and not commingled with other assets of the
Collateral Agent. The Shared Collateral Account shall be subject to the
exclusive dominion and control of the Collateral Agent and shall constitute
shared collateral
<PAGE>
hereunder. All right, title and interest in and to the Shared Collateral
Account, funds on deposit therein from time to time, all proceeds of the
conversion thereof into cash, instruments, securities or other property, and all
other proceeds thereof, shall vest in the Collateral Agent, and each Grantor
hereby grants, conveys, assigns, pledges and transfers to the Collateral Agent,
and grants to and creates in favor of the Collateral Agent, a continuing Lien in
the foregoing. Each Grantor hereby represents, warrants, covenants and agrees
that such Lien shall at all times be valid, perfected and of first priority,
subject to no other Lien whatever, and each Grantor, jointly and severally,
shall take or cause to be taken such actions and shall execute and deliver such
instruments and documents as may be necessary, appropriate, or in the Collateral
Agent's or any other Secured Party's judgment desirable to perfect or protect
the Lien and security interest intended to be created hereby. The Grantors shall
not create or suffer to exist any Lien on any amounts or investment held in the
Shared Collateral Account other than the Lien in favor of the Collateral Agent
granted under this Section 4.1.
4.2 Investment. The Collateral Agent shall invest and reinvest
moneys on deposit in the Shared Collateral Account in Cash Equivalent
Investments (or in such of them as shall be specified by the Directing Party
from time to time) in its own name as agent hereunder, and all such investments
and the interest and income received thereon and the net proceeds on the sale or
redemption thereof shall be held in the Shared Collateral Account. The
Collateral Agent may liquidate investments prior to maturity to make a
distribution pursuant to Section 4.4 hereof.
4.3 Deposits. The Collateral Agent shall deposit in the Shared
Collateral Account all funds required to be so deposited under any Security
Document or any other Financing Document. No other funds shall be deposited in
the Shared Collateral Account or commingled with funds in the Shared Collateral
Account. The Collateral Agent shall establish a separate subaccount within the
Shared Collateral Account for each Grantor, and the Collateral Agent shall
deposit into the corresponding subaccount all funds to be deposited in the
Shared Collateral Account received from or on behalf of such Grantor (including
but not limited to proceeds of Joint Stock Collateral owned by such Grantor).
The Collateral Agent may establish such other subaccounts as it deems
appropriate from time to time.
4.4 Distributions. The Collateral Agent shall make
distributions from the Shared Collateral Account from time to time when directed
by the Directing Party or at such other times as may be required by Law, except
that the Collateral Agent shall have the right at any time to apply moneys held
by it in the Shared Collateral Account to the payment of due and unpaid
Collateral Agent Obligations. All moneys held by the Collateral Agent in the
Shared Collateral Account shall, to the extent available for distribution, be
distributed by the Collateral Agent as follows:
First: to the Collateral Agent for any Collateral Agent
Obligations due and unpaid upon such distribution date;
<PAGE>
Second: to (a) the Revolver Agent, for the payment of all
amounts due to Revolver Agent in its capacity as such under the Credit
Agreement which are unpaid on such distribution date and (b) to the
Synthetic Lease Facility Agent, for payment of all amounts due to the
Synthetic Lease Facility Agent in its capacity as such under the SLF
Participation Agreement and the SLF Loan Agreement which are unpaid on
such distribution date;
Third: to (a) the Revolver Agent, for the account of the RCA
Lender Parties, in an amount equal to all amounts due and payable to
the RCA Lender Parties on such distribution date with respect to RCA
Loan Obligations, (b) the Synthetic Lease Facility Agent, for the
account of the Synthetic Lease Participants, in an amount equal to all
amounts due and payable to the Synthetic Lease Participants on such
distribution date with respect to the SLF Obligations, and (c) each
Swap Party, in an amount equal to all amounts due and payable to such
Swap Party, on such distribution date with respect to Swap Obligations;
provided, that if such moneys to be distributed by the Collateral Agent
shall be insufficient to pay in full the amounts referred to in the
foregoing clauses (a), (b), and (c), then such distribution shall be
made ratably (without priority of any one over any other) to the
Revolver Agent, the Synthetic Lease Facility Agent and the Swap Parties
in proportion to the respective amounts referred to in the foregoing
clauses (a), (b) and (c) on such distribution date.
Finally: if all RCA Loan Obligations, SLF Obligations and Swap
Obligations shall have been paid in full in cash, all commitments to
lend or issue Letters of Credit or extend credit under the Credit
Agreement, the Synthetic Lease Facility and the SLF Loan Agreement
shall have terminated, all outstanding Letters of Credit under the
Credit Agreement shall have terminated and all Swap Agreements shall
have terminated, any surplus then remaining shall be paid to the
applicable Grantor or its successors or assigns or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
The Synthetic Lease Facility Agent, the Revolver
Agent, the Swap Parties and the Collateral Agent may amend item "Third" above to
provide for a different order of distribution among themselves in a writing
signed by the Synthetic Lease Facility Agent, the Revolver Agent, the Swap
Parties and the Collateral Agent and delivered to Genesis on behalf of the
Grantors.
4.5 Calculations. In making the determinations and allocations
required by Section 4.4 hereof, the Collateral Agent may rely upon information
supplied by the Revolver Agent as to the amounts described in clause (a) of item
"Second" and clause (a) of item "Third", may rely upon information supplied by
the Synthetic Lease Facility Agent as to the amounts described in clause (b) of
item "Second" and clause (b) of item "Third" and may rely upon information
supplied by the Swap Parties as to the amounts described in clause (c) of item
"Third", and the Collateral Agent shall have no liability to any Secured Party
for actions taken in reliance on such information. All distributions made by the
Collateral Agent
<PAGE>
pursuant to Section 4.4 hereof shall be final as against the Collateral Agent
(subject to any decree of any court of competent jurisdiction), and the
Collateral Agent shall have no duty to inquire as to the application by the
Synthetic Lease Facility Agent, the Revolver Agent, any Swap Party or any other
Secured Parties of any amounts distributed to them.
4.6 Application of Moneys. Each Secured Party agrees to apply
moneys distributed under Section 4.4 hereof to satisfaction of the corresponding
obligation described therein.
ARTICLE 5 - THE COLLATERAL AGENT
5.1 General Nature of Duties. The Collateral Agent shall have
no duties or responsibilities except those expressly set forth in this Agreement
and the other Security Documents, and no implied duties or responsibilities on
the part of the Collateral Agent shall be read into this Agreement or any other
Security Document or shall otherwise exist. The duties and responsibilities of
the Collateral Agent shall be mechanical and administrative in nature, and the
Collateral Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Secured Party. The Collateral Agent is and shall
be solely the agent of the Secured Parties. The Collateral Agent does not
assume, and shall not at any time be deemed to have, any relationship of agency
or trust with or for, or any other duty or responsibility to, any Grantor or any
Person other than the Secured Parties. The Collateral Agent shall be under no
obligation to take any action hereunder or under any other Security Document if
the Collateral Agent believes in good faith that taking such actions may
conflict with any Law or any provision of this Agreement or any other Security
Document, or may require the Collateral Agent to qualify to do business in any
jurisdiction where it is not then qualified.
5.2 General Exculpation. Notwithstanding any other provision
hereof or of any other Security Document, but subject to Section 5.5 hereof,
neither the Collateral Agent nor any of its directors, officers, agents or
employees shall be liable to any Grantor or any Secured Party for any action
taken or omitted to be taken by it or them hereunder or under any other Security
Document or in connection herewith or therewith unless caused by its or their
own gross negligence or willful misconduct.
5.3 Certain Disclaimers. The Collateral Agent shall not be
responsible to any Secured Party for: (a) the execution, delivery,
effectiveness, genuineness, validity, enforceability or adequacy of this
Agreement or any other Security Document, (b) any recital, report, statement,
document, certificate, warranty or representation made by or on behalf of any
Person other than the Collateral Agent contained herein or therein or given or
made in connection herewith or therewith, (c) the validity, enforceability,
perfection, recordation, continued perfection or recordation, priority, adequacy
or value, now or at any time in the future, of any security purported to be
afforded hereby or by any of the other Security Documents or (d) insuring the
Joint Stock Collateral or paying any taxes, charges or
<PAGE>
assessments or discharging Liens on any Joint Stock Collateral. The Collateral
Agent shall be under no obligation to any Secured Party to ascertain, inquire or
give any notice relating to (x) the performance or observance by any Grantor or
any other Person of the terms or conditions of this Agreement, any other
Security Document or any other Senior Credit Document, (y) the business,
operations or condition (financial or otherwise) of any Grantor or any other
Person or (z) the existence or possible existence of an Event of Default or
Potential Default (as such terms are defined in the SLF Documents and in the
Credit Agreement). The Collateral Agent shall not be deemed to have any
knowledge or notice of the occurrence of any such Event of Default unless the
Collateral Agent has received notice from the Synthetic Lease Facility Agent or
the Revolver Agent referring to this Agreement, describing such Event of
Default, and stating that such notice is a "notice of default."
5.4 Right to Require Indemnity. The Collateral Agent shall be
fully justified in failing or refusing to take any action hereunder or under any
other Security Document, at the direction of the Directing Party or another
Person or set of Persons, unless it shall first be indemnified to its
satisfaction by the Lenders or by such Person or set of Persons against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
5.5 Delegation of Duties. The Collateral Agent may execute any
of its duties as Collateral Agent hereunder or under any other Security Document
by or through employees, agents and attorneys-in-fact and shall not be
answerable for the default or misconduct of any such agents or attorneys-in-fact
selected by it, except as to money or securities received by it or its
authorized agents. The Collateral Agent may hold certificates, instruments and
securities pledged to it under any Security Document in the name of a nominee,
including without limitation in the name of any Affiliate of the Collateral
Agent or any Lender.
5.6 Reliance, Etc.
(a) Whenever in the administration of duties under this
Agreement or the other Security Documents the Collateral Agent shall deem it
necessary or desirable that a matter be proved or established with respect to
any Grantor or any other Person in connection with the taking, suffering or
omitting of any action hereunder or thereunder by the Collateral Agent, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be provided or established by a certificate of such Grantor or
other Person delivered to the Collateral Agent, and the Collateral Agent may
conclusively rely thereon.
(b) The Collateral Agent shall be entitled to rely upon any
notice, consent, certificate, affidavit, letter, telegram, statement, paper,
document, telephone conversation or other communication believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons (whether or not made in the manner specified herein or in the
applicable Security Documents). The Collateral Agent may conclusively rely
<PAGE>
upon the truth of the statements and the correctness of the opinions expressed
in any certificates or opinions furnished to the Collateral Agent and conforming
to the requirements of this Agreement or any other Security Document.
(c) The Collateral Agent may consult with legal counsel
(including in-house counsel for the Collateral Agent or in-house or other
counsel for any Secured Party), independent public accountants and any other
experts selected by it from time to time, and the Collateral Agent shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts.
(d) The Collateral Agent shall be under no obligation or duty
to take any action hereunder or under any other Security Document if taking such
action would subject the Collateral Agent to a tax in any jurisdiction where it
is not then subject to a tax, unless it is first fully indemnified to its
satisfaction against such tax.
5.7 Representations, Etc. Each Secured Party expressly
acknowledges: (a) that the Collateral Agent has not made any representations or
warranties to it, except as expressly set forth herein and that no act by the
Collateral Agent taken heretofore or hereafter, including without limitation any
review of the affairs of any Grantor, shall be deemed to constitute any
representation or warranty by the Collateral Agent to any Secured Party; (b)
that it has made and will make its own independent investigation of the
financial condition and affairs (including, without limitation investigation and
examination of any agreements or instruments pertaining to the transactions
contemplated by the Senior Credit Documents), and its own appraisal of the
creditworthiness of the Grantors; (c) that it has made its own independent
investigation and evaluation of the legal matters relating to this Agreement,
the other Security Documents and the Senior Credit Documents; and (d) that the
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Secured Party with any credit or other
information, except for notices, reports or other information, if any, expressly
required to be furnished to the Secured Parties by the Collateral Agent
hereunder or under any other Security Document.
5.8 Disclosure Authorized. Each Grantor authorizes the
Collateral Agent, as the Collateral Agent may elect in its sole discretion, to
discuss with and furnish to any Secured Party or any Person which is an assignee
of or participant in, or a prospective assignee of or participant in, any
Obligation or participation therein, all financial statements, audit reports and
other information pertaining to the transactions contemplated by the Senior
Credit Documents, relating to any Grantor, its agents or its partners or
otherwise. Neither the Collateral Agent nor any of its employees, officers,
directors or agents makes any representation or warranty regarding any audit
reports or other analyses of the condition of any Grantor which the Collateral
Agent may elect to distribute, nor shall the Collateral Agent or any of its
employees, officers, directors or agents be liable to any Person or entity
receiving a copy of such reports or analyses for any inaccuracy or omission
contained in or relating thereto.
<PAGE>
5.9 Collateral Agent in Individual Capacity. The Collateral
Agent may be a Lender, the Issuer, the Synthetic Lease Facility Agent, the
Lessor, a Synthetic Lease Participant, the Revolver Agent or a Swap Party, and
in such event the Collateral Agent, in its capacity as Lender, Issuer, Synthetic
Lease Facility Agent, Lessor, Synthetic Lease Participant, Revolver Agent or
Swap Party, shall have the same rights and powers as any other Lender, Issuer,
Synthetic Lease Facility Agent, Lessor, Synthetic Lease Participant, Revolver
Agent or Swap Party, and may exercise the same as though it were not the
Collateral Agent, and the terms "Lenders", "Issuer", "Synthetic Lease Facility
Agent", "Lessor", "Synthetic Lease Participant", "Revolver Agent" and "Swap
Party" shall, unless the context hereof otherwise indicates, include the
Collateral Agent in its individual capacity. The Collateral Agent and its
affiliates may, without liability to account, make loans to, accept deposits
from, act as trustee under indentures of, enter into leases with, enter into or
participate in Interest Rate Hedging Agreements with, and generally engage in
any kind of banking or trust business with, the Grantors and their respective
stockholders, partners, subsidiaries and affiliates as though it were not acting
as Collateral Agent hereunder.
5.10 Moneys to be Held As Agent. All moneys received by the
Collateral Agent under or pursuant to any provision of this Agreement or any
other Security Document shall be held by it as agent for the purposes for which
such moneys were paid or are held. The Collateral Agent shall not, except as
otherwise provided herein, be liable for any interest thereon.
5.11 Responsible Parties. The Collateral Agent may deem and
treat each Responsible Party named herein as the Responsible Party hereunder and
under the other Security Documents for all purposes hereof unless and until
written notice of the assignment or transfer of such Responsible Party's rights
hereunder and thereunder shall have been filed with the Collateral Agent. Any
request, instruction, authority or consent of any Person who at the time of
making such request or giving such instruction, authority or consent is a
Responsible Party hereunder shall be conclusive and binding on any subsequent
successor, assignee or transferee.
5.12 Compensation. Genesis and the Grantors hereby jointly and
severally agree to pay to the Collateral Agent, from time to time upon demand,
reasonable compensation (which shall not be limited by any provision of law in
regard to compensation of fiduciaries or of a trustee of an express trust) for
its services hereunder and under the other Security Documents; provided, that if
and so long as the Collateral Agent is also the Revolver Agent and no Event of
Default (as defined in the SLF Documents and in the Credit Agreement) has
occurred and is continuing, neither the Collateral Agent nor any co-Collateral
Agent shall be entitled to any compensation under this Section 5.12.
5.13 Expenses. Genesis and the Grantors hereby jointly and
severally agree to pay or cause to be paid and to save the Collateral Agent
harmless against liability for the payment of all out-of-pocket costs and
expenses (including but not limited to reasonable fees and expenses of counsel
and all other professional, accounting, evaluation and consulting
<PAGE>
costs) incurred by the Collateral Agent from time to time arising from or
relating to (i) the negotiation, preparation, execution, delivery,
administration and performance of this Agreement, any Joinder Supplement or any
other Security Document or other instruments or documents related hereto or
thereto, (ii) any amendments, modifications, waivers or consents (whether or not
ultimately entered into or granted) hereto or thereto, (iii) the enforcement or
preservation of rights hereunder or thereunder (including but not limited to any
such costs or expenses arising from or relating to (A) the protection,
collection, lease, sale, taking possession of, preservation of, or realization
on, any Joint Stock Collateral or the Collateral Agent's Lien thereon, including
without limitation advances for storage, insurance premiums, transportation
charges, taxes, filing fees and the like, (B) collection or enforcement of any
other amount owing hereunder or thereunder by the Collateral Agent, and (C) any
litigation, proceeding, dispute, workout, restructuring or rescheduling related
in any way to this Agreement or any other Security Document or any other
agreement or instrument related hereto or thereto). The agreements contained in
this Section shall survive the termination of this Agreement and the other
Security Documents.
5.14 Indemnity. Genesis and the Grantors hereby jointly and
severally agree to reimburse and indemnify the Collateral Agent, its affiliates,
and their respective directors, officers, employees, attorneys and agents
("Collateral Agent Indemnified Parties"), and each of them, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Collateral Agent Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Collateral Agent Indemnified Party shall be designated a
party thereto) which may be imposed on, incurred by or asserted against any of
them in any way relating to or arising out of this Agreement, any other Security
Document or any other agreement or instrument in connection herewith or
therewith or the matters referred to herein or therein, or the administration or
enforcement hereof or thereof, or any action taken or omitted by the Collateral
Agent hereunder or thereunder; provided, however, that Genesis and the Grantors
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of such Collateral
Agent Indemnified Party, as finally determined by a court of competent
jurisdiction. The agreements contained in this Section shall survive the
termination of this Agreement and the other Security Documents.
5.15 Indemnification by Secured Parties. Each Secured Party
(other than the Collateral Agent) hereby agrees to reimburse and indemnify each
Collateral Agent Indemnified Party (to the extent such Collateral Agent
Indemnified Party is not reimbursed by Genesis or the Grantors and without
limitation of the obligation of Genesis and the Grantors to do so), ratably in
accordance with each Secured Party's Pro Rata Share, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature (including,
without limitation, the fees and disbursements of counsel for such Collateral
Agent Indemnified Party in
<PAGE>
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Collateral Agent Indemnified Party
shall be designated a party thereto) which may be imposed on, incurred by or
asserted against any of them in any way relating to or arising out of this
Agreement, any other Security Document or any other agreement or instrument in
connection herewith or therewith or the matters referred to herein or therein,
or the administration or enforcement hereof or thereof, or any action taken or
omitted by the Collateral Agent hereunder or thereunder; provided, however, that
no Secured Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of such Collateral Agent Indemnified Party, as finally determined by
a court of competent jurisdiction. The agreements contained in this Section
shall survive the termination of this Agreement and the other Security
Documents.
5.16 Interest. All amounts payable by any Grantor to the
Collateral Agent under this Agreement or any other Security Document shall bear
interest (without duplication of any interest Obligation under any other
Financing Document) from the date when due to the date of payment (before and
after judgment) at a rate per annum (based on a year of 365 days and actual days
elapsed) 2% above the then-current Prime Rate Option.
5.17 Collateral Agent Obligations. Notwithstanding anything to
the contrary in this Agreement, the Collateral Agent shall have the right to
apply any of the funds held by the Collateral Agent in the Shared Collateral
Account to Collateral Agent Obligations.
5.18 Successor Collateral Agent.
(a) The Collateral Agent may resign at any time by giving
prior written notice thereof to each Responsible Party and Genesis, and may be
removed without cause at any time by the Directing Party by giving ten days'
prior written notice thereof to each Responsible Party, Genesis and the
Collateral Agent. Such resignation or removal shall be effective on the date
specified in such notice and, on such date, the resigning or removed Collateral
Agent shall be automatically discharged from its duties under this Agreement and
the other Security Documents without requirement of any further action by such
resigning or removed Collateral Agent. Upon any such resignation or removal, the
Directing Party shall have the right to appoint a successor Collateral Agent,
subject to the approval of Genesis as to the identity of such successor
Collateral Agent (which approval shall not be unreasonably withheld or delayed)
unless such successor Collateral Agent is an RCA Lender or Synthetic Lease
Participant and unless an Event of Default or Potential Default (as defined in
either the SLF Documents or the Credit Agreement) shall have occurred and be
continuing. If no successor Collateral Agent shall have been appointed and shall
have accepted such appointment within ten days after such notice of resignation
or removal, then the resigning or removed Collateral Agent, on behalf of the
Secured Parties, may, but shall not be obligated to, appoint a successor
Collateral Agent. If no successor Collateral Agent shall be appointed and shall
have accepted such appointment within thirty days after such notice of
resignation or removal, any Secured Party may apply to any court of competent
jurisdiction to appoint a
<PAGE>
successor Collateral Agent until such time, if any, as a successor Collateral
Agent shall have been appointed as provided in this Section 5.18. Any successor
so appointed by such court shall immediately and without further act be
superseded by any successor Collateral Agent appointed by the Directing Party as
provided in this Section 5.18.
(b) Any successor Collateral Agent shall be either a lender or
a commercial bank or trust company organized under the laws of the United States
of America or any state thereof and having a combined capital and surplus of at
least $1,000,000,000.
(c) Upon the acceptance by a successor Collateral Agent of its
appointment as Collateral Agent hereunder, such successor Collateral Agent shall
thereupon succeed to and become vested with all of the properties, rights,
powers, duties, authority and title of the retiring Collateral Agent in its
capacity as such, without any further act, deed or conveyance; but such
predecessor Collateral Agent shall nevertheless, on the request of Genesis, the
Synthetic Lease Facility Agent, the Revolver Agent or the successor Collateral
Agent from time to time, execute and deliver instruments transferring and
confirming to such successor all the properties, rights, powers, duties,
authority and title of such predecessor, and shall deliver all securities and
moneys held by it or them to such successor agent or agents. After any
Collateral Agent's resignation or removal hereunder as Collateral Agent, such
Collateral Agent shall be discharged from its duties under this Agreement and
the other Security Documents in its capacity as Collateral Agent, but the
provisions of this Article 5 shall continue to inure to its benefit as to any
actions taken or omitted by it while it was Collateral Agent under this
Agreement and the other Security Documents. If and so long as no successor
Collateral Agent shall have been appointed, then any notice or other
communication required or permitted to be given by the retiring Collateral Agent
shall be sufficiently given, if given by the Directing Party, and all notices or
other communications required or permitted to be given to the retiring
Collateral Agent shall be given to the Directing Party.
(d) Notwithstanding any other provision of this Agreement or
the other Security Documents to the contrary, neither the Collateral Agent nor
any of its directors, officers, employees or agents shall be liable to any
Secured Party for any action taken or omitted to be taken by it or them under or
in connection with this Section 5.18.
(e) Any corporation into which the Collateral Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, shall be the successor of the Collateral Agent
hereunder.
5.19 Co-Collateral Agent. If the Collateral Agent shall from
time to time deem it necessary or advisable, for its own protection in the
performance of its duties hereunder or in the interest of the Secured Parties,
the parties hereto shall execute and deliver a supplemental agreement and all
other instruments and agreements necessary or advisable, in the opinion of the
Collateral Agent, to constitute another commercial bank or
<PAGE>
trust company, or one or more other Persons approved by the Collateral Agent, to
act as co-Collateral Agent or agent with respect to any part of the Joint Stock
Collateral, with such powers of the Collateral Agent as may be provided in such
supplemental agreement, and to vest in such bank, trust company or other Person
as such co-Collateral Agent or separate agent, as the case may be, any
properties, rights, powers, privileges and duties of the Collateral Agent under
this Agreement or any other Security Document.
5.20 Delivery of Documents. On the Closing Date, the Grantors
shall deliver to the Collateral Agent true and complete copies of all material
Financing Documents and, to the extent in force on the Closing Date, all Swap
Documents. The Grantors shall, promptly upon the execution thereof, deliver to
the Collateral Agent a true and complete copy of any and all Security Documents,
Swap Documents, and all material amendments, modifications or supplements to the
Loan, SLF, and Swap Documents.
ARTICLE 6 - MISCELLANEOUS
6.1 Amendments, Supplements and Waivers. With the prior
written consent of the Synthetic Lease Facility Agent and the Revolver Agent and
with written notice by the Collateral Agent to the Responsible Parties and
Genesis, the Collateral Agent and the applicable Grantors may from time to time
amend, modify or supplement this Agreement or any other Security Document for
the purpose of amending, adding to, or waiving any provisions of, this Agreement
or any other Security Document, releasing (other than under Section 6.8, which
requires no such consent or notice) any Joint Stock Collateral, releasing or
limiting the obligations of any Grantor under any Security Document, or changing
in any manner the rights of the Collateral Agent, any Secured Party or any
Grantor hereunder or thereunder. In addition, the Synthetic Lease Facility
Agent, the Revolver Agent, the Swap Parties and the Collateral Agent may amend
this Agreement as provided in Section 4.4 hereof. The Collateral Agent shall
enter into such amendments, modifications or supplements from time to time as
directed by the Synthetic Lease Facility Agent and the Revolver Agent, and only
as so directed; provided, that the Collateral Agent shall not be required,
without its consent, to enter into any amendment of Article 5 hereof or any
amendment which would materially enlarge its duties or responsibilities (or
lessen the protections afforded to it) hereunder or under the other Security
Documents. Any such amendment, modification or supplement made in accordance
with this Section shall be binding upon each Grantor and each Secured Party and
their respective successors and assigns. No amendment, modification or
supplement relating hereto or to any other Security Document shall be effective
unless in writing signed by or on behalf of the party to be charged therewith
(it being understood that any such amendment, modification or supplement signed
by the Collateral Agent shall be binding upon each Secured Party as aforesaid).
The Collateral Agent shall furnish each Responsible Party with a fully executed
original of, a photocopy of a fully executed original of, or conformed copy of,
any such amendment, modification, supplement or waiver promptly after the
effectiveness thereof.
<PAGE>
6.2 Notices. Except to the extent otherwise expressly
permitted hereunder or thereunder, all notices, requests, demands, directions
and other communications (collectively "notices") given or made under this
Agreement or any other Security Document shall be given in writing (including
telexed and facsimile communications) and shall be sent by first-class mail,
nationally-recognized overnight courier or facsimile transmission (with
confirmation in writing mailed first-class or sent by such an overnight courier)
or by personal delivery. All notices shall be sent to the applicable party at
the address stated on the signature pages hereof (or, in the case of any Swap
Party, as set forth under its signature to the Joinder Supplement with respect
thereto) or in accordance with the last unrevoked written direction from such
party to the other parties hereto, in all cases with postage or other charges
prepaid. Any such properly given notice to a Secured Party shall be effective
when received. The address for Genesis shall be the address for all other
Grantors, unless Genesis shall direct the Collateral Agent otherwise in writing.
Any such properly given notice to a Grantor shall be effective upon the earliest
to occur of receipt, telephone confirmation of receipt or facsimile transmission
communication, one Business Day after delivery to a nationally-recognized
overnight courier, three Business Days after deposit in the mail, or when
telephoned (to the extent that notice is permitted by telephone).
6.3 No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Collateral Agent or any other Secured
Party in exercising any right, power or privilege hereunder or under any other
Security Document, any other Senior Credit Document, or any other documents or
instruments pursuant to or in connection herewith or therewith shall affect any
other or future exercise thereof or exercise of any other right, power or
privilege; nor shall any single or partial exercise of any such right, power or
privilege or any abandonment or discontinuance of steps to enforce such a right,
power or privilege preclude any further exercise thereof or of any other right,
power or privilege. The rights and remedies of the Collateral Agent and each
other Secured Party under this Agreement, the other Security Documents, the
other Senior Credit Documents and all other agreements and instruments pursuant
to or in connection herewith or therewith are cumulative and not exclusive of
any rights or remedies which any of them would otherwise have. Any waiver,
permit, consent or approval of any kind or character on the part of the
Collateral Agent of any breach or default under, or term or condition of, this
Agreement or any other Security Document shall be in writing and shall be
effective only to the extent specifically set forth in such writing.
6.4 Severability. The provisions of this Agreement and of the
other Security Documents are intended to be severable. If any provision of this
Agreement or any other Security Document shall be held invalid or unenforceable,
in whole or in part, in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof or thereof
in any jurisdiction. Where, however, such invalidity or unenforceability may be
waived, it is hereby waived by each Grantor to the fullest extent permitted by
law, to the end that this
<PAGE>
Agreement and the other Security Documents shall be valid and binding agreements
enforceable in accordance with their terms.
6.5 Prior Understandings. This Agreement and the other
Financing Documents supersede all prior understandings and agreements, whether
written or oral, among the parties hereto relating to the transactions provided
for herein.
6.6 Survival. All representations and warranties of each
Grantor contained herein or in any other Security Document or made in connection
herewith or therewith shall be deemed to have been relied upon by the Collateral
Agent and the other Secured Parties and shall survive the execution and delivery
of this Agreement and the other Security Documents, any knowledge of or
investigation by the Collateral Agent or any other Secured Party, and all other
events and conditions whatever. All statements in any financial statement,
certificate, document or instrument from time to time delivered by or on behalf
of any Grantor under or in connection with this Agreement or any other Security
Document shall be deemed to constitute representations and warranties by such
Grantor.
6.7 Counterparts. This Agreement and any other Security
Document may be executed in any number of counterparts and by the different
parties hereto or thereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
6.8 Termination of Liens.
(a) Except as otherwise provided in any Security Document,
upon payment in full of all Obligations, termination of the obligations of the
RCA Lenders and the Issuer to make Loans (as defined in the Credit Agreement)
and issue Letters of Credit under the Credit Agreement, expiration of all
Letters of Credit under the Credit Agreement, payment in full of the SLF
Obligations and termination of any remaining commitments to extend credit
(whether denominated as debt or equity) under the Synthetic Lease Facility, the
SLF Loan Agreement and the SLF Participation Agreement, and termination of all
Swap Agreements, the Liens created hereby and by the other Security Documents
shall terminate. Except as otherwise provided in any Security Document, upon
such termination, the Collateral Agent will, at the expense of the Grantors,
redeliver and reassign to the Grantors any remaining Joint Stock Collateral in
its possession and take all action necessary to terminate the Lien of the
Collateral Agent in the Joint Stock Collateral.
(b) Effective upon (i) the closing of a sale of any Joint
Stock Collateral in conformity with the provisions of clause (e) of Section 7.10
of the Credit Agreement (or, if the Credit Agreement is not then in effect, in
accordance with such provisions or any equivalent provisions of the "Credit
Agreement" as defined in the SLF Participation Agreement) and receipt by the
Collateral Agent of a certification to such effect from the chief financial
officer of Genesis or (ii) the designation by Genesis of a Subsidiary as a
"Non-Material Restricted Subsidiary" or an "Unrestricted Entity" in accordance
with the
<PAGE>
provisions of clause (e) of Section 7.6 of the Credit Agreement (or, if the
Credit Agreement is not then in effect, in accordance with such provisions or
any equivalent provisions of the "Credit Agreement" as defined in the SLF
Participation Agreement), then the Lien of the Collateral Agent in the Joint
Stock Collateral which is the subject of the sale or the designation and all
proceeds thereof (the "Released Collateral") shall terminate. The Collateral
Agent shall thereupon reassign and deliver to the applicable Grantor, or to such
Person as such Grantor shall designate, against receipt, the Released
Collateral, together with appropriate instruments or reassignment and release,
all without any recourse to, or warranty whatsoever by, the Collateral Agent, at
the sole cost and expense of the Grantors. The RCA Lender Parties, the SLF
Parties, and the Swap Parties agree that no separate consents from any of them
shall be required as a condition to the release of any Joint Stock Collateral
under this subsection.
6.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Collateral Agent (and the Collateral Agent
Indemnified Parties), the other Secured Parties, the Grantors and their
respective successors and assigns, except that a Grantor may not assign or
transfer any of its rights hereunder or any interest therein, and any such
purported assignment or transfer shall be void. No other Person shall have any
rights hereunder or shall be entitled to rely on any provision hereof.
6.10 Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial; Limitation of Liability.
(a) THIS AGREEMENT AND ALL OTHER SECURITY DOCUMENTS (EXCEPT TO
THE EXTENT, IF ANY, OTHERWISE EXPRESSLY STATED IN SUCH OTHER SECURITY DOCUMENTS)
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
(b) EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY
PERSON ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER
SECURITY DOCUMENT (INCLUDING BUT NOT LIMITED TO ANY COURSE OF
CONDUCT, COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR
ACTIONS OF ANY SECURED PARTY) (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING IN ALLEGHENY COUNTY OR
PHILADELPHIA COUNTY, PENNSYLVANIA, AND SUBMITS TO THE
JURISDICTION OF SUCH COURTS (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY SECURED PARTY TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM);
<PAGE>
(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT
IN ANY SUCH STATE OR FEDERAL COURT, AND WAIVES ANY CLAIM THAT
ANY SUCH RELATED LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM;
(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY
REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO IT AT
THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 6.2 HEREOF, AND
CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN
EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN
SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED
IN ANY OTHER MANNER PERMITTED BY LAW); AND
(iv) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
RELATED LITIGATION.
(c) EACH SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED LITIGATION.
(d) TO THE FULLEST EXTENT PERMITTED BY LAW, NO CLAIM MAY BE
MADE BY ANY GRANTOR AGAINST THE COLLATERAL AGENT, ANY OTHER SECURED PARTY, OR
ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY OF THEM FOR
ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT
OF ANY CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER SECURITY
DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING
IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF CONTRACT, TORT OR ANY
OTHER THEORY OF LIABILITY). EACH GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT
TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM PRESENTLY EXISTS
OR ARISES HEREAFTER AND WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By_________________________________
Title: Senior Vice President and Chief
Financial Officer
Address for notices:
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and Chief
Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
BREVARD MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
<PAGE>
its sole general partner
EDELLA STREET ASSOCIATES, a
Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS PROPERTIES LIMITED
PARTNERSHIP, a
Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HAMMONDS LANE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
MERIDIAN/CONSTELLATION LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
general partner
MERIDIAN EDGEWOOD LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN PERRING LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
<PAGE>
MERIDIAN VALLEY LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MILLVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp., its
sole general partner
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its sole general partner
SEMINOLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its
sole general partner
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: State Street Associates, Inc.
its sole general partner
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Genesis Eldercare
Rehabilitation Services, Inc.
its sole general partner
<PAGE>
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its sole
general partner
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation, and
Meridian Healthcare, Inc., a
Pennsylvania corporation,
its general partners
By:__________________________________
On behalf of each of the foregoing
as Senior Vice President and Chief
Financial Officer of the general
partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
<PAGE>
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE
SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICIAN
SERVICES, INC.,
a Pennsylvania corporation
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
<PAGE>
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
GENESIS ELDERCARE STAFFING SERVICES
INC.
a Pennsylvania corporation
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION
SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
WYNCOTE HEALTHCARE CORP.
a Pennsylvania corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
<PAGE>
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS, INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
PROFESSIONAL PHARMACY SERVICES,
INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
DERBY NURSING CENTER CORPORATION,
a Connecticut Corporation
GENESIS ELDERCARE NATIONAL
CENTERS, INC.,
a Florida Corporation
<PAGE>
GENESIS ELDERCARE NETWORK
SERVICES, INC.,
a Pennsylvania Corporation
GENESIS ELDERCARE PROPERTIES, INC.,
a Pennsylvania Corporation
OAK HILL HEALTH CARE CENTER, INC.,
a Virginia Corporation
VERSALINK, INC.,
a Delaware Corporation
By:_____________________________________
On behalf of each of the foregoing
as Senior Vice President and Chief
Financial Officer
<PAGE>
MELLON BANK, N.A., as Revolver Agent, as Synthetic Lease
Facility Agent and as Collateral Agent
By___________________________________________
Title: Vice President
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, PA 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, PA 19101-7899
Attention: Linda Sigler,
Loan Administration
Telephone: 215-553-4583
Facsimile: 215-553-4789
With a copy to
Plymouth Meeting Executive Campus
610 W. Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: 610-941-8409
Facsimile: 610-941-4136
<PAGE>
Exhibit A to
Amended and Restated
Collateral Agency Agreement
JOINDER SUPPLEMENT
THIS JOINDER SUPPLEMENT to the Second Amended and Restated
Collateral Agency Agreement dated as of ___________, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Collateral Agency
Agreement") among Genesis Health Ventures, Inc., a Pennsylvania corporation
("Genesis"), the other Grantors referred to therein, Mellon Bank, N.A., as
"Agent" (together with its successors, the "Synthetic Lease Facility Agent") on
behalf of the SLF Parties referred to therein, Mellon Bank, N.A., as "Agent"
(together with its successors, the "Revolver Agent") on behalf of the RCA Lender
Parties referred to therein, each financial institution which is or which may
become party thereto as "Swap Party" and Mellon Bank, N.A., as Collateral Agent
(together with its successors, the "Collateral Agent").
Recitals:
A. Capitalized terms used herein and not otherwise defined
shall have the meanings given to them in, or by reference in, the Collateral
Agency Agreement.
B. The Collateral Agency Agreement contemplates that in
certain circumstances a financial institution which enters into a Qualifying
Interest Rate Hedging Agreement with Genesis may become party to the Collateral
Agency Agreement as "Swap Party," with such Qualifying Interest Rate Hedging
Agreement being deemed a "Swap Agreement" as defined in the Collateral Agency
Agreement, in which event, among other things, the obligations of Genesis under
such Swap Agreement will be entitled to the benefit of certain Security
Documents.
C. The Person executing this Joinder Supplement as Swap Party
below desires to become party to the Collateral Agency Agreement as "Swap
Party," with the Qualifying Interest Rate Hedging Agreement attached hereto
being deemed the "Swap Agreement" referred to therein.
NOW, THEREFORE, the Swap Party, intending to be legally bound
hereby, hereby represents, warrants and agrees to the Secured Parties and the
Grantors as follows:
Section 1. Joinder. The Swap Party hereby becomes party to the
Collateral Agency Agreement as the "Swap Party" thereunder, and shall be subject
to and bound by all of the provisions thereof and of the other Security
Documents referred to therein. The attached Qualifying Interest Rate Hedging
Agreement is hereby deemed the "Swap Agreement" referred to in such Collateral
Agency Agreement. It is expressly understood that, to the extent the attached
Qualifying Interest Rate Hedging Agreement is in the form of a master agreement,
pursuant to which multiple "confirmations" or "transaction supplements" (however
named) may be entered into from time to time, only the transactions evidenced by
confirmations or transaction supplements attached hereto shall constitute part
of such "Swap
<PAGE>
Agreement." No other transactions have been or will be entered into pursuant to
such Qualifying Interest Rate Hedging Agreement.
Section 2. Swap Agreement. The attached Qualifying Interest
Rate Hedging Agreement, including all schedules, confirmations and transaction
supplements thereto and attached hereto, is true, correct and complete and
contains the entire agreement of the Swap Party and Genesis relating to the
subject matter thereof.
Section 3. Effectiveness. This Joinder Supplement shall be
effective on the date set forth under the Collateral Agent's signature below,
evidencing its receipt of a copy hereof executed by the Swap Party and consented
to by the Synthetic Lease Facility Agent, the Revolver Agent and Genesis.
Section 4. Governing Law. This Joinder Supplement shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the Swap Party has caused this Joinder
Supplement to be executed by a duly authorized officer thereof as of the date
set forth below.
------------------------------
as Swap Party
By____________________________
Name:_________________________
Title:________________________
Address
Attn:
Telephone:
Facsimile:
<PAGE>
CONSENTED AND AGREED TO:
MELLON BANK, N.A., as
Synthetic Lease Facility Agent
and as Revolver Agent
By___________________________
Name:________________________
Title:_______________________
CONSENTED AND AGREED TO:
GENESIS HEALTH VENTURES, INC.
By___________________________
Name:________________________
Title:_______________________
RECEIPT ACKNOWLEDGED:
MELLON BANK, N.A. as Collateral Agent
By___________________________
Name:________________________
Title:_______________________
Date:________________________
<PAGE>
Exhibit C
PLEDGE AGREEMENT
(amending and restating the
Amended and Restated Security Agreement referred to below)
PLEDGE AGREEMENT (this "Agreement"), dated as of October 7, 1996 is
entered into by and among GENESIS HEALTH VENTURES, INC., a Pennsylvania
corporation ("Genesis"), the SUBSIDIARIES AND AFFILIATES OF GENESIS listed on
the signature pages hereof (collectively with Genesis and with all other
Subsidiaries and Affiliates of Genesis that become parties hereto from time to
time in accordance with the terms hereof, the "Grantors") and MELLON BANK, N A.,
a national banking association, as Collateral Agent for the Secured Parties (as
hereafter defined) under the Collateral Agency Agreement referred to below (in
such capacity, together with its successors and assigns in such capacity, the
"Collateral Agent").
BACKGROUND OF AGREEMENT
Genesis and certain Subsidiaries of Genesis (collectively identified as
"Borrowers" in the Credit Agreement (defined below), and, together with all
entities that become "Borrowers" thereunder, from time to time, hereinafter
referred to as the "Borrowers"), Mellon Bank, N.A. as Agent (together with its
successors and assigns in such capacity, the "Revolver Agent"), Mellon Bank,
N.A. as an Issuer of letters of credit, Citibank, N.A. as the Co-Syndication
Agent, certain Co-Agents named therein and certain Lenders named therein entered
into a certain Second Amended and Restated Credit Agreement, dated as of the
date hereof (as amended, modified, and supplemented, from time to time, the
"Credit Agreement") pursuant to which the Lenders and Issuer agreed to extend
credit in an aggregate principal amount not to exceed at any time Three Hundred
Million Dollars ($300,000,000) to the Borrowers upon the terms and conditions
specified therein. That Credit Agreement amended and restated another credit
facility referred to therein as the "Original Credit Agreement".
Concurrently, Genesis Eldercare Properties, Inc., a Pennsylvania
corporation, and its permitted successors and assigns (the "Lessee") and Mellon
Financial Services Corporation #4 (together with its successors and assigns in
such capacity, the "Lessor") entered into a certain Amended and Restated Lease
and Agreement of even date herewith (as amended, modified and supplemented from
time to time, the "Synthetic Lease Facility"). Also concurrently, the Lessor and
certain Participants named therein (collectively and together with any other
entity that may become a Lessor or Participant thereunder from time to time, the
"Synthetic Lease Participants") entered into a certain Amended and Restated
Participation Agreement dated of even date herewith (as amended, modified and
supplemented from time to time, the "Participation Agreement"). Pursuant to the
Synthetic Lease Facility, the Participation Agreement and the various
agreements, instruments and other documents entered in connection therewith,
(collectively and together with each other agreement, instrument and document
<PAGE>
entered into thereunder from time to time, and as the same may be amended,
modified and supplemented, from time to time, the "Synthetic Lease Facility
Documents"), the Synthetic Lease Participants agreed to make certain loans in an
aggregate principal amount not to exceed One Hundred and Forty Five Million Five
Hundred Thousand Dollars ($145,500,000) to the Lessor, the proceeds of which are
to be used, to finance certain of the acquisition, construction and other costs
and expenses of the Lessor under the Synthetic Lease Facility. The obligations
of the Lessee under the Synthetic Lease Facility and obligations of the Lessor
under the Participation Agreement are guaranteed by the material subsidiaries of
Genesis (collectively with any other subsidiary of Genesis that may become a
guarantor of such obligations, from time to time, the "Lease Guarantors")
pursuant to those certain "Guaranties" as such term is defined in the
Participation Agreement (as amended, modified and supplemented from time to
time, the "Lease Guarantees"). The Synthetic Lease Facility amends and restates
that certain Lease and Agreement, dated as of July 24, 1996 between the Lessor
and the Lessee.
The Synthetic Lease Participants are the same entities as the Lenders.
The Borrowers are the same entities as the Lease Guarantors.
One of the prerequisites to the making of advances by the Lenders under
the Credit Agreement, the making of new advances by the Synthetic Lease
Participants under the Participation Agreement and the modification of the lease
by the Lessor under the Synthetic Lease Facility is that the Grantors shall have
entered into this Agreement and shall have granted to the Collateral Agent for
the benefit of the Secured Parties a security interest in and to all of the
capital stock, partnership interests, and other equity of the Borrowers, the
Lessee and Lease Guarantors to secure the Secured Obligations (as defined
below). This Agreement amends and restates that certain Amended and Restated
Security Agreement, dated as of September 29, 1995, as previously amended, by
and among Genesis, certain Subsidiaries of Genesis and the Collateral Agent (the
"Amended and Restated Security Agreement"); the Liens in the Collateral
hereunder are a continuation of certain of the Liens created under said Amended
and Restated Security Agreement.
The rights and obligations of the Secured Parties among themselves are
set forth in a certain Second Amended and Restated Collateral Agency Agreement
of even date herewith among the Lenders, the Issuer, the Lease Participants, the
Collateral Agent and certain other parties named therein (as amended, modified
and supplemented from time to time, the "Collateral Agency Agreement").
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained and other
good and valuable consideration, agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in, or by reference (e.g., to the
Credit Agreement) in, the Collateral Agency Agreement. The following terms shall
have the following meanings:
2
<PAGE>
"Business Day" shall mean a day other than a Saturday, Sunday
or day on which commercial banks are required or permitted to open in
Philadelphia, Pennsylvania or New York, New York.
"Collateral" shall mean collectively:
(i) the shares of capital stock listed on
Schedule I hereto and (without duplication) any other shares
of capital stock (whether now or hereafter existing) of any
Pledged Subsidiary, now owned or hereafter acquired by any
Grantor, and, in each case, all certificates representing such
shares and all rights, options and warrants relating to such
shares and all stock or other securities receivable or
distributed in respect of, or exchanged for, any of the
foregoing (including, without limitation, all stock dividends,
liquidation dividends, shares of stock resulting from stock
splits, or reclassifications), (all of the foregoing being
referred to herein as the "Pledged Securities");
(ii) all of the partnership and other equity
interests listed on Schedule II hereto and (without
duplication) any interests in partnerships (whether general,
limited, limited liability or otherwise) of, or any other
right, title and interest, direct or indirect, present or
future, in and to, any Pledged Subsidiary (whether such entity
now exists or is hereafter formed) now owned or hereafter
acquired by any Grantor (except Pledged Securities referred to
above), including without limitation (a) subject to Section
5.3 all right, title and interest (but none of the
obligations) of each partner or other equity owner in, to and
under any partnership agreement or other organizational
document and in and to all other rights as a partner or owner
in property and assets of any partnership or other entity, (b)
all right, title and interest of any partner, or other equity
owner to exercise voting and other consensual rights with
respect to such partnership or other equity interests, (c) all
rights and claims of any equity owner to receive any payment
of money or other distribution of property due and to become
due to such equity owner under or in connection with or
arising out of any such entity, whether as a distribution of
the income, profits or cash, as a distribution of proceeds of
a liquidation or dissolution, as damages arising out of a
breach of or default under a partnership or other agreement,
or otherwise, and (d) all rights of any equity holder to
terminate, amend, supplement or modify a partnership or
similar agreement, or to consent to the same, or to perform or
compel performance thereunder, or otherwise to exercise rights
and remedies thereunder or in connection therewith as an
equity owner (all the foregoing being hereinafter referred to
as "Pledged Partnership Interests");
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(iii) all other property which from time to
time is required to create, perfect or render enforceable the
Liens purported to be created hereunder and all other property
which may be delivered to and held by the Collateral Agent
pursuant to the terms hereof of any character whatsoever into
which any of the foregoing may be converted or which may be
substituted for any of the foregoing; and
(iv) all Proceeds of the Pledged Securities,
Pledged Partnership Interests and such other property referred
to in clause (iii) above.
"Licensing Authority" shall mean any local, state or federal
governmental agency or body with the power and authority to regulate and issue
licenses, permits and similar authorizations to providers of healthcare services
of the nature provided by Genesis and its Subsidiaries consistent with the terms
of the Credit Agreement and Synthetic Lease Facility.
"Lien" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention agreement
or capital lease with respect to, any property or asset of such Person.
"Necessary Endorsement" shall mean undated stock powers
endorsed in blank (with signatures properly guaranteed) or other proper
instruments of assignment duly executed and such other instruments or documents
as the Collateral Agent may reasonably request.
"Pledged Subsidiary" shall mean (without duplication) each
Borrower, each Lease Guarantor, each Lessee and each other Person that is the
issuer of any capital stock or other equity that constitutes Collateral
hereunder, from time to time. Pledged Subsidiary shall not include any
Non-Material Restricted Subsidiary or any other Unrestricted Entity.
"Proceeds" shall have the meaning assigned to such term under
the Uniform Commercial Code, and, in any event, shall include (without
duplication) (i) any and all dividends, distributions, interest, cash, notes,
securities payments, rights and other property at any time and from time to time
acquired, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral; (ii) any and all proceeds of any guarantee, insurance or
indemnity payable to a Grantor from time to time with respect to any of the
Collateral; (iii) any and all payments (in any form whatsoever) made or due and
payable to a Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority); and (iv) any and all other amounts from time to time
paid or payable with respect to or in connection with any of the Collateral.
"Secured Obligations" shall include any and all indebtedness,
obligations and liabilities of any type or nature, now existing or hereafter
created, of any Borrower, any Grantor, or any other Loan Party (as defined in
the Credit Agreement) or the "Lessee" or any
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"Guarantor" (each as defined in the Synthetic Lease Facility, to any Secured
Party, arising out of or represented by any Senior Credit Documents. Without
limiting the generality of the foregoing, the term "Secured Obligations" shall
include all amounts (including but not limited to post-petition interest) that
constitute part of the Secured Obligations and would be owed by any Person under
the Senior Credit Documents but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding.
"Secured Parties" shall mean collectively the Collateral
Agent, the Revolver Agent, the Synthetic Lease Facility Agent, the Lenders, the
Issuer (as defined in the Credit Agreement) the issuer of any Qualified Interest
Rate Hedge Agreement constituting a Senior Credit Document, the Synthetic Lease
Participants, indemnified parties named in the Credit Agreement and Synthetic
Lease Facility and any other Person designated as a "Secured Party" in a writing
signed jointly by the Revolver Agent and the Synthetic Lease Facility Agent and
delivered to the Collateral Agent, in each case together with their successors
and assigns.
"Senior Credit Documents" shall mean collectively the Credit
Agreement, each Note (as defined in the Credit Agreement), each Letter of Credit
issued thereunder, this Agreement, each Qualified Interest Rate Hedge Agreement
(as is defined in the Credit Agreement) which is designated as a "Senior Credit
Document" pursuant to the terms of the Collateral Agency Agreement, each of the
other Loan Documents (as defined in the Credit Agreement), the Synthetic Lease
Facility, the Guarantees, each of the other Synthetic Lease Facility Documents
and any other agreement or instrument designated as a "Senior Credit Document"
in a writing signed jointly by Genesis (on behalf of each Grantor), the
Synthetic Lease Facility Agent and the Revolver Agent and delivered to the
Collateral Agent, in each case, as amended from time to time.
"Synthetic Lease Facility Agent" shall mean Mellon Bank, N.A.
in its capacity as agent for the Synthetic Lease Participants under the
Synthetic Lease Facility Documents, and any successors or assigns in such
capacity.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the Commonwealth of Pennsylvania or such other state
Uniform Commercial Code as applies to the Liens hereunder, in each case, as
amended from time to time.
SECTION 2. CREATION OF SECURITY INTEREST
As security for the payment and performance in full of the
Secured Obligations, each Grantor hereby hypothecates, pledges, assigns, sets
over and delivers unto the Collateral Agent, and grants to the Collateral Agent,
for the equal (in priority) and ratable benefit of the Secured Parties, a
continuing first priority security interest in all its right, title and interest
in, to and under the Collateral, TO HAVE AND TO HOLD the Collateral, together
with all right, title, interest, powers, privileges and preferences pertaining
or incidental thereto, unto the Collateral Agent, its successors and assigns,
forever; subject, however, to the terms, covenants and conditions hereinafter
set forth and to the extent that a pledge of any Collateral
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was originally granted under the Amended and Restated Security Agreement, the
foregoing serves as a confirmation of such pledge.
SECTION 3. DELIVERY OF COLLATERAL
3.1 At Effective Date. Prior to the Effective Date (as defined
in the Credit Agreement), each Grantor shall deliver or cause to be delivered to
the Collateral Agent (i) any and all certificates and other instruments
representing or evidencing the Pledged Securities or Pledged Partnership
Interests, (ii) any and all other certificates and other instruments or
documents representing any of the Collateral and (iii) all other property
comprising part of the Collateral, in each case along with the Necessary
Endorsements. Each Grantor is, contemporaneously with the execution hereof,
delivering to Collateral Agent, or has previously delivered to Collateral Agent,
an original counterpart of each partnership agreement governing the Pledged
Partnership Interests and such UCC-1 financing statements as may be necessary to
perfect any Lien created hereunder. Further, each Grantor shall, on or prior to
the Effective Date, take any action that may be necessary to perfect any
security interest in any "uncertificated securities" as such term is used in the
relevant Uniform Commercial Code.
3.2 Subsequent Delivery of Collateral. Subject to the
provisions of Section 5 below, if after the Effective Date, a Grantor shall
become entitled to receive or shall receive any certificates or other
instruments (including, without limitation, instruments representing Pledged
Securities or Pledged Partnership Interests) in respect of the Collateral, such
Grantor agrees:
(i) to accept the same as the agent of the
Collateral Agent,
(ii) to segregate the same and hold it in trust on
behalf of and for the benefit of the Collateral Agent, and
(iii) to deliver the same to the Collateral Agent on
or before the close of business on the seventh (7th) Business Day following the
receipt thereof by such Grantor, in the exact form received together with the
Necessary Endorsements, to be held by the Collateral Agent subject to the terms
of this Agreement, as additional Collateral.
In addition, each Grantor shall (w) deliver to the Collateral Agent such updates
to the Schedules as may be necessary from time to time to maintain the accuracy
and completeness of the information on the Schedules, especially the list of
Collateral, (x) deliver to the Collateral Agent an original counterpart of each
additional partnership agreement governing the Pledged Partnership Interests as
it may obtain the same from time to time, (y) execute and deliver such
additional UCC-1 financing statements or continuation statements as may be
necessary to perfect and cause to stay perfected any Lien created hereunder from
time to time and (z) take any further action that may be necessary to perfect
any security interest in any "uncertificated securities" as such term is used in
the Uniform Commercial Code.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF GRANTORS
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4.1 Representations and Warranties. Each Grantor represents
and warrants that each representation and warranty set forth in the Senior
Credit Documents that relates to or refers to a Grantor or the Collateral
subject hereto (or, in either case, any other term that is used with the same or
similar meaning) is incorporated herein by reference and is true and correct on
and as of the date hereof. Without limiting the generality of the foregoing,
each Grantor further represents and warrants that
(i) except as set forth on Schedule III hereto (which
lists any consents required in connection with the execution, delivery and
performance of this Agreement), the Pledged Securities and the Pledged
Partnership Interests and other Collateral are not subject to any charter,
bylaw, statutory, contractual or other restriction governing their issuance,
transfer, ownership or control which restriction would limit the effectiveness
or enforceability of the Lien created under this Agreement;
(ii) the stock listed on Schedule I hereto represents
all of the stock held by each Grantor in any Borrower, Lessee or Lease
Guarantor;
(iii) the partnership interests listed on Schedule II
hereto represents all the partnership or other equity interests (except
interests constituting Pledged Securities) held by a Grantor in any Borrower,
Lessee or Lease Guarantor;
(iv) the chief executive office of each Grantor and
the other offices or places of business of each Grantor and any other offices
where records concerning the Collateral are kept are set forth on the signature
pages hereto;
(v) each Grantor is the legal and beneficial owner of
the Pledged Securities and Pledged Partnership Interests which are reflected as
owned by it on the schedules hereto, free and clear of any Lien except for the
security interests created by this Agreement; and
(vi) the pledge of the Pledged Securities and Pledged
Partnership Interests pursuant to this Agreement and the filing of the necessary
financing statements (which filings have been duly made) create a valid and
perfected first priority security interest in the Collateral securing payment of
the Secured Obligations. Without limiting the generality of the foregoing, all
necessary UCC-1 financing statement filing locations for each Grantor are set
forth on Schedule IV hereto.
4.2 Survival of Representations and Warranties. All the
foregoing representations and warranties (including, without limitation, those
incorporated by reference) shall survive the execution and delivery of this
Agreement and shall continue until this Agreement is terminated as provided
herein and shall not be affected or waived by any inspection or examination made
by or on behalf of Collateral Agent or any Security Party.
SECTION 5. VOTING; DIVIDENDS
5.1 Rights Prior To Default. Prior to the occurrence of an
Event of Default:
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(i) Each Grantor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of the Senior
Credit Documents;
(ii) Subject to and limited by the restrictions on
dividends and other payments in respect of the Collateral set forth in the
Senior Credit Documents, each Grantor shall be entitled to receive and retain
any and all dividends and other payments paid in respect of the Collateral,
provided, however, that any and all
(a) dividends or other payments paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed
in respect of, or in exchange for, any Collateral,
(b) dividends and other distributions paid
or payable in cash in respect of any Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(c) except as provided in clauses (d) and
(e) of Section 7.10 of the Credit Agreement cash paid, payable
or otherwise distributed in respect of principal of, or in
redemption of, or exchange for, any Collateral,
shall be forthwith delivered to the Collateral Agent to hold as Collateral and
shall, if received by a Grantor, be received in trust for the benefit of the
Collateral Agent on behalf of the Secured Parties, be segregated from the other
property or funds of such Grantor, and be forthwith delivered to the Collateral
Agent as Collateral in the same form as so received (with any Necessary
Endorsement); and
(iii) The Collateral Agent shall execute and deliver
to each Grantor all such proxies and other instruments as such Grantor may
reasonably request for the purpose of enabling such Grantor to exercise the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) above and to receive the dividends or payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
5.2 Rights After a Default. Upon the occurrence and during the
continuation of an Event of Default and as more fully set forth in Section 10
below,
(i) Upon notice from the Collateral Agent, all rights of a
Grantor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection 5.1 above and to
receive the dividends and other payments which it would otherwise be authorized
to receive and retain pursuant to subsection 5.1 above shall cease, and all such
rights shall thereupon become vested in the Collateral Agent who shall have the
sole right to exercise such voting and other consensual rights and to receive
and hold as Collateral such dividends and other payments.
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(ii) All dividends, interest and other payments which are
received by the Grantor contrary to the provisions of paragraph (i) of this
subsection 5.2 shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of each Grantor and shall forthwith
be paid over to the Collateral Agent as Collateral in the same form as so
received (with any Necessary Endorsements).
5.3 Liability of Collateral Agent and of Secured Party.
Nothing in this Agreement shall be construed to subject the Collateral Agent or
any Secured Party to liability as a partner in any partnership which constitutes
Collateral, nor shall the Collateral Agent or any Secured Party be deemed to
have assumed any obligations under any partnership agreement constituting or
related to Collateral or otherwise, nor shall the Collateral Agent or any
Secured Party be deemed to have assumed any obligations with respect to the
businesses of any Pledged Subsidiary unless and until the Collateral Agent
exercises its right to be substituted for a Grantor as a partner thereof
pursuant to the terms of this Agreement.
SECTION 6. COVENANTS OF GRANTORS
Each of the covenants and agreements which are set forth or
incorporated in the Senior Credit Documents and which are applicable or refer to
a Grantor or the Collateral subject hereto (or, in either case, any other term
that is used with the same or similar meaning) are incorporated herein by
reference and each Grantor agrees to perform and abide by each such covenant and
agreement. Without limiting the generality of the foregoing and in furtherance
thereof, each Grantor (i) shall vote the stock and securities included in the
Collateral to comply with the covenants and agreements set forth in the Senior
Credit Documents, (ii) shall cause each Pledged Subsidiary to restrict the
issuance of additional debt except as permitted in the Credit Agreement and
additional shares of stock or other ownership interests of its Subsidiaries (or
rights or options therefore) except as permitted in the Credit Agreement and, to
the extent required by the Credit Agreement, shall cause such stock or other
ownership interests to be pledged to the Collateral Agent hereunder; and (iii)
shall not sell or otherwise dispose of, or grant any option with respect to, any
of the Collateral except as permitted by the Credit Agreement.
SECTION 7. FURTHER ASSURANCES
Each Grantor agrees that at any time and from time to time, at
the expense of the Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT; MAY
PERFORM CERTAIN DUTIES
8.1 Appointment as Attorney-in-fact. Effective upon the
occurrence of an Event of Default, so long as such Event of Default is
continuing, each Grantor hereby appoints
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the Collateral Agent as its true and lawful agent, proxy, and attorney-in-fact
for the purpose of carrying out the terms and purposes of this Agreement and
taking any action and executing any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof including, without
limitation, the execution on behalf of each Grantor of any financing or
continuation statement with respect to the security interest created hereby and
the endorsement of any drafts or orders which may be payable to a Grantor in
respect of, arising out of, or relating to any or all of the Collateral. This
power shall be valid until the termination of the security interests created
hereunder, any limitation under law as to the length or validity of a proxy to
the contrary notwithstanding. This appointment is irrevocable and coupled with
an interest; upon an Event of Default and notice to a Grantor, any proxies
heretofore given by such Grantor to any other Person shall be immediately
revoked. The designation set forth herein shall be deemed to amend and supersede
any inconsistent provision in the articles of incorporation, bylaws or other
documents to which any Grantor or is subject or to which any is a party.
8.2 Registration of Securities. Each Grantor shall register,
or cause the registration of, the pledge of the shares included in the
Collateral in the name of the Collateral Agent on the books of the Grantor and
the relevant Pledged Subsidiary. Upon the occurrence and during the continuance
of an Event of Default, each Grantor shall at the direction of the Collateral
Agent register, or cause the registration of, the shares included in the
Collateral in the name of the Collateral Agent on the books of the Grantor and
the Pledged Subsidiary. After the Event of Default is cured or waived, such
shares shall be re-registered in the name of the Grantor.
8.3 Performance of Grantor's Duties. In furtherance, and not
by way of limitation, of the foregoing subsections 8.1 and 8.2, if (at any time
either before or after the occurrence of an Event of Default) a Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself perform
such agreement and any expenses incurred shall be payable by the Grantor
provided, however, that nothing herein shall be deemed to relieve a Grantor from
fulfilling any of its obligations hereunder.
8.4 Acts May Be Performed By Agents and Employees. Any act of
the Collateral Agent to be performed pursuant to this Section 8 or elsewhere in
this Agreement may be performed by agents or employees of the Collateral Agent.
SECTION 9. STANDARD OF CARE.
9.1 In General. No act or omission of any Secured Party (or
agent or employee thereof) shall give rise to any defense, counterclaim or
offset in favor of a Grantor or any claim or action against any such Secured
Party (or agent or employee thereof), in the absence of gross negligence or
willful misconduct of such Secured Party as determined in a final, nonappealable
judgment of a court of competent jurisdiction. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords to its own
property, it being understood that it has no duty to take any action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative
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to any Collateral or to preserve any rights of any parties and shall only be
liable for losses which are a result of it gross negligence or willful
misconduct as determined in a final, nonappealable judgment of a court of
competent jurisdiction.
9.2 Reliance on Advice of Counsel. The Collateral Agent may
consult with legal counsel (including in-house counsel for the Collateral Agent
or in-house or other counsel for any Secured Party), independent public
accountants and any other experts selected by it from time to time, and the
Collateral Agent shall not be liable for any action taken or omitted to be taken
in good faith by it in accordance with the advice of such counsel, accountants
or experts.
SECTION 10. DEFAULT
10.1 Certain Rights Upon Default. In addition to any
other rights accorded to the Collateral Agent and the Secured Parties hereunder,
upon the occurrence and during the continuation of an Event of Default under the
Credit Agreement or the Synthetic Lease Facility:
10.1.1 The Collateral Agent shall be entitled to
receive any distributions, cash dividends or other payments on or in respect of
the Collateral and to exercise in the Collateral Agent's sole discretion all
voting rights pertaining thereto as more fully set forth in Section 5 above.
Without limiting the generality of the foregoing, the Collateral Agent shall
have the right to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or any Grantor or any
Pledged Subsidiary.
10.1.2 Each Grantor shall take, and shall cause each
Pledged Subsidiary to take, any action necessary or required or requested by the
Collateral Agent in order to allow it fully to enforce the security interest in
the Collateral hereunder and to realize thereon to the fullest extent possible,
including, but not limited to, the filing of any claims with any court,
liquidator, trustee, guardian, receiver or other like person or party.
10.1.3 The Collateral Agent shall have all of the
rights of a secured party under the Uniform Commercial Code and any other
applicable law including the right to sell on such terms as it may deem
appropriate any or all of the Collateral at one or more public or private sales
upon at least ten (10) Business Days' written notice to the Grantors of the time
and place of any public sale and of the date on which the Collateral will first
be offered for sale in the case of any private sale. Collateral Agent shall have
the right to bid thereat or purchase any part or all the Collateral in its own
or a nominee's name. The Collateral Agent shall have the right to apply the
proceeds of the sale, after deduction for any costs and expenses of sale
(including any liabilities incurred in connection therewith including reasonable
attorneys' fees and allocated costs of attorneys who are employees of the
Collateral Agent), to the payment of the Secured Obligations in accordance with
the Collateral Agency Agreement, to the payment of any other amount required by
law (including without limitation Section 9-504(1)(c) of the Uniform Commercial
Code), and to pay any remaining proceeds to the applicable Grantor or its
respective successors or assigns or to whomsoever may lawfully be entitled to
receive the same
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or as a court of competent jurisdiction may direct, without further notice to or
consent of such Grantor and without regard to any equitable principles of
marshalling or other like equitable doctrines. Each Grantor hereby acknowledges
and agrees that the notice provided for above is reasonable and expressly waives
any rights it may have of equity of redemption, stay or appraisal with respect
to the Collateral.
10.1.4 The Collateral Agent shall have the right,
with full power of substitution either in the Collateral Agent's name or the
name of a Grantor, to ask for, demand, sue, collect and receive any and all
moneys due or to become due under and by virtue of the Collateral and to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, provided, however, that nothing herein shall be construed as requiring
the Collateral Agent to take any action, including, without limitation,
requiring or obligating the Collateral Agent to make any inquiry as to the
nature or sufficiency of any payment received, or to present or file any claim
or notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby.
10.1.5 The Collateral Agent shall be entitled to the
appointment of a receiver or trustee for all or any part of the businesses of
any Grantor or any or all of its Subsidiaries whose equity is pledged hereunder,
which receiver shall have such powers as may be conferred by law or the
appointing authority.
10.2 Collateral Agent May Exercise Less Than All Rights. Each
Grantor hereby acknowledges and agrees that the Collateral Agent is not required
to exercise all remedies and rights available to it equally with respect to all
of the Collateral, and the Collateral Agent may select less than all of the
Collateral with respect to which the remedies as determined by the Collateral
Agent may be exercised.
10.3 Duties of Grantors and Subsidiaries of the Grantors With
Respect to Transferee. In the event that, upon an occurrence of an Event of
Default, the Collateral Agent shall sell all or any of the Collateral to another
party or parties (herein called "Transferee") or shall purchase or retain all or
any of the Collateral, such Grantor shall, and shall cause each Pledged
Subsidiary to:
(i) Deliver to the Collateral Agent or Transferee, as
the case may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all other
documents and records of such Grantor and each Pledged Subsidiary, as
applicable;
(ii) Use its best efforts to obtain resignations of
the persons then serving as officers and directors of each such Grantor and
Pledged Subsidiary, if so requested; and
(iii) Use its best efforts to obtain any approvals
that are required by any Licensing Authority in order to permit the sale of the
Collateral to the Transferee or the
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purchase or retention of the Collateral by the Collateral Agent and allow the
Transferee or the Collateral Agent to continue the business of the issuer.
SECTION 11. ACKNOWLEDGEMENT OF REGULATORY CONSIDERATIONS;
UNIQUE NATURE OF ASSETS.
11.1 Licensing Authority Approval. It is hereby acknowledged
that a sale of certain Collateral may require approval of a Licensing Authority,
pursuant to the rules and regulations of such Licensing Authority.
11.2 Grantor and Subsidiary of Grantor Assistance in Obtaining
Approval. Without limiting the generality of the provisions of the preceding
Section 11.1 or Section 7 above, if the Collateral Agent or counsel to the
Collateral Agent reasonably determines that the consent of a Licensing Authority
is required in connection with any of the actions hereunder or under any other
Senior Credit Document, then each Grantor (at its cost and expense) agrees to
use, and to cause each Pledged Subsidiary to use, its best efforts to secure
such consent and to cooperate fully with the Collateral Agent in any action to
secure such consent. Without limiting the generality of the foregoing each
Grantor shall, and shall cause each Pledged Subsidiary to, promptly execute and
file and/or cause the execution and filing of all applications, certificates,
instruments, and other documents and papers that the Collateral Agent deems
necessary or advisable to file in order to obtain any necessary governmental
consent, approval, or authorization, and if any Grantor or any Pledged
Subsidiary thereof fails or refuses to execute (or fails or refuses to cause
another Person to execute) such documents, the Collateral Agent or the clerk of
any court of competent jurisdiction may execute and file the same on behalf of
the Grantor or such other Person.
11.3 Unique Nature of Assets. It is agreed that the licenses,
permits and other authorizations granted by various Licensing Authorities and
held by the Grantors and the Pledged Subsidiaries are unique assets which (or
the control of which) may have to be transferred in order for the Collateral
Agent adequately to realize the value of its security interest. A violation of
the covenants set forth in this Section would result in irreparable harm to the
Collateral Agent for which monetary damages are not readily ascertainable.
Therefore, in addition to any other remedy which may be available to the
Collateral Agent at law or in equity, Collateral Agent shall have the remedy of
specific performance of the provisions of this Section. To enforce the
provisions of this Section, the Collateral Agent is authorized to request the
consent or approval of any Licensing Authority to a voluntary or an involuntary
transfer of control of any license, permit or other authorization or sale or
transfer of control of any Person including a Pledged Subsidiary holding the
same.
SECTION 12. SECURITIES LAW PROVISION
Each Grantor recognizes that the Collateral Agent may be
limited in its ability to effect a sale to the public of all or part of the
Collateral by reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively, the
"Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Collateral for their own account, for
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investment and not with a view to the distribution or resale thereof. Each
Grantor agrees that sales so made may be at prices and on terms less favorable
than if the Collateral were sold to the public, and that the Collateral Agent
has no obligation to delay the sale of any Collateral for the period of time
necessary to register the Collateral for sale to the public under the Securities
Laws. Each Grantor agrees that negotiated sales made under the foregoing
circumstances, whether on cash or credit terms, shall be deemed to have been
made in a commercially reasonable manner. Each Grantor and each Subsidiary
thereof shall cooperate with the Collateral Agent in its attempts to satisfy any
requirements under the Securities Laws (including without limitation
registration thereunder if requested by Collateral Agent) applicable to the sale
of the Collateral by the Collateral Agent.
SECTION 13. SECURITY INTEREST ABSOLUTE; WAIVERS BY GRANTOR
13.1 Absolute Nature of Security Interest. All rights of the
Collateral Agent hereunder, the grant of the security interest in the Collateral
and all obligations of each Grantor hereunder, shall be absolute and
unconditional irrespective of (without duplication) (i) any lack of validity or
enforceability of any of the terms of the Senior Credit Documents or any other
instrument or document relating hereto or thereto, (ii) any increase in the
amount of the Secured Obligations or any other change in the time, manner or
place of payment of, or in any other term of, all or any of the Secured
Obligations (including, without limitation, any extension of any payment date),
or any other amendment or waiver of any terms related thereto, (iii) any
exchange, release or nonperfection of any other collateral, or any release or
amendment or waiver of any guaranty, or (iv) any change in the Persons who
constitute Borrowers or Lease Guarantors, or (v) any other circumstance (besides
the payment of the Secured Obligations) which might otherwise constitute a
defense available to, or a discharge of, any Borrower, any Lease Guarantor, any
Grantor or any other Person in respect of the Secured Obligations or in respect
of this Agreement or any other Senior Credit Document or any obligations
hereunder or thereunder.
13.2 No Duty To Marshal Assets. The Collateral Agent shall
have no obligation to marshal any assets in favor of any Grantor or any other
Person or against or in payment of any or all of the Secured Obligations.
13.3 Waiver with Right of Subrogation, Etc. Each Grantor
acknowledges that until all the Secured Obligations shall have been indefeasibly
paid in full, such Grantor shall have no right (or hereby waives any such right)
of subrogation, reimbursement, or indemnity whatsoever, in respect of any
Borrower or any Lease Guarantor or any other Person, arising out of remedies
exercised by the Collateral Agent hereunder.
13.4 Waivers. Each Grantor hereby waives notice of acceptance
of this Agreement. Each Grantor further waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of dishonor or
default with respect to any of the Secured Obligations, and all other notices to
which a Grantor might otherwise be entitled, except as otherwise expressly
provided in this Agreement or any of the other Senior Credit Documents. Each
Grantor (to the extent that it may lawfully do so) covenants that it shall not
at any time insist upon or plead, or in any manner claim or take the benefit of,
any stay, valuation, appraisal
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<PAGE>
or redemption now or at any time hereafter in force that, but for this waiver,
might be applicable to any sale made under any judgment, order or decree based
on this Agreement or any other Senior Credit Document; and each Grantor (to the
extent that it may lawfully do so) hereby expressly waives and relinquishes all
benefit of any and all such laws and hereby covenants that it will not hinder,
delay or impede the execution of any power in this Agreement or in any other
Senior Credit Document delegated to the Collateral Agent, but that it will
suffer and permit the execution of every such power as though no such law or
laws had been made or enacted.
SECTION 14. NON-WAIVER AND NON-EXCLUSIVE REMEDIES
14.1 Non-Exclusive Remedies. No remedy or right herein
conferred upon, or reserved to the Collateral Agent is intended to be to the
exclusion of any other remedy or right, but each and every such remedy or right
shall be cumulative and shall be in addition to every other remedy or right
given hereunder or under any other Senior Credit Document or under law.
14.2 Delay and Non-Waiver. No delay or omission by the
Collateral Agent to exercise any remedy or right hereunder shall impair any such
remedy or right or shall be construed to be a waiver of any Event of Default, or
an acquiescence therein, nor shall it affect any subsequent Event of Default of
the same or of a different nature.
SECTION 15. CONTINUING SECURITY INTEREST; HEIRS AND ASSIGNS.
This Agreement shall create a continuing security interest in
the Collateral and shall (i) remain in full force and effect until terminated
pursuant to Section 16 below, (ii) be binding upon each Grantor, its successors
and assigns and (iii) inure to the benefit of the Collateral Agent, the other
Secured Parties and their respective successors, transferees and assigns
provided, however, that no Grantor shall be permitted to transfer any of its
obligations hereunder.
SECTION 16. TERMINATION OF AGREEMENT; RELEASE OF COLLATERAL
16.1 Termination of Agreement; Complete Release of Collateral.
At such time as (a) Lenders have no obligations to make further fundings to the
Borrower under the terms of the Credit Agreement, the Issuer has no obligations
to provide additional letters of credit under the Credit Agreement, the
Synthetic Lease Participants have no obligations to make further fundings under
the Synthetic Lease Facility Documents and the Lessor has no obligation to
advance additional funds to Lessee under the Synthetic Lease Facility and (b)
all the Secured Obligations have been indefeasibly paid and/or performed in
full, then this Agreement shall terminate and the Collateral shall be released
pursuant to Section 16.2.
16.2 Duties of Collateral Agent With Respect To Complete
Release of Collateral. When this Agreement terminates pursuant to subsection
16.1 above, the Collateral Agent shall assign and deliver to each Grantor, or to
such Person as each Grantor shall designate, against receipt, such of the
Collateral (if any) as shall not have been sold or otherwise applied by the
Collateral Agent pursuant to the terms hereof and shall still be held by it
hereunder, together with appropriate instruments of reassignment and release,
all without any
15
<PAGE>
recourse to, or warranty whatsoever by, the Collateral Agent, at the sole cost
and expense of the Grantors.
16.3 Partial Release of Certain Collateral; Duties of
Collateral Agent With Respect Thereto. Effective upon (a) the closing of a sale
of any Collateral in conformity with the provisions of clause (e) of Section
7.10 of the Credit Agreement (or, if the Credit Agreement is not then in effect,
in accordance with such provisionsn or any equivalent provisions of the "Credit
Agreement" as defined in the Participation Agreement) and receipt by the
Collateral Agent of a certification to such effect from the chief financial
officer of Genesis or (b) the designation by Genesis of a Pledged Subsidiary as
a "Non-Material Restricted Subsidiary" or an "Unrestricted Entity" under the
provisions of clause (e) of Section 7.6 of the Credit Agreement (or, if the
Credit Agreement is not then in effect, in accordance with such provisions or
any equivalent provisions of the "Credit Agreement" as defined in the
Participation Agreement), then the security interest in the assets which are the
subject of the sale or the designation and all proceeds thereof (the "Released
Collateral") shall terminate. The Collateral Agent shall thereupon reassign and
deliver to the applicable Grantor, or to such Person as such Grantor shall
designate, against receipt, the Released Collateral, together with appropriate
instruments or reassignment and release, all without any recourse to, or
warranty whatsoever by, the Collateral Agent, at the sole cost and expense of
the Grantors.
16.4 No Action Inconsistent with Collateral Agency Agreement.
The Collateral Agent shall not release any Collateral or take any other action
under this Section 16 unless the Collateral Agent is permitted to do so under
the Collateral Agency Agreement.
SECTION 17. PAYMENT OF COSTS AND EXPENSES; INDEMNITIES
17.1 Payment of Costs and Expenses. Upon demand, Genesis and
each other Grantor shall pay to the Collateral Agent the amount of any and all
reasonable expenses incurred by the Collateral Agent hereunder or in connection
herewith, including, without limitation those that may be incurred in connection
with (i) the administration of this Agreement (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure of a Grantor to perform or
observe any of the provisions hereof.
17.2 Fees. The Grantors agree, upon demand, to pay to the
Collateral Agent such reasonable fees (in addition to its expenses) for its
services as the Collateral Agent as may be agreed upon from time to time between
the Collateral Agent and the Grantors.
17.3 Indemnification. The Grantors agree to indemnify and hold
harmless the Collateral Agent and other Secured Parties (and, in each case, its
directors, officers, agents and employees) to the fullest extent permitted by
law, from and against any and all claims, losses, liabilities, actions,
judgments, demands, costs and expenses of whatever nature incurred by the
Collateral Agent or such Secured Party hereunder or in connection herewith,
unless such claim, loss, liability, action, judgment, demand, cost or expense is
the result of the willful misconduct or gross negligence of said indemnified
party as shall have been determined in a final, nonappealable judgment of a
court of competent jurisdiction.
16
<PAGE>
17.4 Taxes. The Grantors hereby jointly and severally agree to
pay to the Collateral Agent, upon demand, the amount of any taxes which the
Collateral Agent may have been required to pay by reason of the security
interests established pursuant to this Agreement (including any applicable
transfer taxes).
17.5 Interest. All monetary obligations of the Grantors under
this Section 17 shall bear interest following demand at the Prime Rate (as
defined in the Credit Agreement) plus two (2) percent.
17.6 Additional Obligations. Any amounts payable pursuant to
this Section 17 shall be additional Secured Obligations secured hereby.
SECTION 18. MISCELLANEOUS PROVISIONS
18.1 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") under this Agreement shall be in
writing (including facsimile communication) and shall be sent by first-class
mail, return receipt requested, or by nationally-recognized overnight courier,
or by facsimile transmission (with confirmation in writing mailed first class or
sent by such an overnight courier) or by personal delivery. All notices shall be
sent to the applicable party at its respective address or telephone or facsimile
number indicated on the signature pages hereof or in accordance with the last
unrevoked written direction from such party to the other parties hereto, in all
cases with postage or other charges prepaid. Any such properly given notice to
the Collateral Agent or other Secured Party shall be effective when received.
Any such properly given notice to any other party shall be effective on the
earliest to occur of receipt, facsimile confirmation, one Business Day after
delivery to a nationally-recognized overnight courier, or three Business Days
after deposit in the mail.
Any Grantor giving any notice to any Secured Party
shall simultaneously send a copy thereof to the Collateral Agent, and the
Collateral Agent shall promptly notify the other Secured Parties of the receipt
by it of any such notice.
Each Secured Party may rely on any notice (whether or
not such notice is made in a manner permitted or required by this Agreement)
purportedly made by or on behalf of any party hereto and no Secured Party shall
have any duty to verify the identity or authority of any Person giving such
notice.
18.2 Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, inducements or conditions, express or implied,
oral or written, with respect thereto, except as contained or referred to
herein.
18.3 Amendments. The terms of this Agreement may be amended,
terminated, modified, supplemented or waived only upon the written consent of
the Collateral Agent and each Grantor.
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<PAGE>
18.4 Joinder of Additional Grantors. Any Person that from time
to time shall have an interest in any Pledged Subsidiary shall become a
"Grantor" hereunder with all rights and obligations of a "Grantor" hereunder as
if such Person had been an original signatory hereto by signing a Joinder in the
form specified in the Credit Agreement or by signing such other joinder document
as shall be acceptable to the Collateral Agent. Without limiting the generality
of the foregoing, upon signing such joinder, all interests of such joining
Grantor in any Pledged Subsidiary shall be Collateral hereunder securing the
Secured Obligations.
18.5 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed and enforced in
accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania, without regard to the laws as to conflict of laws.
18.6 Jurisdiction; Waiver of Jury Trial.
18.6.1 Certain Grantor Waivers. EACH OF THE GRANTORS
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF CONTRACT,
TORT OR ANY OTHER THEORY OF LIABILITY) (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY OR PHILADELPHIA COUNTY,
PENNSYLVANIA, SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE
FULLEST EXTENT PERMITTED BY LAW AGREES THAT, TO THE EXTENT THAT ANY
SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL JURISDICTION OVER THE
PARTY AGAINST WHICH SUCH BORROWER IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY SECURED PARTY TO
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM);
(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT,
WAIVES ANY CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO
ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES
NOT HAVE JURISDICTION OVER SUCH BORROWER;
(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY
REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO SUCH
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GRANTOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 18.1 HEREOF,
AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER
PERMITTED BY LAW); AND
(iv) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
18.6.2 Certain Secured Party Waivers. EACH OF THE SECURED
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY RELATED LITIGATION.
18.6.3 Limitation of Liability. TO THE FULLEST EXTENT
PERMITTED BY LAW, NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST ANY SECURED PARTY
OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY OF THEM
FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM ARISING FROM OR RELATING TO ANY RELATED LITIGATION. EACH OF
THE GRANTORS HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR
ANY SUCH DAMAGES, WHETHER SUCH CLAIM PRESENTLY EXISTS OR ARISES HEREAFTER AND
WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. NO PARTY
HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS
OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
18.7 Severability. If any of the provisions or terms of this
Agreement shall for any reason be held to be invalid or unenforceable such
invalidity or unenforceability shall not affect any of the other terms hereof,
but this Agreement shall be construed as if such invalid or unenforceable term
had never been contained herein. Any such invalidity or unenforceability in a
particular jurisdiction shall not be deemed to render a provision invalid or
unenforceable in any other jurisdiction.
18.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original agreement, but all
of which together shall constitute one and the same instrument. A faxed
signature shall be sufficient for all purposes.
18.9 Certain Grantor Consents. To the extent that the grant of
the security interest herein created in the Collateral and the enforcement of
the terms hereof require the consent, approval or action of any partner,
shareholder or equity owner of any Pledged Subsidiary or compliance with any
provisions of the subject partnership, shareholder or other agreement, each
Grantor (in every legal capacity) hereby grants such consent and approval and
waives any such noncompliance with the terms of said partnership, shareholder or
other agreement.
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18.10 Collateral Agency Agreement. The Collateral Agent's
performance of its duties hereunder shall in all respects be subject to and
governed by the Collateral Agency Agreement. Nothing contained herein shall be
construed to enlarge the degree of responsibility, discretion and duty of care
to be exercised by the Collateral Agent beyond those expressly set forth in the
Collateral Agency Agreement.
18.11 Joint and Several Liability. All Grantors shall jointly
and severally be liable for the obligations of each Grantor to the Collateral
Agent hereunder. To the extent that such obligations are coextensive with
obligations of the Borrowers, the Lease Guarantors or any other Person, the
Grantors shall be jointly and severally liable with the Borrowers, the Lease
Guarantors and/or such other Persons.
18.12 Effectiveness of Agreement. This Agreement shall become
effective on and as of the Effective Date, at which time the terms and
conditions set forth in the Amended and Restated Security Agreement shall be
deemed to be superseded (other than any provisions therein respecting
indemnification, which terms shall survive the Effective Date) by the terms and
conditions hereof. Until the Effective Date, or if there is no Effective Date
prior to December 31, 1996, the Amended and Restated Security Agreement shall
remain in full force and effect and is hereby ratified.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their respective authorized officers on the
date first above written.
GRANTORS:
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
By_________________________________
Title: Associate General Counsel
and Secretary
Address for notices:
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and Chief
Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
BREVARD MERIDIAN LIMITED
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PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
EDELLA STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS PROPERTIES LIMITED
PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HAMMONDS LANE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
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<PAGE>
MERIDIAN/CONSTELLATION LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
general partner
MERIDIAN EDGEWOOD LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN PERRING LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MILLVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, its
sole general partner
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp., its
sole general partner
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its sole general partner
SEMINOLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
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Pennsylvania corporation, its
sole general partner
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: State Street Associates, Inc.
its sole general partner
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Genesis Eldercare
Rehabilitation Services, Inc.
its sole general partner
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its sole
general partner
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, and
Meridian Healthcare, Inc., a
Pennsylvania corporation, its
general partners
By:_________________________________________
On behalf of each of the foregoing
as Associate General Counsel
and Secretary of the general
partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
24
<PAGE>
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICIAN
SERVICES, INC.,
a Pennsylvania corporation
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
25
<PAGE>
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
GENESIS ELDERCARE STAFFING SERVICES
INC.
a Pennsylvania corporation
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION
SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
WYNCOTE HEALTHCARE CORP.
a Pennsylvania corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER, INC.,
26
<PAGE>
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS, INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
PROFESSIONAL PHARMACY SERVICES,
INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
DERBY NURSING CENTER CORPORATION,
27
<PAGE>
a Connecticut Corporation
GENESIS ELDERCARE NATIONAL
CENTERS, INC.,
a Florida Corporation
GENESIS ELDERCARE NETWORK SERVICES, INC.,
a Pennsylvania Corporation
GENESIS ELDERCARE PROPERTIES, INC.,
a Pennsylvania Corporation
OAK HILL HEALTH CARE CENTER, INC.,
a Virginia Corporation
VERSALINK, INC.,
a Delaware Corporation
By:___________________________________
On behalf of each of the foregoing
as Associate General Counsel
and Secretary
MELLON BANK, N.A., as Collateral Agent
By____________________________________
Title: Vice President
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, PA 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, PA 19101-7899
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<PAGE>
Attention: Linda Sigler,
Loan Administration
Telephone: 215-553-4583
Facsimile: 215-553-4789
With a copy to
Plymouth Meeting Executive Campus
610 W. Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: 610-941-8409
Facsimile: 610-941-4136
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<PAGE>
Schedule I
TO PLEDGE AGREEMENT
Pledged Securities
<PAGE>
Schedule II
TO PLEDGE AGREEMENT
Pledged Partnership Interests
<PAGE>
Schedule III
TO PLEDGE AGREEMENT
Required Consents
<PAGE>
Schedule IV
TO PLEDGE AGREEMENT
UCC Filing Locations
<PAGE>
Exhibit D
Transfer Supplement
THIS TRANSFER SUPPLEMENT, dated as of the date specified in
Item 1 of Schedule I hereto, among the Transferor Lender specified in Item 2 of
Schedule I hereto (the "Transferor Lender"), each Purchasing Lender specified in
Item 3 of Schedule I hereto (each a "Purchasing Lender") and MELLON BANK, N.A.,
as Agent under the Credit Agreement described below.
Recitals:
A. This Transfer Supplement is being executed and delivered in
accordance with Section 10.15(c) of the Second Amended and Restated Credit
Agreement, dated as of _____________, 1996, by and among Genesis Health
Ventures, Inc., a Pennsylvania corporation ("Genesis"), the Subsidiaries of
Genesis parties thereto as Borrowers (collectively with Genesis, the
"Borrowers"), the Lenders parties thereto from time to time, Mellon Bank, N.A.
as the Issuer of Letters of Credit thereunder, Mellon Bank, N.A. as Agent for
such Lenders and Issuer and Citibank, N.A. as Co-Syndication Agent and certain
other Co-Agents referred to therein (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"). Capitalized terms used
herein without definition have the meaning specified in the Credit Agreement.
B. Each Purchasing Lender (if it is not already a Lender)
wishes to become a Lender party to the Credit Agreement.
C. The Transferor Lender is selling and assigning to each
Purchasing Lender, and each Purchasing Lender is purchasing and assuming, a
certain portion of the Transferor Lender's rights and obligations under the
Credit Agreement, including, without limitation, the Transferor Lender's
Commitments and Loans and Reimbursement Obligations owing to it and any Notes
held by it (the "Transferor Lender's Interests").
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Transfer Effective Notice. Upon receipt by the Agent of
five counterparts of this Transfer Supplement (to each of which is attached a
fully completed Schedule I and Schedule II), each of which has been executed by
the Transferor Lender, by each Purchasing Lender and by any other Person
required by Section 10.15(c) of the Credit Agreement to execute this Transfer
Supplement, the Agent will transmit to Genesis (on behalf of the Borrowers), the
Transferor Lender and each Purchasing Lender a transfer effective notice,
substantially in the form of Schedule III to this Transfer Supplement (a
"Transfer Effective Notice"). The date specified in such Transfer Effective
Notice as the
-1-
Form of Transfer Agreement
<PAGE>
date on which the transfer effected by this Transfer Supplement shall become
effective (the "Transfer Effective Date") shall be the fifth Business Day
following the date of such Transfer Effective Notice or such other date as shall
be agreed upon among the Transferor Lender, the applicable Purchasing Lender,
the Agent and Genesis. From and after the close of business at the Agent's
Office on the Transfer Effective Date each Purchasing Lender (if not already a
Lender party to the Credit Agreement) shall be a Lender party to the Credit
Agreement for all purposes thereof having the respective interests in the
Transferor Lender's interests reflected in this Transfer Supplement.
2. Purchase Price; Sale. At or before 12:00 o'clock Noon,
local time at the Transferor Lender's office specified in Schedule III, on the
Transfer Effective Date, each Purchasing Lender shall pay to the Transferor
Lender, in immediately available funds, an amount equal to the purchase price,
as agreed between the Transferor Lender and such Purchasing Lender (the
"Purchase Price"), of the portion being purchased by such Purchasing Lender
(such Purchasing Lender's "Purchased Percentage") of the Transferor Lender's
Interests. Effective upon receipt by the Transferor Lender of the Purchase Price
from a Purchasing Lender, the Transferor Lender hereby irrevocably sells,
assigns and transfers to such Purchasing Lender, without recourse,
representation or warranty (express or implied) except as set forth in Section 6
hereof, and each Purchasing Lender hereby irrevocably purchases, takes and
assumes from the Transferor Lender such Purchasing Lender's Purchased Percentage
of the Transferor Lender's Interests. The Transferor Lender shall promptly
notify the Agent of the receipt of the Purchase Price from a Purchasing Lender
("Purchase Price Receipt Notice"). Upon receipt by the Agent of such Purchase
Price Receipt Notice, the Agent shall record in its register the information
with respect to such sale and purchase as contemplated by Section 10.15(d) of
the Credit Agreement.
3. Principal, Interest and Fees. All principal, interest, fees
and other amounts that would otherwise be payable from and after the Transfer
Effective Date to or for the account of the Transferor Lender in respect of the
Transferor Lender's Interests shall, instead, be payable to or for the account
of the Transferor Lender and the Purchasing Lenders, as the case may be, in
accordance with their respective interests as reflected in this Transfer
Supplement.
4. Closing Documents. Concurrently with the execution and
delivery hereof, the Transferor Lender will request that Genesis provide to each
Purchasing Lender (if it is not already a Lender party to the Credit Agreement)
conformed copies of all documents delivered to such Transferor Lender on the
Effective Date in satisfaction of conditions precedent set forth in the Credit
Agreement.
5. Further Assurances. Each of the parties to this Transfer
Supplement agrees that at any time and from time to time upon the written
request of any other party, it will execute and deliver such further documents
and do such further acts and things as such
-2-
Form of Transfer Agreement
<PAGE>
other party may reasonably request in order to effect the purposes of this
Transfer Supplement.
6. Certain Representations and Agreements. By executing and
delivering this Transfer Supplement, the Transferor Lender and each Purchasing
Lender confirm to and agree with each other and the Agent and the other Lender
Parties as follows:
(a) Other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned hereby free
and clear of any adverse claim, the Transferor Lender makes no
representation or warranty and assumes no responsibility with respect
to (i) the execution, delivery, effectiveness, enforceability,
genuineness, validity or adequacy of the Credit Agreement or any other
Loan Document, (ii) any recital, representation, warranty, document,
certificate, report or statement in, provided for in, received under or
in connection with, the Credit Agreement or any other Loan Document, or
(iii) the existence, validity, enforceability, perfection, recordation,
priority, adequacy or value, now or hereafter, of any Lien or other
direct or indirect security afforded or purported to be afforded by any
of the Loan Documents or otherwise from time to time.
(b) The Transferor Lender makes no representation or warranty
and assumes no responsibility with respect to (i) the performance or
observance of any of the terms or conditions of the Credit Agreement or
any other Loan Document on the part of any Loan Party, (ii) the
business, operations, condition (financial or otherwise) or prospects
of any Loan Party or any other Person, or (iii) the existence of any
Event of Default or Potential Default.
(c) Each Purchasing Lender confirms that it has received a
copy of the Credit Agreement and each of the other Loan Documents,
together with copies of such other documents and information as it has
deemed appropriate to make its own credit and legal analysis and
decision to enter into this Transfer Supplement. Each Purchasing Lender
confirms that it has made such analysis and decision independently and
without reliance upon the Agent, the Transferor Lender or any other
Lender Party.
(d) Each Purchasing Lender, independently and without reliance
upon the Agent, the Transferor Lender or any other Lender Party, and
based on such documents and information as it shall deem appropriate at
the time, will make its own decisions to take or not take action under
or in connection with the Credit Agreement or any other Loan Document.
(e) Each Purchasing Lender irrevocably appoints the Agent
to act as Agent for such Purchasing Lender under the Credit Agreement
and the other Loan
-3-
Form of Transfer Agreement
<PAGE>
Documents, all in accordance with Article 9 of the Credit Agreement and
the other provisions of the Credit Agreement and the other Loan
Documents.
(f) Each Purchasing Lender agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of the Credit Agreement and the other Loan Documents are required to be
performed by it as a Lender.
(g) THE PURCHASING LENDER IS CONCURRENTLY PURCHASING
AN EQUIVALENT PORTION OF TRANSFEROR'S RIGHTS AND OBLIGATIONS
UNDER THE SYNTHETIC LEASE FACILITY DOCUMENTS.
(h) This transfer complies with the limitations set forth in
Section 10.15 of the Credit Agreement including the minimum retention and
assignment amounts and all fees (including the recordation fee) payable to the
Agent have been, or on or before the Transfer Effective Date, will have been
paid.
7. Schedule II. Schedule II hereto sets forth the revised
Commitments of the Transferor Lender and each Purchasing Lender as well as
administrative information with respect to each Purchasing Lender.
8. Governing Law. This Transfer Supplement shall be governed
by, and construed and enforced in accordance with, the laws of the Commonwealth
of Pennsylvania, without regard to principles of choice of law.
9. Counterparts. This Transfer Supplement may be executed on
any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
-4-
Form of Transfer Agreement
<PAGE>
Schedule I to Transfer Supplement
Completion of Information and
Signatures for Transfer Supplement
Re: Second Amended and Restated Credit Agreement, dated as of _____________,
1996, by and among Genesis Health Ventures, Inc., a Pennsylvania
corporation ("Genesis"), the Subsidiaries of Genesis parties thereto as
Borrowers (collectively with Genesis, the "Borrowers"), the Lenders parties
thereto from time to time, Mellon Bank, N.A. as the Issuer of Letters of
Credit thereunder, Mellon Bank, N.A. as Agent for such Lenders and Issuer,
Citibank, N.A. as Co-Syndication Agent and certain other Co-Agents referred
to therein (as the same may be amended, modified or supplemented from time
to time, the "Credit Agreement")
Item 1 (Date of [Insert date of
Transfer Supplement): Transfer Supplement]
Item 2 (Transferor Lender): [Insert name of Transferor
Lender]
Item 3 (Purchasing Lender[s]): [Insert name[s] of
Purchasing Lender[s]]
Item 4 (Signatures of Parties
to Transfer Supplement):
[Name of Transferor Lender] ,
------------------------------------------
as Transferor Lender
By:
--------------------------------------
Title:
[Name of Purchasing Lender] ,
------------------------------------------
as Purchasing Lender
By:
---------------------------------------
Title:
-5-
Form of Transfer Agreement
<PAGE>
[Add signature lines for additional
Purchasing Lenders as needed]
-6-
Form of Transfer Agreement
<PAGE>
[The following consents are required only when the Purchasing Lender is not
already a Lender or an Affiliate of a Lender, and then only to the extent
specified in Section 10.15(c) of the Credit Agreement]
CONSENTED TO AND ACKNOWLEDGED:
GENESIS HEALTH VENTURES, INC.
By:
-----------------------------------
Title:
MELLON BANK, N.A., as Agent and as Issuer
By:
----------------------------------
Title:
ACCEPTED FOR RECORDATION
IN THE REGISTER:
MELLON BANK, N.A., as Agent
By:
----------------------------------
Title:
-7-
Form of Transfer Agreement
<PAGE>
Schedule II to Transfer Supplement
List of Lending Offices, Addresses
for Notices and Committed Amounts
[Name of Transferor
Lender]
Revised Commitment: $
-------------------
Revised Commitment Percentage: --------%
[Name of Purchasing
Lender]
New* Commitment: $
--------------------
New* Commitment Percentage: ---------%
Administrative Information
for Purchasing Lender:
Address:
------------------------------
------------------------------
------------------------------
Attention:
---------------------------
Telephone:
---------------------------
Facsimile:
---------------------------
[Add information for additional
Purchasing Lenders as needed]
- --------
* or, in the case of a Purchasing Lender which is already a Lender, Revised]
-8-
Form of Transfer Agreement
<PAGE>
Schedule III to Transfer Supplement
Transfer Effective Notice
To: Genesis Health Ventures, Inc.
[Insert Name of Transferor
Lender and each Purchasing Lender]
The undersigned, as Agent under the Second Amended and
Restated Credit Agreement, dated as of _______________, 1996, by and among
Genesis Health Ventures, Inc., a Pennsylvania corporation, the Subsidiaries of
Genesis parties thereto as Borrowers (collectively with Genesis, the
"Borrowers"), the Lenders parties thereto from time to time, Mellon Bank, N.A.
as the Issuer of Letters of Credit thereunder, Mellon Bank, N.A. as Agent for
such Lenders and Issuer, Citibank, N.A. as Co-Syndication Agent and certain
other Co-Agents referred to therein (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"), acknowledges receipt of
five executed counterparts of a completed Transfer Supplement, dated __________,
_______, from [name of Transferor Lender] to [name of each Purchasing Lender]
(the "Transfer Supplement"). Terms defined in the Transfer Supplement are used
herein as therein defined.
1. Pursuant to the Transfer Supplement, you are advised that
the Transfer Effective Date will be________________________, ___________.
[Insert fifth Business Day following date of Transfer Effective Notice or other
date agreed to among the Transferor Lender, the applicable Purchasing Lender,
the Agent and Genesis.]
2. Pursuant to Section 10.15(c) of the Credit Agreement, the
Transferor Lender has delivered to the Agent the Transferor Lender Notes.
3. Section 10.15(c) of the Credit Agreement provides that each
Borrower is to deliver to the Agent on or before the Transfer Effective Date the
following Notes, each dated the date of the Note it replaces: [Describe each new
Note for Transferor Lender and Purchasing Lender as to date (as required by the
Credit Agreement), principal amount and payee.]
4. The Transfer Supplement provides that each Purchasing
Lender is to pay its Purchase Price to the Transferor Lender at or before 12:00
o'clock Noon, local time at the Transferor Lender's lending office specified in
Schedule II to the Transfer Supplement, on the Transfer Effective Date in
immediately available funds.
Very truly yours,
MELLON BANK, N.A., as Agent
By:
------------------------------
Title:
-9-
Form of Transfer Agreement
<PAGE>
Exhibit E
Additional Borrower/Grantor Joinder Supplement
___________________, 199_
To: Each of the Lander Parties Under the
Credit Agreement Referred to Below
Reference is hereby made to the Second Amended and Restated
Credit Agreement dated as of ____________, 1996 by and among Genesis Health
Ventures, Inc., a Pennsylvania corporation ("Genesis") and certain of the
subsidiaries of Genesis jointly and severally as Borrowers, the Lenders party
thereto from time to time, Mellon Bank, N.A. as the Issuer of Letters Credit
thereunder, Mellon Bank, N.A. as Agent for such Lenders and such Issuer and
Citibank, N.A. as Co-Syndication Agent and the other Co-Agents named therein (as
it may be amended, modified or supplemented from time to time, the "Credit
Agreement"). Capitalized terms used in this Additional Borrower/Grantor Joinder
Supplement (this "Joinder Supplement") and not otherwise defined shall have the
meanings given to them in the Credit Agreement.
The undersigned [entity (the "Joining Subsidiary") hereby
acknowledge, confirms and agrees] [entities (each, a "Joining Subsidiary")
hereby jointly and severally acknowledge, confirm and agree] that on and as of
the date of this Joinder Supplement, [such Joining Subsidiary] [each of such
Joining Subsidiaries] has become, and is, a "Borrower" under the Credit
Agreement, a "Grantor" under the Collateral Agency Agreement and the Pledge
Agreement, and a comparable party to each other applicable Loan Document for all
purposes, and as such shall be jointly and severally liable, as provided in the
Loan Documents, for all Loan Obligations thereunder and all Collateral Agent
Obligations under and as defined in the Collateral Agency Agreement (in each
case whether incurred or arising prior to, on, or subsequent to, the date
hereof) and all "Secured Obligations" under the Pledge Agreement and otherwise
bound by all of the terms, provisions and conditions of each of the foregoing.
Without limiting the generality of the foregoing, [the] [each]
Joining Subsidiary, as security for the full and timely payment and performance
of each of the Secured Obligations, assigns, pledges, transfers and sets over
unto the Collateral Agent for the benefit of the Secured Parties, and hereby
grants and creates in favor of the Collateral Agent for the benefit of the
Secured Parties a Lien on and security interest in, all of such Joining
Subsidiary's right, title and interest in, to and under the Collateral (as
defined in the Pledge Agreement), in
-1-
Form of Additional Borrower Joinder Supplement
<PAGE>
each case whether now existing or hereafter arising or now owned
or hereafter acquired.
Attached hereto and made a part hereof are schedules setting
forth all of the information regarding [the] [each] Joining Subsidiary which
must be added to the schedules to the Credit Agreement in order to maintain the
accuracy of such schedules; on the Joinder Effective Date with respect to this
Joinder Supplement, the Credit Agreement shall be deemed supplemented by the
addition of such information to such schedules, as applicable. Also attached
hereto and made a part hereof are schedules setting forth all of the information
regarding [the] [each] Joining Subsidiary which must be added to the schedules
to the Pledge Agreement in order to maintain the accuracy of such schedules; on
the Joinder Effective Date with respect to this Joinder Supplement, the Pledge
Agreement shall be deemed supplemented by the addition of such information to
such schedules, as applicable. Notwithstanding the immediately preceding two
sentences, however, no such supplementation shall relieve any Joining
Subsidiary, Genesis or any other Borrower of its obligations under Section 3.10
of the Collateral Agency Agreement or any other obligation under that or any
other Loan Document.
Genesis and [the] [each] Joining Subsidiary hereby represent
and warrant that all of the representations and warranties contained in the Loan
Documents are true and correct on and as of the date hereof as if made on and as
of such date, both before and after giving effect to this Joinder Supplement,
and that no Event of Default or Potential Default has occurred and is continuing
or exists or would occur or exist after giving effect to this Joinder
Supplement.
[The] [Each] Joining Subsidiary, Genesis and the other
Borrowers have taken all of the steps required of them under Section 10.16 of
the Credit Agreement or otherwise required under that or any other Loan Document
in connection with [the] [each] Joining Subsidiary's becoming a "Borrower" under
the Credit Agreement, a "Grantor" under the Collateral Agency Agreement and the
Pledge Agreement, and a comparable party to each of the other Loan Documents.
This Joinder Supplement shall be governed by and
construed and enforced in accordance with the laws of the
-2-
Form of Additional Borrower Joinder Supplement
<PAGE>
Commonwealth of Pennsylvania, without regard to principles of choice of law.
WITNESS the due execution hereof as of the day and year first
above written.
Genesis:
GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By
--------------------------------------
Title:
-3-
Form of Additional Borrower Joinder Supplement
<PAGE>
Joining Subsidiary[ies]:
[____________________________________, a
_______________________________ corporation
By____________________________________________
Title: ]
[_____________________________________________, a
__________________________________________ limited
partnership
By________________________________________, a
___________________________________ corporation,
its general partner
By________________________________________________
Title: ]
[add additional signature lines as needed]
-4-
Form of Additional Borrower Joinder Supplement
<PAGE>
Exhibit 11
GENESIS HEALTH VENTURES
COMPARATIVE EARNINGS PER SHARE CALCULATION
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
9/30/96 9/30/95
----------------- ----------------
<S> <C> <C>
Primary Earnings Per Share:
Reported earnings before debenture conversion expense $37,966 $25,531
Debenture conversion expense, net of tax (797)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income $37,169 $23,608
----------------- ----------------
Weighted average shares & CSE's: 27,491,765 22,587,038
----------------- ----------------
Primary EPS before debenture conversion expense $1.38 $1.13
Primary EPS - Debenture conversion expense ($0.03)
Primary EPS - Extraordinary item, net of tax ($0.08)
change in accounting principle ----------------- ----------------
Primary EPS - Net income $1.35 $1.05
Fully Diluted Earnings Per Share:
Reported earnings before debenture conversion expense $37,966 $25,531
Debenture conversion expense, net of tax (797)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income 37,169 23,608
Adjustments to net income:
Interest expense, amortization and other costs
related to the assumed conversion of the
Convertible Debentures, net of tax 2,812 3,793
----------------- ----------------
Adjusted net income $39,980 $27,401
----------------- ----------------
Weighted average shares & CSE's:
Common shares 27,491,765 22,587,038
Additional option shares 6,374 154,992
Convertible Debenture shares 3,631,906 5,710,407
----------------- ----------------
Total 31,130,045 28,452,437
----------------- ----------------
Fully diluted EPS before debenture conversion expense $1.31 $1.03
Fully diluted EPS - Debenture conversion expense ($0.02)
Fully diluted EPS - Extraordinary item, net of tax (0.06)
----------------- ----------------
Fully diluted EPS - Net income $1.29 $0.97
================= ================
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
ASCO Healthcare of New England, Inc. Maryland Corporation
ASCO Healthcare of New England, Limited Maryland Corporation
Partnership
ASCO Healthcare, Inc. Maryland Corporation
Brevard Meridian Limited Partnership Maryland Limited
Partnership
Brinton Manor, Inc. Delaware Corporation
CareCard, Inc. Maryland Corporation
Carefleet, Inc. Pennsylvania Corporation
Catonsville Limited Partnership Maryland Limited
Partnership
Cheltenham LTC Management, Inc. Pennsylvania Corporation
CompuAims, Inc. Tennessee Corporation
Concord Healthcare Corporation Delaware Corporation
Crestview Convalescent Home, Inc. Pennsylvania Corporation
Crestview North, Inc. Pennsylvania Corporation
Crystal City Nursing Center, Inc. Maryland Corporation
Derby Nursing Center Corporation Connecticut Corporation
Diversified Diagnostics, Inc. Pennsylvania Corporation
Dover Healthcare Associates, Inc. Delaware Corporation
Eastern Medical Supplies, Inc. Maryland Corporation
Eastern Rehab Services, Inc. Maryland Corporation
Easton Meridian Limited Partnership Maryland Limited
Partnership
Edella Street Associates Pennsylvania Limited
Partnership
EIDOS, Inc. Florida Corporation
Genesis Eldercare Home Care Services, Pennsylvania Corporation
Inc.
f/k/a Healthcare Services Network, Inc.
Genesis Eldercare Management Services, Delaware Corporation
Inc. f/k/a Bluefield Manor, Inc.
Genesis Eldercare National Centers, Inc. Florida Corporation
f/k/a National Health Care Affiliates,
Inc.
Genesis Eldercare Network Services, Inc. Pennsylvania Corporation
f/k/a/ Genesis Management Resources, Inc.
f/k/a Total Care Systems, Inc.
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
Genesis Eldercare Physician Services, Pennsylvania Corporation
Inc. f/k/a Genesis Physician Services,
Inc.
Genesis Eldercare Properties, Inc. Pennsylvania Corporation
Genesis Eldercare Rehabilitation Pennsylvania Corporation
Management Services, Inc. f/k/a Robindale
Medical Services, Inc.
Genesis Eldercare Rehabilitation Pennsylvania Corporation
Services, Inc. f/k/a Team Rehabilitation,
Inc.
Genesis Eldercare Staffing Services, Inc. Pennsylvania Corporation
f/k/a Staff Replacement Services, Inc.
Genesis Health Services Corporation Delaware Corporation
Genesis Health Ventures of Arlington, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Bloomfield, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Clarks Summit, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Indiana, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Lanham, Inc. Pennsylvania Corporation
Genesis Health Ventures of Massachusetts, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Naugatuck, Pennsylvania Corporation
Inc.
Genesis Health Ventures of New Garden, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Point Pennsylvania Corporation
Pleasant, Inc.
Genesis Health Ventures of Salisbury, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Wayne, Inc. Pennsylvania Corporation
Genesis Health Ventures of West Virginia, Pennsylvania Corporation
Inc.
Genesis Health Ventures of West Virginia, Pennsylvania Limited
L. P. Partnership
Genesis Health Ventures of Wilkes-Barre, Pennsylvania Corporation
Inc.
Genesis Health Ventures of Windsor, Inc. Pennsylvania Corporation
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
Genesis Health Ventures, Inc. Pennsylvania Corporation
Genesis Healthcare Centers Holdings, Inc. Delaware Corporation
Genesis Holdings, Inc. Delaware Corporation
Genesis Immediate Med Center, Inc. Pennsylvania Corporation
Genesis Properties Limited Partnership Pennsylvania Limited
Partnership
Genesis Properties of Delaware Delaware Corporation
Corporation
Genesis Properties of Delaware Ltd. Delaware Limited
Partnership, L. P. Partnership
Geriatric & Medical Companies, Inc. Delaware Corporation
Geriatric & Medical Investments Corp. Delaware Corporation
Geriatric & Medical Services, Inc. New Jersey Corporation
Gerimed Corp. Pennsylvania Corporation
GMC Leasing Corporation Delaware Corporation
GMC Management, Inc. Pennsylvania Corporation
GMC Medical Consulting Services, Inc. Pennsylvania Corporation
GMC-LTC & Management, Inc. Pennsylvania Corporation
GMS Insurance Services, Inc. Pennsylvania Corporation
GMS Management - Tucker, Inc. Pennsylvania Corporation
Governor's House Nursing Home, Inc. Delaware Corporation
Greenspring Meridian Limited Partnership Maryland Limited
Partnership
Hallmark Healthcare Limited Partnership Maryland Corporation
Hammonds Lane Meridian Limited Maryland Limited
Partnership Partnership
HCHS, Inc. Pennsylvania Corporation
Health Concepts and Services, Inc. Maryland Corporation
Healthcare Resources Corp. Pennsylvania Corporation
Hilltop Health Care Center, Inc. Delaware Corporation
HSS-Para Transit, Inc. Pennsylvania Corporation
Innovative Health Care Marketing, Inc. Pennsylvania Corporation
Innovative Pharmacy Services, Inc. New Jersey Corporation
Keystone Nursing Home, Inc. Delaware Corporation
Knollwood Manor, Inc. Pennsylvania Corporation
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
Knollwood Nursing Home, Inc. Delaware Corporation
Life Support Ambulance, Inc. Pennsylvania Corporation
Life Support Medical Equipment, Inc. Pennsylvania Corporation
Life Support Medical, Inc. Pennsylvania Corporation
LIH Chestnut Associates L. P. Pennsylvania Limited
Partnership
Lincoln Nursing Home, Inc. Delaware Corporation
Manor Management Corporation of Georgian Pennsylvania Corporation
Manor, Inc.
McKerley Health Care Center - Concord New Hampshire Limited
Limited Partnership Partnership
McKerley Health Care Center - Concord New Hampshire Corporation
Inc.
McKerley Health Care Centers, Inc. New Hampshire Corporation
McKerley Health Facilities New Hampshire General
Partnership
Medical Services Group, Inc. Maryland Corporation
Meridian Edgewood Limited Partnership Maryland Limited
Partnership
Meridian Health, Inc. Pennsylvania Corporation
Meridian Healthcare Investments, Inc. Maryland Corporation
Meridian Healthcare, Inc. Pennsylvania Corporation
Meridian Perring Limited Partnership Maryland Limited
Partnership
Meridian Valley Limited Partnership Maryland Limited
Partnership
Meridian Valley View Limited Partnership Maryland Limited
Partnership
Meridian/Constellation Limited Maryland Limited
Partnership Partnership
Metro Pharmaceuticals, Inc. Pennsylvania Corporation
Millville Meridian Limited Partnership Maryland Limited
Partnership
Neighborcare Pharmacies, Inc. Maryland Corporation
Norristown Nursing & Rehabilitation Pennsylvania Limited
Center Associates, L. P. Partnership
North Cape Convalescent Center Pennsylvania Limited
Associates, L. P. Partnership
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
Northweat Total Care Centers Associates, New Jersey Limited
L. P. Partnership
Oak Hill Health Care Center, Inc. Virginia Corporation
Pharmacy Equities, Inc. Pennsylvania Corporation
Philadelphia Avenue Associates Pennsylvania Limited
Partnership
Philadelphia Avenue Corporation Pennsylvania Corporation
Professional Pharmacy Services, Inc. Maryland Corporation
Prospect Park LTC Management, Inc. Pennsylvania Corporation
Quakertown Manor Convalescent and Delaware Corporation
Rehabilitation, Inc.
River Ridge Partnership Pennsylvania General
Partnership
River Street Associates Pennsylvania Limited
Partnership
Seminole Meridian Limited Partnership Maryland Limited
Partnership
State Street Associates Limited Pennsylvania Limited
Parthership Partnership
State Street Associates, Inc. Pennsylvania Corporation
Suburban Medical Services, Inc. Pennsylvania Corporation
The Tidewater Healthcare Shared Services Pennsylvania Corporation
Group, Inc.
Therapy Care Systems, L. P. Pennsylvania Limited
Partnership
Therapy Care, Inc. Pennsylvania Corporation
Transport Services, Inc. Maryland Corporation
United Health Care Services, Inc. Pennsylvania Corporation
Valley Medical Services, Inc. Pennsylvania Corporation
Valley Transport Ambulance Service, Inc. Pennsylvania Corporation
Versalink, Inc. Delaware Corporation
Villas Realty & Investment, Inc. Pennsylvania Corporation
Volusia Meridian Limited Partnership Maryland Limited
Partnership
Walnut LTC Management, Inc. Pennsylvania Corporation
Walnut Park Plaza Associates Pennsylvania Limited
Partnership
</TABLE>
<PAGE>
Genesis Subsidiaries
<TABLE>
State of
Name Organization Type of Entity
- ---- ------------ --------------
<S> <C> <C>
Wayside Nursing Home, Inc. Delaware Corporation
Weisenfluh Ambulance Service, Inc. Pennsylvania Corporation
West Philadelphia LTC Managemet, Inc. Pennsylvania Corporation
Wyncote Healthcare Corp. Pennsylvania Corporation
York LTC Management, Inc. Pennsylvania Corporation
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Auditors
The Board of Directors
Gensis Health Ventures, Inc.:
We consent to incorporation by reference in the registration statement dated
September 12, 1996 on Form S-8 (No. 333-11845) for the 1985 Amended and Restated
Employee Stock Option Plan and the 1992 Stock Option Plan for Non-Employee
Directors of Genesis Health Ventures, Inc., and the registration statement dated
September 12, 1996 on Form S-3 (No. 333-11847) for the registration of common
shares, of our reports dated November 20, 1996 relating to the consolidated
balance sheets of Genesis Health Ventures, Inc. and subsidiaries as of
September 30, 1996 and 1995 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended September 30, 1996 and the related schedule, which
reports appear in the September 30, 1996 annual report on Form 10-K of Genesis
Health Ventures, Inc.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
December 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 12,763,000
<SECURITIES> 5,517,000
<RECEIVABLES> 152,847,000
<ALLOWANCES> (11,131,000)
<INVENTORY> 17,051,000
<CURRENT-ASSETS> 232,721,000
<PP&E> 416,766,000
<DEPRECIATION> (65,837,000)
<TOTAL-ASSETS> 950,669,000
<CURRENT-LIABILITIES> 77,230,000
<BONDS> 0
0
0
<COMMON> 640,000
<OTHER-SE> 513,968,000
<TOTAL-LIABILITY-AND-EQUITY> 950,669,000
<SALES> 671,469,000
<TOTAL-REVENUES> 671,469,000
<CGS> 543,200,000
<TOTAL-COSTS> 587,212,000
<OTHER-EXPENSES> 1,245,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,926,000
<INCOME-PRETAX> 58,086,000
<INCOME-TAX> 20,917,000
<INCOME-CONTINUING> 37,169,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,169,000
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.29
</TABLE>
